2009 First half financial report

Transcription

1 2009 First half financial report Preliminary remarks This financial report and the unaudited condensed financial statements for the half year ended June 30, 2009 were approved by the Management Board on July 21, They were reviewed by the Supervisory Board on July 28, 2009 pursuant to the decision of the Audit Committee meeting of July 28, This report should be read in conjunction with the Management Board s report for the year ended December 31, 2008 as published in Registration Document as filed with the Securities Regulator (AMF) on April 24, 2009 ( the 2008 Registration Document ).

2 TABLE OF CONTENTS

3 1 HIGHLIGHTS AND KEY FIGURES 4 2 CERTIFICATIONS PERSON RESPONSIBLE FOR THE FIRST HALF REPORT CERTIFICATION OTHE FIRST HALF YEAR PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS INFORMATION POLICY 11 3 GENERAL INFORMATION RELATING THE COMPANY AND ITS SHARE CAPITAL GENERAL INFORMATION REGARDING THE COMPANY S SHARE CAPITAL TRADING OF THE COMPANY S SHARE 14 4 INFORMATION CONCERNING COMPNAY BUSINESS ACTIVITIES DESCRIPTION OF ACTIVITIES REGULATORY ENVIRONMENT HUMAN RESOURCES REAL PROPERTY LEGAL AND ARBITRATION PROCEEDINGS 29 5 FINANCIAL REPORT CONSOLIDATION FINANCIAL DATA INCOME STATEMENT CONSOLIDATED FINANCIAL DATA 38 6 CORPORATE GOVERNMENT MANAGEMENT AND SUPERVISORY BOARD CORPORATE GORVERNANCE CORPORATE GOVERNMENT RELATED PARTY TRANSACTIONS RECENT DEVELOPMENT AND MARKET OUTLOOK RECENT DEVELOPMENT MARKET OUTLOOK 57

4 HIGHLIGHTS AND KEY FIGURES First half report- Maroc Telecom

5 1. HIGHTLIGHTS AND KEY FIGURES 1. HIGHTLIGHTS AND KEY FIGURES January Maroc Telecom again reviewed its pricing terms, raising its monthly fixed-line subscription for prepaid capped phone plan customers while lowering prices on fixed-line international calls and bundles. Maroc Telecom launched a new offering for international calls over VPN. February Success of Maroc Telecom s bid to acquire a 51% stake in Sotelma in Mali. Maroc Telecom further developed its innovative offerings with a new triple-play service, called the MT Box (test phase) as well as the Pack Pro call plan combining fixed-line, mobile and Internet (ADSL or 3G) services, along with a PC at a subsidized rate, and an exclusive TV service for mobile subscribers. Bintel awarded a fourth Mobile license in Gabon March Maroc Telecom provided extensive support for customers during the switchover of the telephone numbering system in Morocco, with a major communications campaign and the provision of a free service for updating call-lists. A number of different promotional campaigns were also launched (TV ADSL, 3G Internet modem starter kits, Infinifix, etc.). Results of the bid for a 20% stake in Onatel were announced: 1.4 times oversubscribed. An IPO on the Abidjan Stock Exchange is planned before May 1, April Maroc Telecom launched an online bill payment service for customers in Morocco. The ANRT approved Maroc Telecom s technical and pricing terms for interconnection to fixed-line and mobile networks in 2009, together with the terms of Maroc Telecom s partial unbundling for Onatel completes its IPO on the regional stock exchange in Abidjan. May Maroc Telecom concluded with the ANRT a MAD334.6 million agreement governing the extension of universal service to 2,530 rural areas in The cost of provision of services will be offset against Maroc Telecom s universal service contribution in respect of Signature of an investment agreement between the Government of the Kingdom of Morocco and Maroc Telecom under which the operator committed to complete a MAD10.5 million capital investment program over the period. Maroc Telecom received the SICCAM 2009 trophy, acknowledging its decade of service to Morocco s call center industry along with its investment in infrastructure enabling it to meet the demand of call center operators and its role in connecting Morocco with the rest of the world. Maroc Telecom divested its equity interest in the Mobisud France subsidiary to SFR. June Mauritel introduced 3G+ services for the Voice and Data segments. Maroc Telecom continued its sponsorship of the Clean Beaches program for Morocco s Mediterranean coastline. As a result, two beaches in Northern Morocco were awarded Pavillon bleu status for the first time. July Launch of the Jawali customer loyalty program for prepaid Jawal and Mobisud customers in Morocco. On July 7, 2009, Maroc Telecom was declared the winner of the tender offer for the acquisition of a 51% equity stake in SOTELMA, the incumbent telecoms operator in Mali, for 275 million First half report - Maroc Telecom 5

6 1 H H H In IFRS (in millions of Moroccan dirhams) Consolidated revenues Mobile - gross Maroc Telecom Mauritel Onatel Gabon Télécom Mobisud Fixed lines and Internet - gross Maroc Telecom Mauritel Onatel Gabon Télécom Consolidated earnings/loss from operations before amortization Mobile Maroc Telecom Mauritel Onatel Gabon Télécom Mobisud (99) -179 (13) Fixed lines and Internet Maroc Telecom Mauritel Onatel Gabon Télécom Consolidated earnings from operations Mobile Maroc Telecom Mauritel Onatel Gabon Télécom Mobisud (100) -187 (14) Fixed lines and Internet Maroc Telecom Mauritel Onatel (54) Gabon Télécom (35) Consolidated net earnings (Group share) Capital expenditure Mobile Fixed lines and Internet First half report- Maroc Telecom

