2008 First half financial report

Transcription

1 2008 First half financial report Preliminary remarks: This selection report and the unaudited condensed financial statements for the half year ended June 30, 2008 were approved by the Management Board on July 23, On July 29, 2008, they were reviewed by the Supervisory Board, after their review by the Audit Committee on July 28, This report should be read in conjunction with the Management Board s report for the year ended December 31, 2007 as published in Registration Document filed with the Securities Regulator (AMF) on April 28, 2008 ( the 2007 Registration Document ).

2 TABLE OF CONTENTS

3 1 HIGHLIGHTS & KEY FIGURES 4 2 CERTIFICATIONS PERSON RESPONSIBLE FOR THE FIRST HALF REPORT CERTIFICATION OF THE FIRST HALF REPORT 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 COMPANY BUSI- NESS ACTIVITIES DESCRIPTION OF ACTIVITIES REGULATORY ENVIRONMENT HUMAN RESOURCES REAL PROPERTY LEGAL AND ARBITRATION PROCEEDINGS 27 5 FINANCIAL REPORT CONSOLIDATED FINANCIAL DATA INCOME STATEMENT CONSOLIDATED FINANCIAL STATEMENTS 36 6 CORPORATE GOVERNANCE MANAGEMENT AND SUPERVISORY BOARD CORPORATE GOVERNANCE RELATED PARTY TRANSACTIONS 52 7 RECENT DEVELOPMENT AND MARKET OUTLOOK RECENT DEVELOPMENT MARKET OUTLOOK 55

4 HIGHLIGHTS & KEY FIGURES First half report - Maroc Telecom

5 1. HIGHLIGHTS & KEY FIGURES 1. HIGHLIGHTS & KEY FIGURES January Maroc Telecom launched video-telephony in the main cities of the Kingdom for both postpaid and prepaid customers and Optimis, a new tariff plan for business customers. The monthly telephone subscription for residential customers and telestores was reviewed. The management committee of Universal Service of the ANRT approved the Pacte program for an amount of MAD1.2 billion, and gives to Maroc Telecom the coverage of almost 80% of the 9,263 concerned localities. Completion of the merger between Mauritel SA and Mauritel Mobiles and significant price cuts have been made on Mobile tariffs. February Launch of unlimited numbers for international calls and Phony International, a new unlimited rate plan for calls to international Fixed-line numbers and price reductions for calls from Fixed-line to other international Fixed-line and Mobile numbers. Mauritel launched the service AMI Mobile (news by SMS) and reduced price for ADSL clients. A tariff rebalancing has been made by Onatel, with price cuts going up to 78% for international calls, and reinforcement of its distribution network by the opening of 75 kiosks, particularly in rural area. March Maroc Telecom launched two new unlimited Mobile broadband Internet offers Internet Mobile 1.8 and Internet Mobile 512, and adds new contents (Disney) to Mobile Zone portal. For prepaid customers, launch of the Call return service. Mauritel cut its prices for CDMA Internet access, CDMA subscriptions tariffs and raised its Mobile subscription tariffs. Onatel put in operation its new IN (Mobile and Fixed-line) and launched new low value Fixed prepaid cards (Phone Cash) for low income customers. April As part of the universal service, Maroc Telecom launched «Internet CDMA 1MB/s», a new unlimited bandwidth Internet, for rural areas covered by the CDMA network. A new Ministerial decree set up new rules for telecommunication services promotion in Morocco and Maroc Telecom will have to notify ANRT of promotional offers that it intends to set up. The ANRT approved the technical and pricing offers for the interconnection by capacity to Maroc Telecom Fixed-line network, and set Wana Mobile termination tariffs for 2008 and 2009, which is different from that of Maroc Telecom and Meditel. Signature of a convention between Maroc Telecom and ANRT related to Pacte program for 2008: Maroc Telecom have to equip 1,500 localities for an estimated amount of MAD762 million. Mauritel rebalanced its tariffs Mobile on-net calls First half report - Maroc Telecom 5

6 1 May Maroc Telecom decreased its international postpaid mobiles prices (Area 1), as well as Internet leased lines tariffs. Signature of an agreement between Mohammed VI foundation (constitute by teachers), and various partners of which Maroc Telecom, allowing its members to have access to Internet with subsidized tariffs Gabon Telecom launched a social plan relating to 752 persons, in agreement with the Gabonese government and signature with a local bank (BGFI) of a mandate to arrange a financing of FCFA47 billion. Onatel launched the Internet via CDMA (postpaid and prepaid) and the fixed-line and mobile electronic recharging, and extend its distribution network with the signature of a convention with Sonapost, allowing the distribution of fixed-line and mobile products in nearly 70 sales outlets. June The Mobile Zone portal added new Vivendi Games contents. Onatel launched unlimited Mobile offers, with a free of charge communication, preferential tariffs in intra, and new offer for young people (preferential tariffs and SMS rate plan at off-peak time). In order to finance its development, Onatel takes a 7.5 million loan from SFI. Gabon Telecom rebalanced its subscription and communication tariffs. July Maroc Telecom launched new unlimited options for business customers: Mobile Business Control and Mobile Business Class rate plan. Maroc Telecom launched summer operations with promotions on the Fixed-line packs tariffs, TV/ADSL, Internet ADSL, as well as ADSL clients, and set a new tariff for the «Canal+ Essentiel» option First half report - Maroc Telecom