7 1. HIGHTLIGHTS AND KEY FIGURES Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 In thousands Mobile - Customers 12,736 13,172 14,517 15,342 15,897 16,574 17,204 17,184 17,624 17,553 Maroc Telecom 11,372 11,713 12,838 13,327 13,697 14,224 14,629 14,456 14,630 1,289 Mauritel ,015 1,104 1,141 1,218 1,315 Onatel ,162 1,316 Gabon Télécom Mobisud Number of Fixed lines 1,477 1,490 1,496 1,518 1,526 1,536 1,530 1,526 1,524 1,533 Maroc Telecom 1,314 1,325 1,324 1,336 1,335 1,329 1,314 1,299 1,286 1,290 Mauritel Onatel Gabon Télécom Internet - Customers Maroc Telecom Mauritel Onatel Gabon Télécom In IFRS (in millions of Moroccan dirhams) Consolidated revenues 6,113 6,894 7,320 7,205 6,965 7,343 7,729 7,484 7,129 7,457 Mobile - gross 4,162 4,727 5,260 5,148 4,901 5,260 5,612 5,388 5,078 5,374 Maroc Telecom 3,795 4,105 4,722 4,474 4,295 4,628 4,939 4,668 4,378 4,638 Mauritel Onatel Gabon Télécom Mobisud Fixed lines and Internet - gross 2,618 2,913 2,769 2,789 2,745 2,800 2,871 2,938 2,798 2,809 Maroc Telecom 2,326 2,401 2,377 2,347 2,347 2,403 2,437 2,497 2,376 2,384 Mauritel Onatel Gabon Télécom Elimination of intra-segment transactions (667) (746) (710) (731) (681) (716) (754) (843) (748) (726) Consolidated earnings from operations 2,844 3,155 3,510 2,724 3,104 3,562 3,755 3,469 3,188 3,364 Mobile 2,162 2,426 2,777 2,191 2,344 2,789 2,951 2,615 2,312 2,458 Fixe et Internet First half report - Maroc Telecom 7

8 First half report- Maroc Telecom CERTIFICATIONS

9 2. CERTIFICATIONS In this 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 of its directly and indirectly owned subsidiaries. 2.1 PERSON RESPONSIBLE FOR THE INTERIM REPORT Mr. Abdeslam Ahizoune Chairman of the Management Board 2.2 CERTIFICATION OF THE INTERIM REPORT I hereby attest, to my knowledge, that the condensed interim financial statements are established in accordance with applicable accounting standards and give a true and fair view of the income and financial position and results of the company and all of the consolidated companies, and that the attached interim management report gives a true and fair view of the significant events having occurred during the first six months of the year, and their impact on the condensed interim financial statements, the main related-party transactions as well as a description of the principal risks and uncertainties for the remaining six months of the year. Mr. Abdeslam Ahizoune Chairman of the Management Board 2.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL STATEMENTS Statutory Auditors KPMG Maroc Represented by Mr. Fouad Lahgazi 11, avenue Bir Kacem, Souissi Rabat, Morocco First appointed on 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, Morocco First appointed in 1998 by the bylaws, renewed in 2008, the current mandate, of a three-year term, will expire at the end of the shareholders meeting held to approve the financial statements for the fiscal year ended December 31, First half report - Maroc Telecom 9

10 Report of the statutory auditors on the consolidated financial statements for first-half 2009 Period from January 1 to June 30, 2009 As Statutory Auditors of the company, and in compliance with the assignment entrusted to us by the Supervisory Board we hereby report to you on: our limited review of the accompanying condensed interim consolidated financial statements of Maroc Telecom, for the period from January 1, to June 30, the verification of the information given in the interim report. These condensed consolidated financial statements are the responsibility of the Management Board. Our role is to express a conclusion on these financial statements based on our limited review. We have conducted our limited review in accordance with international auditing standards. A limited review consists in making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical procedures. A limited review is substantially less in scope than an audit conducted in accordance with international auditing standards. Consequently a review provides only limited assurance, which is substantially less in scope than an audit, that the financial statements, taken as a whole, are free from material misstatements. Based on our limited review, we did not identify any material misstatements of a nature to cause us to believe that these condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 IFRS as adopted by the European Union applicable to interim financial information. Without modifying the conclusion expressed above, we draw your attention to the fact that segment data, as presented in the attached notes which refer to the notes to the consolidated financial statements for the period ended December 31, 2008, and as described in Note 1 (section 2.5) of the notes to the consolidated financial statements for fiscal 2008, has been based on estimates. In compliance with international auditing standards, we have also verified the information provided in the interim management report in respect of the condensed interim consolidated financial statements that were the object of our limited review. We have no matters to report on the fairness and consistency of this information with the condensed interim financial statements. July 29, 2009 Statutory auditors KPMG Fouad Lahgazi Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner First half report- Maroc Telecom

11 2. CERTICATIONS Information policy 2.4 INFORMATION POLICY Person responsible for information Mr. Arnaud Castille Chief Financial Officer Maroc Telecom Avenue Annakhil Hay Riad Rabat, Morocco Telephone: (0) E: mail : relations.investisseurs@iam.ma Shareholders information All of the legal and accounting documents about the Company which must be made available to shareholders and third parties in accordance with Moroccan and French laws and the bylaws can be consulted at the registered office of the Company. Registration Documents and updates to Registration Documents filed with the French securities regulator (AMF), presentations to investors and financial analysis made by the Company, as well as the various press releases can be viewed and downloaded from 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 and archived on Maroc Telecom s website: information-reglementee.aspx First half report - Maroc Telecom 11

12 GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL First half report- Maroc Telecom

13 3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL General information relating to the company s share capital 3.1 GENERAL INFORMATION RELATING TO THE COMPANY S SHARE CAPITAL Share capital Itissalat Al-Maghrib s issued capital amounts to MAD5,274,572,040 divided into 879,095,340 shares of the same class and fully paid up, with a par value of MAD6 per share Ownership of share capital and voting rights in the Company As at June 30, 2008, the share capital and voting rights of the Company were distributed as follows: Shareholders *: Held via the wholly-owned subsidiary (Société de Participation dans les Télécommunications) **: Share held directly or indirectly by the Company Number of shares % of capital/ voting rights Vivendi group * 465,920, % Government of the Kingdom of Morocco 263,728, % Senior executives 155, % Employees 1,071, % Public 147,829, % Treasury shares** 389, % Total 879,095, % On July 2, 2007, the Moroccan State sold 4% of Maroc Telecom s share capital on the Casablanca Stock Exchange at a price of MAD130 per share. The sale was reserved for Moroccan and international institutional investors via a book order between June 26 and June 28, Under the terms of an agreement between Vivendi and the group CDG, Vivendi acquired 2% of the capital of Morocco Telecom, thereby increasing its stake from 51% to 53%. In addition, CDG group acquired a 0.6% equity interest in Vivendi Share buyback program The current share buyback program implemented to support the Company s share price was approved by the General Shareholders Meeting of May 28, The decision to approve the buyback program was taken subsequent to the authorization obtained for the program s Information Notice from the Moroccan securities market regulator (CDVM) on May 9, 2008 (reference no. VI/EM/017/2008). The main features of the buyback program are as follows: Term: until November 29, 2009; Price range for share purchase or sale: MAD ; Maximum share capital that can be held: 1.82% (or 16 million shares). Since October 16, 2007 and for a period of one year, renewable by tacit agreement, Rothschild & Cie Banque has been under contract by Maroc Telecom to implement: In Casablanca, a share price regulation contract for an amount of MAD55 million. In Paris, a liquidity contract consistent with the Charter of Professional Conduct of the French Association of Investment Firms (AFEI) was approved by the AMF by a decision dated March 22, 2005 and published in the French Legal Gazette on April 1, For the purposes of this contract 5 million was allocated to a liquidity account. On January 7, 2009, Maroc Telecom added 2,500,000 in cash First half report - Maroc Telecom 13

14 3 On June 30, 2009, the following resources were held in the liquidity account Casablanca Paris 10,000 shares 379,750 shares MAD57,211, ,151,280 The details of the share buyback program conducted in first-half 2009 were as follows: Casablanca Paris Total Number of shares repurchased 415, , ,376 Average purchase price MAD Number of share sold 585, , ,976 Average sale price MAD TRADING OF THE COMPANY S SHARES Stock exchange listings Maroc Telecom has been listed in Casablanca and Paris since December 13, Maroc Telecom share price Casablanca Stock Exchange Main market, Code Average price* High Low Transactions** (in MAD) Number of shares (in thousands) Trade value (in millions MAD) January , February , March , April , May , June , * The average price is calculated by dividing the value of shares traded by the number of shares ** Not including block market transactions Source: Casablanca Stock Exchange Changes in Maroc Telecom s share price on the Casablanca Stock Exchange Maroc Telecom MASI In June 2009, 96% of the free float was traded on the Casablanca Stock Exchange First half report- Maroc Telecom

15 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 Euronext s SRD deferred settlement service Average price* High Low Transactions** (in Euro) Number of shares (in thousands) Trade value (in millions Euro) January , February , March April May June * The average price is calculated by dividing the value of shares traded by the number of shares ** Not including block market transactions Source: Euronext Paris Changes in Maroc Telecom s share price on Euronext Paris Maroc Telecom CAC40 In June 2009, 4% of the free float was traded on Euronext Paris First half report - Maroc Telecom 15

16 : INFORMATION CONCERNING THE COMPANY S BUSINESS ACTIVITIES First half report- Maroc Telecom