7 1. HIGHLIGHTS & KEY FIGURES June 30, 2007 December 31, 2007 June 30, 2008 Change yoy in thousands Number of Mobile customer 13,171 15,342 16,561 26% Maroc Telecom 11,713 13,327 14,211 21% Mauritel ,015 32% Onatel % Gabon Telecom % Mobisud ns Number of Fixed-line 1,490 1,518 1,536 3% Maroc Telecom* 1,325 1,336 1,329 0% Mauritel % Onatel % Gabon Telecom % Number of Internet customer % Maroc Telecom** % Mauritel % Onatel % Gabon Telecom % * equivalent base for whatever type of access ** including Internet 3G+ In IFRS (in millions of Moroccan dirhams) H H Change Published Comparable basis Consolidated revenues 13,007 14, % 8.2% Mobile (gross) 8,889 10, % 13.0% Fixed-line and Internet (gross) 5,532 5, % (2.0%) Consolidated earnings from operations before amortization 7,548 8, % 12.7% Mobile 5,399 6, % 13.9% Fixed-line and Internet 2,149 2, % 9.9% Consolidated earnings from operations 5,999 6, % 12.4% Mobile 4,588 5, % 12.2% Fixed-line and Internet 1,411 1, % 13.1% Earnings (group share) 3,850 4, % Capital expenditure 2,143 1,964 (8.4%) Mobile 1,184 1,028 (13.2%) Fixed-line and Internet (5.9%) 2008 First half report - Maroc Telecom 7

8 First half report - Maroc Telecom CERTIFICATIONS

9 2. CERTIFICATIONS In this Report, "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. 2.1 PERSON RESPONSIBLE FOR THE FIRST HALF REPORT Mr. Abdeslam Ahizoune. Chairman of the Management Board 2.2 CERTIFICATION OF THE FIRST HALF REPORT I attest, to my knowledge, that the condensed accounts for the past half year 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 joined half year management report gives a faithful presentation of the evolution of the businesses during the first half of 2008, and their incidence on the accounts, the main related party transactions as well as a description of the principal risks and uncertainties for the remaining 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, 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, renewed in 2005, the current mandate, of a three year term, was renewed by the shareholders meeting held April 17, 2008 and 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 2008 first half From January 1, to June 30, 2008 As Statutory Auditors of the company, and pursuant to the assignment which was trusted to us by the Supervisory Board we proceeded to: Limited examination of the accompanying summarized half year consolidated financial statements of Maroc Telecom, for the period from January 1, to June 30, Checking the information given in the half year report. The summarized consolidated financial statements have been approved by the Management Board. It is our responsibility, based on our audit, to express an opinion on these financial statements. We conducted our limited examination in accordance with international auditing standards. A limited examination primarily consists in discussing with the members of direction in charge of the countable and financial aspects, and implementing analytical procedures. This work less extended than those necessary for an audit prepared according the international auditing standards. Consequently, the insurance that the all accounts, do not comprise any significant anomalies, obtained within the framework of a limited examination is a moderated insurance, less high than that obtained within the framework of audit. On the basis of our limited examination, we didn t found any significant anomalies which could prejudice the conformity, in all their significant aspects, of the summarized consolidated accounts with IAS 34 - standard of IFRS referential such as adopted by the European Union relating to the intermediate financial information. Without prejudice to the opinion above, we draw your attention to the estimated character of segment data (expressed in the joined note and which refers to notes to consolidated financial statements as closed at December 31, 2007, and such exposed in Notes 1 ( 2.5) and 28 from the note relating to 2007 consolidated financial statements. In compliance with the international auditing standards, we also, performed the verifications of information contained in the half year report commenting the summarized half year consolidated financial statements subject of our limited examination. We ensured that it was consistent with the Company s half year summarized financial statements. July 29, 2008 Statutory Auditors KPMG Fouad LAHGAZI Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner First half report - Maroc Telecom

11 2. CERTIFICATIONS Information policy 2.4 INFORMATION POLICY Person responsible for information Mr. Arnaud Castille Chief Financial Officer Maroc Telecom Avenue Annakhil - Hay Riad Rabat, Maroc Telephone : (0) [email protected] 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: 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 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 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 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 1,258, % Public 147,853, % Maroc Telecom** 178, % Total 879,095, % *: Through its 100% subsidiary (Société de Participation dans les Télécommunications) **: Share detained directly or indirectly by the company 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, During the first half of 2008, 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%. 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 to 17% of the share capital. In addition, CDG group acquired 0.6% of Vivendi s share capital The share buyback program The share buyback program with a view to stabilizing the share price, into force currently was approved by the General meeting of May 28, 2008, after the Company obtained the visa of the CDVM on May 9, 2008 under reference VI/EM/017/2008 for the Note of relative information to that program. The main features of this program are as follows: Duration: until November 29, 2009 Price range for share purchase or sale: MAD [ ]; Maximum share capital to be held: 1.82% (equivalent to 16 million shares) From October 16, 2007, for a period of one year, tacitly renewable, Maroc Telecom has contracted with 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 First half report - Maroc Telecom 13

14 3 Appraisal of the share buyback program at June 30, 2008: Casablanca Paris Total Number of shares acquired 58, , ,798 Number of shares sold 1,467 78,181 79,967 Shares held at June 30, , , , 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** (in MAD) number of shares (in thousands) trade value (in millions MAD) January , ,061.5 February , ,301.1 March , ,022.3 April , ,556.7 May , ,012.0 June , * The average price is calculated by dividing trade value by number of shares ** Not including block market transactions Changes in Maroc Telecom s share price on the Casablanca stock exchange since December 2004 In May 2008, 89% of free float was traded on the Casablanca Stock Exchange. IAM-Casablanca (dirham) VS MASI MASI IAM déc/04 mars/05 juin/05 sept/05 déc/05 mars/06 juin/06 sept/06 déc/06 mars/07 juin/07 sept/07 déc/07 mars/08 juin/ 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 SRD 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 trade value by number of shares ** Not including off-system transactions Source : Euronext Paris Changes in Maroc Telecom s share price on Euronext Paris since December 2004 In May 2008, 11% of free float was traded on Euronext Paris. 18,0 17,0 16,0 15,0 14,0 13,0 12,0 11,0 10,0 9,0 8,0 IAM-Paris (euro) VS Euronext 100 IAM Euronext 100 7,0 déc/04 mars/05 juin/05 sept/05 déc/05 mars/06 juin/06 sept/06 déc/06 mars/07 juin/07 sept/07 déc/ First half report - Maroc Telecom 15

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

17 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of activities 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES 4.1 Description of activities Activities in Morocco The information provided in this paraghraph, only concerns the business in Morocco. In the first half of 2008, Maroc Telecom consolidated its positions and net revenues of all business activities in Morocco amounted to MAD12,511 million, up 9.8%. For the same period, earnings from operations amounted to MAD6,649 million, up 15,5%, allowing to enhance the operating margin to 52.8%, up 2.3 points compared to the first half of Mobile The table below shows the breakdown of Maroc Telecom Mobile revenues for the first halves of the past two years: in millions of Moroccan dirhams in IFRS As of June Gross revenues 7,900 8,923 Revenues from sale of services 7,520 8,360 Revenues from sale of handsets Earnings from operations before amortization 4,999 5,776 Earnings from operations 4,341 4,982 During the first half of 2008, Mobile gross revenues in Morocco increased by 12.9% to MAD8,923 million, with the combined effect of the customer base significant growth and the limited decrease of ARPU, in spite of a highly competitive context. The first half of 2008 was marked by the launch by Maroc Telecom of 3G+ Voice and Internet offers. Despite of the competing pressures, the Mobile activity EFO amounted to MAD4,982 million, up 14.8% compared to 2007 first half, thanks to the activity growth and the control of costs, enabling to improve the operating margin by 0.9 points to 55.8% First half report - Maroc Telecom 17

18 4 The following table shows the main data relating to prepaid and postpaid services H H Number of Mobile customers * (in thousands) 11,713 13,327 14,211 Prepaid 11,250 12,822 13,658 Postpaid** Churn rate («churn») (%) Prepaid 24.2% 25.7% 28.0% Postpaid ** 16.0% 17.9% 17.2% Average churn rate 23.9% 25.4% 27.6% ARPU (in MAD/customer /month) Prepaid Postpaid** Blended ARPU Incoming usage (minutes/customer/month) Prepaid Postpaid** Average incoming usage Average outgoing usage (minutes/customer/month) Prepaid Postpaid** Average outgoing usage *: Postpaid subscribers and prepaid cards **: Including 'no commitment rate plans The customer base maintained a steady growth and reached 14.2 million at the end of June 2008, up 21.3% compared to end of June 2007, which corresponds to a net increase of nearly 0.9 million since the beginning of the year. Due to the strong increase of the customer base and the low level of access fees, the churn rate reached 27.6%, up 3.7 points compared to the first half of In improvement compared to the previous quarter, the first half blended ARPU amounted to MAD98.6, down by 8.2% compared to the first half of 2007, due mainly to the customer base strong increase. The average outgoing usage was maintained at the same level as 2007 with the similar level of promotional offers. Consequently, the average price by minute is slightly down by 1.6% at approximately MAD1.3 excluding tax. Among the main events of the first half of 2008, the lauch of the 3G+ service based on HSDPA (High Speed Downlink Packet Access) technology, which the capacity may culminate to 3,6Mbit/sec, allowing Maroc Telecom postpaid and prepaid customers to access to the Video-telephony and the broadband Internet. In addition, and following the signature of convention with the ANRT (Pacte), Maroc Telecom startes the deployment of its mobile network in the white areas, and continues to reinforce the coverage and the network capacity in the other areas First half report - Maroc Telecom

19 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of activities Mobile competition As of March 31, 2008, the number of mobile customers (all operators) rise to MAD million, corresponding to a penetration rate of 66.85% (Source: ANRT), 96% of which is prepaid customers. At the end of the first quarter 2008, Maroc Telecom maintained its leadership in the Moroccan Mobile market, with a market share of 66.4%. Over the same period, the market share of prepaid and postpaid reached respectively 66.6% and 63.4% (Source: ANRT/Maroc Telecom calculation). The remaining of the market is held by Meditel, but it should be noted that since the beginning of June 2008, Wana launched its 3G Mobile. Maroc Telecom market share Fixed-line and Internet June 30, 2007 December 31, 2007 March 31, 2008 Total Mobile market 66.4% 66.5% 66.4% * (Source ANRT) Prepaid 66.6% 66.7% 66.6% Postpaid 61.7% 63.1% 63.4% The table below shows the breakdown of Maroc Telecom Fixed-line and Internet revenues for the specified periods. in millions of Moroccan dirhams - in IFRS as of June Gross revenues 4,727 4,750 Voice* 3,143 3,040 Interconnection Data Internet** Earnings from operations before amortization 1,984 2,284 Earnings from operations 1,417 1,667 * including commitment service contract, except intercompanies ** including revenues generated by TV/ADSL Fixed-line and Internet activities in Morocco achieved in the first half of 2008 gross revenues of- MAD4,750 million, slightly up by 0.5%. Despite the decrease by 3.9% of the average monthly invoice, mainly impacted by the competition on the phone shop segment, the Fixed-line revenues are stable due to the data and Internet performances of which revenues are in net increase. Fixed-line and Internet EFO amounted to MAD1,667 million, up 17.6% compared to This performance is explained by the decrease of interconnection charges of national outgoing traffic, due to the combined effect of tariff and consumption decrease First half report - Maroc Telecom 19