17 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Description of activities 4. INFORMATION CONCERNING THE COMPANY S BUSINESS ACTIVITIES 4.1 Description of activities Maroc Telecom s first-half 2009 consolidated revenues amounted to 14,586 million, up 1.9% on the same period in 2008 (up 2.0% at constant exchange rates). Against the backdrop of a more challenging economic climate, the key factors driving revenue growth were Maroc Telecom s continued leadership on its domestic market and the solid operating performances of its subsidiaries. The Group s customer base grew to 19.6 million customers at June 30, 2009, up 5.3% year on year. This performance was essentially fuelled by the Group s subsidiaries in sub-saharan Africa and the significant growth in the Mobile customer base which rose by 44.1% year on year to reach 3.2 million customers. The Group s consolidated earnings from operations (EFO) amounted to MAD6,552 million, down 1.7% year on year (down 2.2% at constant exchange rates). The reduction in EFO was partially offset by profit margin gains across the Group s subsidiaries. However, in Morocco, it was compounded by the net impact of increases in promotional initiatives and maintenance costs, which were introduced to bolster market growth and develop the network, as well as by amortization and depreciation. EBITDA grew by 1% versus the prior-year period and stood at MAD8,589 million at the end of June Domestic activities The Group s operations in Morocco generated net revenues of MAD12,574 million in first-half 2009, up 0.5% year on year, with a deceleration in market growth overall and in the mobile segment in particular. Earnings from operations totaled MAD6,155 million, down 7.4% on the same period in Mobile The table below shows the breakdown of Maroc Telecom s Mobile revenues for the first halves of the past three years: In millions of Moroccan dirhams At June Gross revenues 7,900 8,923 9,015 Revenues from sales of services 7,520 8,360 8,415 Revenues from sales of handsets Earnings from operations before amortization 4,999 5,776 5,370 Earnings from operations 4,341 4,982 4,364 Gross revenues generated by Mobile services in first-half 2009 increased by 1.0% to MAD9,015 million. The Mobile subscriber base remained broadly unchanged versus the prior-year period while ARPU declined marginally due to the impact of an unfavorable economic climate and increased competitive pressures. Revenues generated from communications services rose by 0.7% versus first-half This increase was fuelled by the rise in outbound call revenues, which account for almost 70% of total Mobile revenues, and helped to offset lower revenues from inbound calls (down 8%) and roaming in (down 7%). Revenues generated from terminal sales climbed by approximately 7%, fuelled by increases in sales of postpaid terminals and 3G modems First half report - Maroc Telecom 17

18 4 Earnings from operations generated by Mobile services in Morocco amounted to MAD4,364 million, down 12.4% year on year. This decrease was chiefly attributable to the impact of the promotional initiatives taken to stimulate market growth. The number of Mobile subscribers increased marginally to million clients, up 0.5% year on year. The premium-value postpaid segment made a strong contribution to this growth with an 18.6% increase. At end- June 2009, the total number of high-value subscribers stood at 671,000, thus enabling Maroc Telecom to achieve continued growth in market share in the premium-value segment. As a consequence of the rapid growth in the customer base in the prior-year period (increase of 21.3% versus June 2007) combined with a natural progression in the rate of subscription cancellations, the overall churn rate increased to 35.2% in first-half 2009, up 7.6 basis points versus the prior-year period and up 0.3 basis points since the end of This was due to increased churn among prepaid customers while the postpaid churn rate improved by 3.4 basis points to 13.8%. Mixed ARPU amounted to MAD94.2 during the period, reflecting a 4.4% decline on first-half 2008, chiefly due to a reduction in inbound call revenues. Outbound usage increased by 5% to 55 min per customer per month. New services introduced by Maroc Telecom in first-half 2009 included a Mobile TV service and a pointsbased loyalty program for prepaid Mobile customers. The following table shows the data relating to prepaid and postpaid services: June 30, 2008 Dec 31, 2008 Mar 31, 2009 Number of Mobile customers (1) (in thousands) 14,223 14,456 14,289 Prepaid 13,658 13,853 13,618 Postpaid (2) Churn rate ( churn ) (%) Prepaid 28.0% 35.5% 36.2% Postpaid (2) 17.2% 17.2% 13.8% Average churn rate 27.6% 34.9% 35.2% ARPU (in MAD/customer /month) Prepaid Postpaid (2) Average ARPU Inbound usage (minutes/ customer /month) Prepaid Postpaid (2) Average inbound usage Outbound usage (minutes/ customer /month) Prepaid Postpaid (2) Average outbound usage (1) Postpaid subscribers and prepaid cards (2)Including pay-as-you-go rate plans (3)Including data First half report- Maroc Telecom

19 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Description of activities Competitive environment for mobile services At March 31, 2009, the number of mobile customers in Morocco (all operators) stood at MAD23.5 million (up 14% year-on-year), representing a 75.4% penetration rate (Source: ANRT). At the end of the first quarter 2009, Maroc Telecom retained its preeminent position in the Moroccan Mobile market while achieving a 62.2% market share, a level 4.2 points lower than the prior-year period exclusively due to the prepaid segment. As such, Maroc Telecom continued to grow its share of the postpaid highvalue segment, achieving an increase of 4.9 points year on year (Source: ANRT/Maroc Telecom). The remainder of the market is controlled by Meditel (35.6%) and Wana (2.2%). Maroc Telecom market share * (Source ANRT) June 30, 2008 Dec 31, 2008 Mar 31, 2009 Total Mobile market 66.4% 63.4% 62.2% Prepaid 66.5% 63.3% 62.0% Postpaid** 63.7% 65.4% 68.3% Fixed-line and Internet The table below shows the breakdown of revenues from Fixed-line and Internet operations for the relevant interim reporting periods. In millions of Morocco dirhams IFRS - At June Gross revenues 4,727 4,750 4,759 Voice* 3,143 3,040 2,942 Interconnection Data ,050 Internet** Earnings from operations before amortization 1,984 2,284 2,396 Earnings from operations 1,417 1,666 1,791 * including service commitment contracts but excluding intercompany revenues ** including broadband TV (IPTV) revenues The Fixed-line and Internet segment in Morocco generated gross revenues of MAD4,759 million in the first half. This represented a 0.2% increase on the prior-year period, in spite of the impact of reduced Voice revenues (down 3%) and lower revenues from Interconnection charges (down 22%). The resilience of Fixed-line and Internet revenues was underpinned by stable Internet revenues and higher Data services revenues (up 20%). Revenues were further bolstered by an increase in leased lines used by the Mobile segment in connection with network deployment and 3G services. Earnings from operations generated by the Fixed-line and Internet segment in Morocco grew by 7.5% to MAD1,791 million, thanks to the positive impact of reductions in interconnection charges for outbound national traffic First half report - Maroc Telecom 19

20 4 Fixed-line telephone services The following table shows the change in the overall number of fixed telephone lines in each segment: Number of lines - In thousands * June 30, 2008 Dec 31, 2008 Mar 31, 2009 Residential Public telephony** Enterprises Customer base** 1,329 1,299 1,290 *: Since January 1, 2008, the fixed-line customer base has been reported on an equivalence basis taking into account the number of lines for each access figures have been restated accordingly. **: Aggregate of phone lines used by Maroc Telecom telestores and public call booths. Maroc Telecom had 1.29 million fixed lines in service at June 30, 2009, a level 2.9% lower than in June The reduction in the Residential fixed line segment (down 7%) was partially offset by growth in the Enterprises (up 3%) and Public telephony (up 1%) segments. During the first half of the year, Maroc Telecom focused on consolidating market share via a series of promotional initiatives for Residential and Enterprise clients in the fixed line segment. In the area of product offerings, the period also saw the introduction of a groundbreaking triple play home service (Voice, Internet and Broadband TV). Competitive environment for fixed-line telephony The penetration rate for fixed-line telephony in Morocco stood at 9.92% at March 31, 2009 versus 8.79% at June 30, 2008 (source: ANRT). After having witnessed significant increases in 2007, following the introduction of prepaid restricted mobility offerings by competitors, the rate of progression of Fixed-line penetration has slowed significantly since second-half When restated to take account of restricted mobility, the penetration rate stood at 4.18% at end March 2009, down 0.17 basis points on the same period in If restricted mobility, Maroc Telecom s share of the overall fixed-line market stood at 98.8%. The Company holds a 96.6% share of the Enterprise market and a 91.8% share of the public telephony market. Maroc Telecom market share Competitors June 30, Dec 31, March , 2008 Fixed-line Méditel, Wana 99.5% 99.2% 98.8% Fixed-line, including restricted mobility Méditel / Wana 48.1% 43.4% 41.7% Fixed-line Enterprises Méditel 98.4% 97.0% 96.6% Public telephony Méditel 91.3% 91.5% 91.8% First half report- Maroc Telecom

21 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Description of activities Internet At end-june 2009, Maroc Telecom had over 486,000 wireline Internet access points in service (ADSL accounts for 99% of this figure), a level broadly unchanged versus end-june Wireline access points account for around 43% of fixed lines (excluding public telephony). In addition to the wireline access segment, Maroc Telecom also has a growing number of customers using 3G+ mobile broadband. Maroc Telecom had close to 89,000 3G+ mobile broadband customers at end-june versus 14,000 at end-june This rapid-paced growth was chiefly driven by the introduction of 3G mobile broadband offerings in the prepaid segment in late Number of active costumers in thousands *including leased line (Source : ANRT) Competitive environment for Internet services providers June 30, 2007 Dec 31, 2008 Mar 31, 2009 Narrowband ADSL* G Data Total The Company has two competitors in the Internet access market, Meditel and Wana. Both are active in the wireless Internet segment and had an aggregate market share of 33.8% at March 31, 2009 (Source: ANRT). Maroc Telecom holds a predominant position in ADSL, which accounts for 58% of total access, controlling almost 99% of this market (Source: ANRT), and has increased significantly its share of the wireless Internet market from 10% in December 2008 to 19% in March 2009, thanks to the success of its prepaid offers. Maroc Telecom share market June 30, 2008 Dec 31, 2008 March 31, 2008 Internet 76.6% 67.3% 66.2% ADSL 98.8% 98.8% 98.8% Wireless Internet 8.7% 10.3% 19.0% (Source : ANRT) 2009 First half report - Maroc Telecom 21

22 Subsidiaries business Mauritel The Group s operations in Mauritania generated net revenues of MAD565 million in first-half 2009, up 8.8% year on year (up 3.3% at constant exchange rates). Mauritel s earnings from operations for first-half 2009 amounted to MAD206 million, down 3.2% at constant exchange rates, due to a deterioration in earnings from operations in the Mobile segment against the backdrop of rapid market growth. The following table summarizes Mauritel s principal operating and financial data: In thousands June 30, 2008 Dec 31, 2008 June 30, 2009 Mobile customers 1,015 1,141 1,315 Mobile ARPU Number of fixed lines Internet customers H H % change (constant exchange rates) In million of dirhams IFRS Net revenues* Mobile - gross** Fixed line - gross** Earnings from operations before amortization (0.5) Mobile** (7.1) Fixed line** Earnings from operations (3.2) Mobile** (13.0) Fixed line** (2) 20 n/a * Revenues net of inter-segment revenues between subsidiaries' fixed-line and mobile operations, but including revenues generated by subsidiaries (including service commitment contracts) which are eliminated from consolidated revenues. ** Revenues generated by inbound international traffic to Mauritel s mobile fleet were directly accounted for in Mobile operations in 2009 and were previously accounted for as fixed-line transit revenues. Revenue figures for 2008 have been restated to account for this change. Further details about the consolidation methods used to account for the Mauritel sub-group, together with its contribution to Maroc Telecom s consolidated financial results, are provided in the Notes to the Consolidated Financial Statements. Comparable basis revenues were calculated based on constant exchange rates. It should be noted that revenues generated by inbound international traffic to Mauritel s mobile fleet and outbound international traffic from Mauritel customers were accounted for as Mobile telephony transit revenues in 2009, whereas they were previously accounted for as fixed-line transit revenues. Revenues figures for 2008 have been restated to account for this change First half report- Maroc Telecom