20 4 Telecommunication services The table below describes the development of the number of fixed lines by segment: Numbers of lines in thousands * June 30, 2007 December 31, 2007 June 30, 2008 Residential Public telephony** Corporate Customer base** 1,325 1,336 1,329 *: as from January 1, 2008, the Maroc Telecom Fixed-line customers are communicated by equivalence taking into account the number of lines of each access figures have been adjusted. **: Combines the lines of Maroc Telecom telestores and public booths. The Fixed-line customer base reached million lines, slightly increasing by 0.3% compared to June The moderate fall of the residential customer, of which 2/3 are Phony customer, the unlimited offer, mainly related to the growth of the MAD10 subscription from January 1, 2008, was largely compensated by the growth of 2% and 4% of Public Telephony and Corporate customers. During the first half of 2008, Maroc Telecom endeavoured to consolidate its market shares by launching many promotions for its residential and corporate customers. Fixed-line competition The Fixed-line penetration rate was 8.79% as at March 31, 2008, compared with 6.36% as at June 30, 2007 (source ANRT). This increase is particularly due to the introduction by competitors of prepaid restricted mobility offers. Excluding these offers, the penetration rate is 4.35%. Two fixed-line licenses were awarded in July and September 2005 to Meditel and Wana. These licenses are currently operational. Maroc Telecom market share Competitors June 30, 2007 December 31, 2007 March 31, 2008 Fixed-line Meditel / Wana 100% 99.7% 99.6% Fixed-line, including restricted mobility Meditel / Wana 100% 66.0% 49.3% Fixed-line corporate Meditel 100% 98.7% 98.5% Public telephony Meditel 90.8% 90.3% 91.0% (Source : ANRT) Internet The number of Internet customers reached 487,000 lines, up 9.7% compared to the end of June 2007, the number of ADSL lines totaled 482,000 lines, up 10.1% compared to June 2007, accounting for approximately 43% of the fixed lines (excluding public telephony). Besides this customer base using fixed lines, customers using the broadband Internet via Maroc Telecom 3G Mobile Network and which reached 14,000 subscribers. It should be noted that Maroc Telecom takes part in the offer Nafid@ launched mid-may 2008 enabling teachers to acquire computer material and to subscribe to Internet with tariffs subsidized jointly by the ANRT, the Mohammed VI Foundation and operators, including Maroc Telecom First half report - Maroc Telecom

21 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of subsidiaries activities Number of active customers - in thousands Internet competition Competitors on the market for Internet access services are Meditel and Wana, present on the wireless Internet segment, with a total market share of 16.3% as of March 31, 2008 (Source: ANRT). Maroc Telecom has a very strong position on the ADSL market, which accounts 96% of total access, with a market share of almost 99% (Source: ANRT). Maroc Telecom market share June 30, 2007 June 30, 2007 December 31, 2007 December 31, 2007 June 30, 2008 Narrowband ADSL G Data Total March 31, 2008 Internet 97.8% 93.1% 83.7% ADSL 98.3% 98.5% 98.8% (Source : ANRT) Subsidiaries business Mauritel Mobile As of June 30, 2008, the mobile customer base of Mauritel reached million, up 32.3% compared to the end of June 30, Mauritel 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. As of December 31, 2007, according to the available data (ITU and Mauritel), the market share of Mauritel is 70%. Fixed-line, Data and Internet As of June 30, 2008, Mauritel s total number of fixed-lines amounted to almost 46,000, up 27.8% compared to the end of June 2007, thanks to the success of CDMA offers. The Internet customer base reached almost 7,000 accesses at June 30, 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 2 operators: Mauritel and Chinguitel (since August 2007). The Internet market share for Mauritel is 90% (source: Mauritel estimates). The following table summarizes Mauritel Group s main operating and financial data: in thousands June 30, 2007 December 31, 2007 June 30, 2008 Mobile customers ,015 Number of Fixed-line Internet customers First half report - Maroc Telecom 21

22 4 H H Change at constant exchange In millions of Moroccan dirhams in IFRS rate Net revenues* (0.9%) Mobile (gross) % Fixed-line (gross) (9.4%) Earnings from operations before amortization % Mobile (0.5%) Fixed-line % Earnings from operations (4.5%) Mobile (7.9%) Fixed-line % * 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. Mauritanian activities generated overall net revenues of MAD519 million in the first half of 2008, down 3.7% with the negative effect of exchange rate. On a comparable basis, revenues decrease by 0.9%, due to the competition intensification with the entry of a third operator that induces strong pressures on tariffs and additional efforts on promotions. The Mauritel Mobile business gross revenues amounted to MAD417 million for the first half of 2008, up 2.1% on a comparable basis. The Mauritel Fixed-line and Internet business gross revenues amounted to MAD145 million, down 9.4% on a comparable basis. For the first half of 2008, the EFO of Mauritel group amounted to MAD201 million, down 4.5% at a constant exchange rate. This evolution is the result of the combined effect of a weak Mobile revenues growth, despite a good control of operating and sales costs, and the growth of amortization with the speedup of capital expenditure. The consolidation method of the Mauritel sub-group, and its contribution to Maroc Telecom s results are summarized in Notes to the consolidated financial statements. The comparable basis illustrates at Mauritel the maintain of a constant exchange rate. Onatel Mobile At end of June, 2008, Telmob's customer base reached more than 756,000 clients, up 95% compared to the end of June, 2007, due mainly to the coverage enlargement. Telmob operates in a liberalized market alongside the companies Celtel Burkina and Telecel Faso. According to the available data (ITU, Zain and Telmob), the market share of Telmob as of December 31, 2007, is 35%. Fixed-line, Data and Internet As of June 30, 2008, the number of fixed-lines amounted to 130,000, up 21.5% and the number of Internet customers reached almost 15,000 compared with 8,000 as of June 30, Even though Onatel lost its fixed-line monopoly (national fixed-line telephone, telex and telegraph) as of December 31, 2005, it was still the only fixed-line operator in Burkina Faso at the end of June However, on the Internet market, other ISPs operate alongside Onatel First half report - Maroc Telecom

23 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of subsidiaries activities The following table summarizes Onatel group s main operating and financial data: in thousands June 30, 2007 December 31, 2007 June 30, 2008 Mobile customers (active) Number of Fixed-line Internet customer H H Change at constant rate exchange in millions of Moroccan dirhams in local standards Net revenues* % Mobile (gross) % Fixed-line (gross) (10.6%) Earnings from operations before amortization (8.2%) Mobile % Fixed-line (57.5%) Earnings from operations (47.5%) Mobile (7.9%) Fixed-line 23 (39) ns * 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. During the first half of 2008, net revenues of all business in Burkina Faso amounted to MAD715 million, up 6.6% on a comparable basis. Despite the strong increase of the customer base, the revenues growth of Onatel was impacted by the drop in the consumption level, due to the cost of living rise. Onatel Mobile business gross revenues amounted to MAD421 million for the first half of 2008, up 28.4% (+25.4% on a comparable basis). Onatel Fixed-line and Internet business gross revenues amounted to MAD375 million, down 8.5% (- 10.6% on a comparable basis). In the first half of 2008, the EFO of Onatel group amounted to MAD80 million, down 47.5% compared to 2007 first half, due to the increase of costs sales and amortizations of Mobile capital expenditures. The growth of amortization is due to the speedup of the network deployment. The consolidation method of the Onatel sub-group, and its contribution to Maroc Telecom s results are summarized in Notes of the consolidated financial statements. The comparable basis illustrates at Onatel the maintain of a constant exchange rate. Gabon Telecom Mobile The Mobile customer base posted an increase of 61.2% to 424,000 clients at the end of June 2008, driven both by promotional offers and the coverage enlargement. The market is shared by 3 operators: Libertis, Celtel-Gabon and Moov. According to the available data (ITU, Zain and Libertis ), the Libertis market share is 33% as of December 31, Fixed-line, Data and Internet Even though Gabon Telecom, lost its monopoly of certain services such as Internet since June 2001, it was still the only fixed-line operator in Gabon until The telephones lines of Gabon Telecom reached approximately 31,000 lines at the end of June 2008, up 40.9% compared to the end of June First half report - Maroc Telecom 23

24 4 The following table summarizes Gabon Telecom group s main operating and financial data: in thousands June 30, 2007 December 31, 2007 June 30, 2008 Mobile customers Number of Fixed-line Internet customers H H Change on comparable in millions of Moroccan dirhams in local standards basis Revenues (18.5%) Mobile (gross) (6.7%) Fixed-line (gross) (22.9%) Earnings from operations before amortization % Mobile % Fixed-line 13 (31) (57.5%) Earnings from operations (26) (78) (11.9%) Mobile 8 28 ns Fixed-line (35) (106) (21.0%) During the first half of 2008, net revenues of all business activities in Gabon amounted to MAD529 million, down 18.5% on a comparable basis mainly due to substantial price cuts carried out since June Mobile business gross revenues in Gabon amounted to MAD308 million for the first half of 2008, up 38.1% (-6.7% on a comparable basis). Gabon Telecom Fixed-line and Internet business gross revenues amounted to MAD275 million during the same period, down 22.9% on a comparable basis. In the first half of 2008, the EFO of Gabon Telecom group amounted to MAD(78) million, compared with a loss of MAD(86) million in the first half of 2007 on a comparable basis, i.e. a slight increase. This result is incorporating a provision of MAD7 million, further to the decision of the Gabonese Government to institute a new tax of 10% on Mobile operators revenues. The consolidation method of the Gabon Telecom sub-group, and its contribution to Maroc Telecom s results are summarized in Notes to the consolidated financial statements. The comparable basis illustrates the effects of the consolidation of Gabon Telecom like as it had actually occurred with the beginning of the year 2007 and the maintain of a constant exchange rate. Mobisud (France and Belgium) Mobisud MVNOs achieved at the end of June 2008 total revenues of MAD91 million, for a customer base of 155,000 customers. The active customer base cleaning process made by Mobisud during the second quarter of 2008 mostly explains the customer base decrease compared to March The total EFO of Mobisud amounted to MAD(187) million, and takes into account restructuring costs in France, where the staff has been strongly reduced First half report - Maroc Telecom