23 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Description of activities Mobile services The number of Mobile subscribers grew by almost 30% to million customers, representing a net gain of 174,000 clients since the beginning of the year. Mauritel broke new ground in the Mauritanian telecoms market with its introduction of postpaid 3G+ mobile services in the Voice and Data segments. Marketing efforts deployed by Mauritel focused on a accelerating the calendar of promotional activities while reducing network access fees and top-up card charges. Mauritel operates in a liberalized market alongside Compagnie Mauritano-Tunisienne de Télécommunications (Mattel) and Chinguitel (since August 2007). In 2006, the Mauritanian telecoms regulator ARE awarded new licenses, including a 3G license for Mauritel and 2G and 3G licenses for Chinguitel. According to Maroc Telecom estimates, the mobile penetration rate is to 62% in Mauritania and the market share is 56%. Mobile services generated gross revenues of MAD472 million, up 9.8% (up 4.0% at constant exchange rates). As a consequence of the rapid growth in the mobile customer base, blended ARPU came to MAD63 in first-half 2009, down 18% at constant exchange rates on the same period on EFO generated by mobile services amounted to MAD186 million, down 13% at constant exchange rates. This decrease was chiefly attributable to the impact of the promotional initiatives in an intensely competitive market environment. Fixed-line, Data and Internet At June 30, 2009, Mauritel s total number of fixed lines amounted to almost 56,000, up 22% compared to the end of June 2008, thanks to the deployment of CDMA offerings. The Internet customer base reached almost 11,000 accesses at June 30, 2009, up 57% on the same period on Mauritel SA operates in a liberalized market since the awarding by the Mauritanian regulator in 2006 of fixed-line licenses in Chinguitel. The Fixed-line and Internet market is shared between two operators: Mauritel and Chinguitel (since August 2007). Mauritel holds an estimated 95% share of the Internet access market (source: Maroc Telecom). The Fixed-line and Internet segment generated gross revenues of MAD134 million in the first half, up 1.3%, at constant exchange rates, mainly fuelled by growth in the CDMA customer base. Earnings from operations generated in the Fixed-line and Internet segment amounted MAD20 million, versus a MAD2 million loss a year earlier. Onatel The Group s operations in Burkina Faso generated net revenues of MAD833 million in first-half 2009, up 16.6% year on year (up 19.0% at constant exchange rates). This increase was due to strong operating performances across the Mobile, Fixed-line and Internet segments. Buoyed by increased profitability in the Mobile segment, Onatel s earnings from operations for first-half 2009 stood at MAD153 million, representing an increase of close to 90% on the same period in The following table summarizes Onatel s principal operating and financial data: In thousands June 30, 2008 Dec 31, 2008 June 30, 2009 Mobile Customers ,316 Mobile ARPU Number of fixed lines Internet customers First half report - Maroc Telecom 23

24 4 H H % change (constant exchange rates) In million of dirhams IFRS Net revenues* Mobile gross Fixed line gross Earnings from operations before amortization Mobile Fixed line (0.9) Earnings from operations Mobile Fixed line (39) (53) (40.7) * Revenues net of inter-segment revenues between subsidiaries' fixed-line and mobile operations, but including revenues generated by subsidiaries (including service commitment contracts) which are eliminated from consolidated revenues. Further details about the consolidation methods used to account for the Onatel sub-group, together with its contribution to Maroc Telecom s consolidated financial results, are provided in the Notes to the Consolidated Financial Statements. Comparable basis revenues were calculated based on constant exchange rates. Mobile services The Mobile customer base rose by 26% to 533,000 clients at end-june 2009, driven both by promotional offers and extensions to network coverage. By end-june 2009, Telmob had approximately million Mobile customers, up 74% year on year. This performance reflected the impact of investment in Mobile infrastructure aimed at extending coverage and network capacity (with the doubling of the number of BTS in one year). Efforts to boost traffic centered on a range of promotional initiatives along with reductions in network access fees and call rates. Telmob operates in a liberalized market alongside the companies Celtel Burkina and Telecel Faso. According to Maroc Telecom estimates, the mobile penetration rate in Burkina Faso is 19% and the market share of Telmob is 37%. Gross revenues generated by Mobile services in first-half 2009 increased by 32.5% to MAD558 million (up 35.3% at constant exchange rates). ARPU amounted to MAD78 in first-half 2009, down 23% at constant exchange rates on the same period on 2008, as a consequence of the significant growth in the customer base. Earnings from operations generated by Mobile services came to MAD206 million, up 76.3% on the same period on Mobile services operating margin improved by 8.6 points to 37% Téléphonie Fixe, Data et Internet At end-june 2009, the fixed line customer base stood at 151,000 lines, up 16%, and the Internet customer base rose to around 21,000, up 40% versus end of June First half report- Maroc Telecom