25 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Description of subsidiaries activities 4.2 REGULATORY ENVIRONMENT Regulatory environment in Morocco Interconnection charges 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 n o 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 time), and MAD at peak time in In addition, the ANRT determined the interconnection charges to Wana mobile network as follows: MAD at peak time in 2008 and MAD at peak time in 2009; Wana benefits thus, as a new entrant, of an asymmetry charges situation on the mobile termination market. in MAD (excluding tax/ minute) Maroc Telecom Meditel Wana 2008 Mobile termination Mobile termination On January 3, 2008, the ANRT approved Maroc Telecom s technical and pricing terms for interconnection to fixed-line and mobile networks for 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 at off-peak time): in MAD (excluding tax/ minute) Maroc Telecom Meditel Wana Fixed termination Intra CAA : Single tariff : Single tariff : Simple Transit : 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 In April 2008, the ANRT approved Maroc Telecom s technical and pricing terms for interconnection by capacity: only fixed to fixed traffic (including restricted mobility) is eligible to this kind of interconnection. The tariffs are as follows: Intra-CAA : 24,891 MAD/MIC/month Simple Transit : 71,844 MAD/MIC/month Double Transit : 105,212 MAD/MIC/month 2008 First half report - Maroc Telecom 25

26 4 Universel service For , the ANRT launched a consultation for all national operators for a vast universal service program entitled "Pacte", aiming to provide telephone services and Internet access to all white zones in Morocco (9,263 localities). The program proposed by Maroc Telecom covered all localities. The Universal Service Management committee selected Maroc Telecom for 7,338 localities, for a total amount of MAD1.159 billion, to be deducted from its universal service contribution for In April 2008, Maroc Telecom concluded with the ANRT an agreement related to universal service program to be carried out in 2008, for 1,500 localities, for an amount of MAD396 million, to deduct from its universal service contribution for Regulatory environment of subsidiaries In Gabon, the 2008 Finance law introduced an obligatory royalty to the health insurance, applicable to the mobile operators, which the amount is fixed at 10% of net revenues excluding of tax. This royalty was recorded in the accounts closed at the end of June In Burkina Faso, the Government of Burkina Faso currently holds a consultation for the transposition of the statutory texts in order to conform with the directives of the UEMOA (Union Economique et Monétaire Ouest Africaine) and the additional acts of CEDEAO (Communauté Economique des Etats de l Afrique de l Ouest) First half report - Maroc Telecom

27 4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES Human Resources 4.3 HUMAN RESOURCES The table below shows the changes in the number of employees to date at Maroc Telecom Employees June 30, 2007 December 31, 2007 June 30, 2008 Maroc 11,058 10,949 10,983 Subsidiaries 3,123 3,103 3,086 Total 14,181 14,052 14, 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: 52% of the sites are legally owned by Maroc Telecom, which has legal title to them; 35% 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; 13% of sites are in the process of being formally registered. 4.5 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 6 months, a significant effect on the Company and on the group s financial position, profits, other than mentionned in the section 4.13 of the 2007 Registration Document. In addition, the proceeding mentioned in the section 7.1 of Registration Document completed as follows: A formal notice of ANRT relating to the identification of mobile customers Under the terms of article 10.3 of its contract specifications, Maroc Telecom must identify its customers, subscribers or holders of prepaid cards; the ANRT carried out, during 2007, one operational audit of the mobile management system of Maroc Telecom subscribers relating in particular to the identification of the mobile customers. The audit report, communicate to Maroc Telecom on January 3, 2008, raises that the identification of the postpaid customers is under the total control of the Maroc Telecom commercial agencies, but the prepaid customers have failures, considering 98% of the prepaid cards are delivered by the indirect sale network of Maroc Telecom. By letter dated January 9, 2008, the ANRT apply Maroc Telecom to urge an action plan, which is currently on deployment, together with a precise calendar in order to relieve this situation. Maroc Telecom set up a vast campaign of identification of its Jawal customers which the impact should be significant until the end of This campaign consists primarily to improve the process of informationfeedback existing (recovery and keyboarding of the available files), to stop the provisioning of the retailers who do not respect their contractual commitments, in particular that to identify, go up information customers, and to encourage, by SMS sending, the not identified customers coming to identify in agency, against a commercial bonus First half report - Maroc Telecom 27

28 First half report - Maroc Telecom FINANCIAL REPORT

29 5. FINANCIAL REPORT Consolidated financial data 5.1 CONSOLIDATED FINANCIAL DATA The selected Maroc Telecom s consolidated financial data is summarized in the table below. This selected financial data have been breakdown from the Group s consolidated financial statements which were prepared in accordance with International Financial Reporting Standards (IFRS) has been taken from the Group s consolidated financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS), are reviewed by the statutory auditors Abdelaziz Almechatt and KPMG Maroc, represented by Fouad Lahgazi Financial data in Moroccan dirhams Income statement for the first halves of 2007 and 2008 (in millions of Moroccan dirhams) Revenues 14,308 13,007 Operating expenses 7,642 7,008 Earnings from operations 6,666 5,999 Earnings from continuing operations 6,658 5,989 Earnings 4,489 3,928 Attributable to equity holders of the parent 4,526 3,850 Earnings per share (in Moroccan dirham) Balance sheet ASSETS (in millions of Moroccan dirhams) June 30, 2008 December 31, 2007 Non-current assets 23,095 23,242 Current assets 12,007 14,507 TOTAL ASSETS 35,102 37,749 LIABILITIES AND EQUITY (in millions of Moroccan dirhams) Share capital 5,275 5,275 Equity attributable to equity holders of the parents 13,799 17,380 Minority interests 1,075 1,254 Total equity 14,874 18,634 Non-current liabilities 1,433 1,436 Current liabilities 18,795 17,679 TOTAL LIABILITIES AND EQUITY 35,102 37, First half report - Maroc Telecom 29

30 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 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 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, 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 First half report - Maroc Telecom

31 5. Financial report Income statement 5.2 INCOME STATEMENT The table below sets out data regarding Maroc Telecom s consolidated income statement for the first halves ended June 30, 2007 and (in millions of Moroccan dirhams) Revenues 14,308 13,007 Cost of purchases (2,238) (2,089) Payroll costs (1,412) (1,303) Sundry taxes and duties (351) (371) Other operating income and expenses (1,826) (1,514) Net depreciation, amortization and provisions (1,814) (1,731) Earnings from operations 6,666 5,999 Income from ordinary activities 0 2 Depreciation of goodwill (8) 0 Income from equity affiliates (1) (12) Earnings from continuing operations 6,658 5,989 Income from cash and cash equivalents Financial costs (46) (52) Net finance costs Other financial income and expenses (78) (9) Net financial items (50) 3 Income tax expense (2,119) (2,064) Earnings 4,489 3,928 Attributable to equity holders of the parent 4,526 3,850 Minority interests (37) 78 EARNINGS PER SHARE (in MAD) Earnings per share Diluted earnings per share First half report - Maroc Telecom 31

32 5 The analyzes below sets out data regarding Maroc Telecom s consolidated income statement and details of its changes over the specified periods Comparison of the first halves of 2007 and 2008 Revenues The table below shows the breakdown of revenues for the first halves of 2007 and (in millions of Moroccan dirhams) Mobile gross revenues 10,161 8,889 Fixed-line and Internet gross revenues 5,544 5,532 Total consolidated gross revenues 15,705 14,420 Elimination of intra-segment transactions (1,397) (1,413) Total net consolidated revenues 14,308 13,007 During the first half year of 2008, Maroc Telecom group achieved consolidated revenues of MAD14,308 million, up 10.0%, thanks to the continuing growth of Mobile activities both in Morocco and abroad in the subsidiaries, and despite an unfavourable economic context. On a comparable basis, consolidated revenues are up by 8.2%. Mobile revenues grew by 14.3% (+13.0% on a comparable basis) to MAD10.2 billion, drived by the strong growth in the customer base. The Fixed-line revenues are steady at MAD5.5 billion. Operating expenses The table below shows operating expenses for the first halves of 2007 and (in millions of Moroccan dirhams) Revenues 14,308 13,007 Cost of purchases % 2,238 16% 2,089 16% Payroll costs % 1,412 10% 1,303 10% Sundry taxes and duties % 351 2% 371 3% Other operating income and expenses % 1,826 13% 1,514 12% Net depreciation, amortization and provisions % 1,814 13% 1,731 13% Total operating expenses 7,642 7, First half report - Maroc Telecom

33 5. FINANCIAL REPORT Income statement Purchases Between first halves of 2007 and 2008, purchases increased by 7.1% to MAD2,238 million, maintained at the same level compared to revenues and this, whereas in Morocco, costs of handsets are in rise due to the commercialization of handsets (2G and 3G) which unit purchase prices are appreciably higher. Payroll costs Between first halves of 2007 and 2008, payroll costs increased by 8.4%, with the consolidation of Gabon Telecom in the whole of the first half of 2008 compared with 4 months in 2007, and restructuring costs of Mobisud France, which the number of employees has been reduced by 50%. Sundry taxes and duties Between first halves of 2007 and 2008, taxes, duties are down 5.4% to MAD351 million, due mainly to the elimination of the urban tax in Morocco, the reduction of the professional tax rate and the obtaining of Universal service exemptions within the framework of the Pacte program. Other operating income and expenses Between first halves of 2007 and 2008, other operating income and expenses increased by 20.6%, partly linked to the rise of distributors commissions given in Morocco and the impact of the commercial efforts granted by subsidiaries. Net depreciation, impairment and provisions Net depreciation, impairment and provisions include in the first half of 2007 a MAD100 million release related to voluntary redundancies plan achieved at the end of Earnings from operations Thanks to the control of costs, and despite of the competing pressures, Maroc Telecom group achieved a consolidated earnings from operations of MAD6,666 million (+11.1% and +12.4% on a comparable basis). The operating margin is then improved by 1.8 point (on a comparable basis) to 46.6%. Income from equity affiliates Medi-1-Sat has been accounted for using the equity method since 2006 fiscal year with an impact of MAD-1 million at June 30, 2008 compared to MAD-12 million at June 30, Net financial items Between first halves of 2007 and 2008, net financial items decreased from MAD3 million to a loss of MAD50 million. This fall is explained mainly by the constitution of a provision for depreciation of Medi-1-Sat asset and the adjustment of receivable interests not yet due of Gabon Telecom, following the revaluation of its debt at the fair value. Tax expense Although the tax rate in Morocco is 30% since January 1, 2008, the effective tax rate is 32% with the impact of deferred taxes for an amount of MAD166 million First half report - Maroc Telecom 33