25 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Description of subsidiaries activities Onatel lost its monopoly in the fixed-line segment (national fixed-line telephone, telex and telegraph) as from December 31, However, at end-june 2009, it remained the only fixed-line operator in Burkina Faso. In the Internet market other ISPs operate alongside Onatel. Fixed-line and Internet services generated gross revenues of MAD399 million in the first half, up 6.4% (up 8.7% at constant exchange rates) and had MAD53 million loss from operations. Gabon Telecom Net revenues generated by Gabon Télécom amounted to MAD593 million in first-half 2009, representing an increase of 12.2% (up 14.5% at constant exchange rates). Earnings from operations amounted to MAD53 million, an increase of almost 170% on the same period in This performance was bolstered by a significant improvement in profitability in the Fixed-line segment on the back of the restructuring plan completed in the latter part of The following table summarizes Gabon Télécom s principal operating and financial data: In thousands June 30, 2008 Dec 31, 2008 June 30, 2009 Mobile customer base Mobile ARPU Number of fixed lines Internet customers H H % change (constant exchange rates) In million of dirhams IFRS Net revenues* Mobile gross Fixed line gross Earnings from operations before amortization Mobile Fixed line (31) Earnings from operations (78) Mobile Fixed line (106) Further details about the consolidation methods used to account for the Gabon Télécom sub-group, together with its contribution to Maroc Telecom s consolidated financial results, are provided in the Notes to the Consolidated Financial Statements. Comparable basis revenues were calculated based on constant exchange rates First half report - Maroc Telecom 25

26 4 Mobile services The number of Mobile subscribers rose by 26% to more than 533,000 customers in first-half 2009, fuelled by the combined effect of promotional initiatives and extensions to coverage. The market is shared by three operators: Libertis, Celtel-Gabon and Moov. According to Maroc Telecom estimates, the mobile penetration rate stands at 93% and Libertis s market share stands at 32%. During the period under review, a fourth mobile license was awarded to BINTEL, a Bahrain-based company which operates mobile telecommunications networks in the Central African Republic and Somaliland, and which plans to launch mobile service in Gabon in the third quarter of Gross revenues generated by Mobile services in first-half 2009 increased by 5.8% to MAD326 million (up 7.9% at constant exchange rates). As a consequence of the rapid growth in the mobile customer base, ARPU amounted to MAD103 in first-half 2009, down 9% at constant exchange rates on the same period in Earnings from operations generated by Mobile services amounted to MAD28 million. Fixed line, Data and Internet The Fixed-line installed base of Gabon Télécom stood at close to 36,000 lines at end-june 2009, up 17% year on year, while the number of Internet subscribers jumped by 62% to more than 19,000 subscribers. Although Gabon Telecom lost its fixed-line and Internet monopoly as from June 2001, it will remain the sole fixed-line operator in Gabon until The Fixed-line and Internet segment in Gabon generated gross revenues of MAD315 million in first-half 2009, up 14.4% (up 16.8% at constant exchange rates) and posted MAD25 million in earnings from operations versus a MAD106 million loss for the same period in Mobisud The Mobisud MVNO had aggregate revenues of MAD83 million in first-half 2009 and reported a MAD14 million loss from operations versus a MAD178 million loss in first-half On May 31, 2009, in joint agreement with the other shareholders, Maroc Telecom sold 66% of the share capital of Mobisud France to SFR. Mobisud France was withdrawn from Maroc Telecom s consolidation scope as from June 1, 2009 Mobisud Belgium had a customer base of 100,000 customers at end-june First half report- Maroc Telecom

27 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Regulatory environment 4.2 REGULATORY ENVIRONMENT Regulatory environment in Morocco License In connection with the invitation to tender launched on October 2008, on February 4, 2009, ANRT awarded to Wana a third generation license for the establishment and operation of public network using second generation mobile technologies. In MAD(excluding tax)/ minute Maroc Telecom Méditel Wana 2008 Mobile termination charge Mobile termination charge Interconnection charges Pursuant to ANRT decision no. 05/07 of April 24, 2007, ANRT exercises multiyear supervision over interconnection charges for the mobile networks of Maroc Telecom and Medi Telecom Mobile. The termination charge for the mobile networks of Maroc Telecom and Medi Telecom stood at MAD at peak time (50% discount for off-peak calls) in 2008 and stood at MAD (peak time) in As a new market entrant, Wana benefits from termination rate asymmetry for mobile services, the ANRT set the interconnection charges for Wana s mobile network as follows: MAD (peak time) in 2008 and MAD (peak time) in On April 14, 2009, the ANRT approved Maroc Telecom s technical and interconnection rates for its fixedline and mobile networks for 2009, together with the terms of Maroc Telecom s unbundling offering for The table below sets out the operators domestic interconnection charges to fixed-line networks as applicable on January 1, 2009 (peak time, with a 50% reduction for off-peak calls): In MAD(excluding tax)/ minute Maroc Telecom Méditel Wana Fixed-line termination charge Intra CAA: Single tariff: Single tariff: Simple Transit: Double Transit: Limited mobility termination charge In addition, the ANRT exercises multiyear supervision over interconnection charges for Maroc Telecom s fixed-line network and has set a requirement to achieve a 15% reduction in termination charges between 2007 and Unbundling charges for 2009 have been set at MAD35/line for partial unbundling and MAD80/line for total unbundling. Maroc Telecom s technical and pricing terms for interconnection by capacity, since 2008, was updated on April, The followings tariffs were introduced as from January 1, 2009: intra-caa: MAD24,571 per MIC per month Simple Transit: MAD 68,710 per MIC per month Double Transit: MAD 100,656 per MIC per month 2009 First half report - Maroc Telecom 27

28 Universel service For , the ANRT launched a request for proposals to Morocco s telecoms operators relating to a vast universal service program (entitled "Pacte") which aims to provide telephone services and Internet access to all white zones in Morocco (9,263 rural areas). The proposal made by Maroc Telecom covered all of the concerned areas. The Universal Service Management committee selected Maroc Telecom for 7,338 localities, representing an overall investment of MAD1.159 billion, to be deducted from its universal service contribution for In May 2009, Maroc Telecom concluded with the ANRT an agreement related to universal service program to be carried out in 2009, for 2,530 localities, for an amount of MAD334.6 million, to deduct from its universal service contribution for Regulatory environment of subsidiaries In Gabon, a fourth mobile license was awarded to BINTEL, a Bahrain-based company which operates mobile telecommunications networks in the Central African Republic and Somaliland, and which plans to launch mobile service in Gabon in In Burkina Faso, the government of Burkina Faso introduced a new telecommunications law aimed at bringing national legislation into compliance with the directives of UEMOA (Union Economique et Monétaire Ouest Africaine) and supplementary acts of CEDEAO (Communauté Economique des Etats de l Afrique de l Ouest). 4.3 HUMAN RESOURCES The table below shows the changes in Maroc Telecom s overall workforce and the workforce of its subsidiaries: Dec 31, 2007 Dec 31, 2008 June 30, 2009 Morocco 10,949 11,093 11,091 Mauritania Burkina Faso 1,301 1,335 1,304 Gabon Group First half report- Maroc Telecom

29 4. INFORMATION CONCERNING THE COMPANY S BUSINESS OPERATIONS Real property 4.4 REAL PROPERTY Maroc Telecom is currently in the process of obtaining formal legal title to sites which historically were owned by the Kingdom of Morocco and were legally transferred to Maroc Telecom at the time of its incorporation in As at July 15, 2008, the sites owned by Maroc Telecom broke down as follows: 56.5% of the sites are legally owned by Maroc Telecom, which has legal title to them; 33% 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; 10.5% of sites are in the process of being formally registered. 4.4 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 six months, a significant effect on the Company and on the Group s financial position or profits, other than mentioned in the section 4.13 of the 2008 Registration Document. The petitions enumerated in section 4.13 of the Registration Document are supplemented as follows: Petition by Maroc Telecom concerning the technical offering and pricing conditions for access to Wana s network infrastructure in the Casanearshore business park: the wholesale market for voice access has been determined by ANRT in accordance with the interests of each party. Petition by Maroc Telecom concerning the transit of international traffic to Maroc Telecom subscribers via domestic interconnection arrangements between Maroc Telecom and Wana: the audit findings evaluated the volume of traffic that had been diverted in 2008 and determined that no further fraudulent activity had occurred in Maroc Telecom introduce new petitions to the ANRT on April 2009 in order to challenge the exclusivity rights granted to Wana for the Casanearshore and Technopark business parks in Casablanca and for the Technopolis business park in Rabat First half report - Maroc Telecom 29

30 First half report- Maroc Telecom FINANCIAL REPORT

31 5. FINANCIAL REPORT Consolidated financial data 5.1 CONSOLIDATED FINANCIAL DATA The selected Maroc Telecom s consolidated financial data is summarized in the below table. This data has been derived from the Group s consolidated financial statements which were prepared in accordance with International Financial Reporting Standards (IFRS) and were the object of a limited review by the statutory auditors Abdelaziz Almechatt and KPMG Maroc, represented by Fouad Lahgazi Consolidated financial data in Moroccan dirhams Income statement for the first halves of 2008 and 2009 (en millions MAD) Consolidated revenues 14,308 14,586 Operating expenses 7,642 8,034 Earnings from operations 6,666 6,552 Earnings from continuing operations 6,657 6,579 Earnings 4,489 4,801 Attributable to Equity shareholders 4,526 4,646 Total earnings for the period 4,459 4,755 Attributable to Equity shareholders 4,513 4,627 Earning per share (in MAD) Balance sheet ACTIF (en millions MAD) 31/12/ /06/2009 Non-current assets 25,034 24,575 Current assets 13,449 12,283 TOTAL ASSETS 38,483 36,858 PASSIF (en millions MAD) Share capital 5,275 5,275 Equity attributable to equity holders of the parents 18,709 13,825 Minority interests 1,647 1,867 Total equity 20,356 15,691 Non-current liabilities 1, Current liabilities 16,809 20,292 TOTAL LIABILITIES AND EQUITY 38,483 36, First half report - Maroc Telecom 31