34 5 Earnings Earnings rose to MAD4,489 million at the end of June 2008 from MAD3,928 million at the end of June 2007,up 14.3% thanks mainly to Maroc Telecom results. Minority interests Minority interests, reflecting the interests of shareholders other than Maroc Telecom in the earnings of the group s consolidated entities, amounted to MAD-37 million, versus MAD78 million as of June 30, Net income (group share) For 2008 first half, net income group share amounted to MAD4,526 million, up 17.6% compared to the end of June Earnings per share Earnings per share amounted to MAD5.1 in the first half of 2008, versus MAD4.5 in the first half of 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) June 30, 2008 June 30, 2007 Cash flow from operating activities 4,774 5,443 Cash flow used in investing activities (1,964) (2,322) Cash flow used in financing activities (5,640) (2,962) Foreign currency translation adjustments (3) 9 Change in cash and cash equivalents (2,833) 168 Cash and cash equivalents at beginning of period 3,725 2,741 Cash and cash equivalents at end of period 892 2,909 Change in cash and cash equivalents (2,833) 168 Cash flow from operating activities At June 30, 2008, cash flow from operating activities totaled MAD4,774 million compared with MAD5,443 million at the end of June 30, Actually, this decrease masks an improvement of net cash earnings for an amount of MAD931 million offset by a rise of paid tax (MAD892 million) and an increase of working capital requirement (MAD786 million), mainly in Morocco First half report - Maroc Telecom

35 5. FINANCIAL REPORT Income statement Cash flows used in investing activities At June 30, 2008, cash flows used in investing activities amounted to MAD-1,964 million compared with MAD-2,322 million in It should be noted that a disbursement of MAD293 million was recorded in the first half of 2007, linked to the acquisition of 51% stake of Gabon Telecom. A detailed breakdown of capital expenditure by segment is shown below. Cash flows used in financing activities At June 30, 2008, cash flows used in financing activities amounted to MAD-5,640 million, compared with MAD-2,962 million in the first half of This increase is due mainly to the distribution of MAD8,220 million dividend in the first half of 2008, versus MAD6,950 million in the first half of 2007; in the same time, the amount of borrowings and overdrafts facilities was limited to MAD2,514 million in 2008 compared with MAD3,968 million in Capital expenditure The table below sets out Maroc Telecom s capital expenditure by segment for the specified periods. (in millions of Moroccan dirhams) June 30, 2008 June 30, 2007 Fixed-line Mobile 1,028 1,184 Total 1,930 2,143 In the first half of 2008, the group s capital expenditure amounted to MAD1.930 billion, with a slight decrease compared with the first half of Morocco represents 85% of these capex. Mobile capex The capex are in slight fall compared to the first half of 2007 linked to a capital expenditure schedule mainly planning in the second half of 2008, in particular with the carrying out of the 2008 program of Pacte project. Fixed-line and Internet capex Capex are stable compared to the first half of Capital resources In the first half of 2008, Maroc Telecom used a bank overdraft of MAD3.147 billion to finance its activity, versus MAD779 million at the end of December 31, Oustanding debts increased in the first half of 2008 by MAD246 million mainly in Onatel and Mobisud France. (in millions of Moroccan dirhams) June 30, 2008 December 31, 2007 Outstanding debt and accrued interests (a) 5,006 2,392 Cash * (b) 988 3,843 Net cash position ** (b) - (a) (4,018) 1,451 *: Investments securities are treated as cash equivalents if their maturity does not exceed three months **: of which a blocked cash for an amount of MAD96 million as at June 30, First half report - Maroc Telecom 35

36 5 5.4 CONSOLIDATED FINANCIAL STATEMENTS Table of contents Consolidated balance sheet at June 30, 2008 and December 31, 2007 Consolidated income statements for the first halves of 2008 and 2007 Consolidated statement of cash flows for the first halves of 2008 and 2007 Consolidated statements of changes in equity for the first halves of 2008 and 2007 Notes to consolidated financial statements Note 1. Accounting principles and valuation methods Note 2. Scope of consolidation for 2008 and 2007 Note 3. Dividends Note 4. Borrowings and other financial liabilities at June 30, 2008 and December 31, 2007 Note 5. Restructuring Note 6. Tax expense Note 7. Segment data at June 30, 2008 and 2007 Note 8. Contractual obligations and contingent assets and liabilities 8.1 Contractual obligations and commercial commitments recorded in the balance sheet 8.2 Other commitments given and received relating to ordinary operations Note 9. Post-balance sheet events First half report - Maroc Telecom

37 5. FINANCIAL REPORT Consolidated financial statements Consolidated balance sheet at June 30, 2008 and December 31, 2007 ASSETS (in millions of Moroccan Dirhams) Note June 30, 2008 December 31, 2007 Goodwill 2,117 2,197 Intangible assets 3,590 3,644 Property, plant and equipment 16,992 16,870 Investment in equity affiliates 0 1 Other non-current financial assets Deferred tax assets Non-current assets 23,095 23,242 Inventories Trade accounts receivable and other 10,112 9,897 Other current financial assets Cash and cash equivalents 892 3,725 Available for sale assets Current assets 12,007 14,507 TOTAL ASSETS 35,102 37,749 LIABILITIES (in millions of Moroccan dirhams) Share capital 5,275 5,275 Retained earnings 3,998 4,071 Earnings for the fiscal year-group share 4,526 8,033 Equity attributable to equity holders of the parent 3 13,799 17,380 Minority interests 1,075 1,254 Total equity 14,874 18,634 Non-current provisions Borrowings and other non-current financial liabilities 4 1,211 1,233 Deferred tax liabilities 25 0 Non-current liabilities 1,433 1,436 Trade accounts payable and other 14,716 15,385 Current income tax liabilities Current provisions Borrowings and other current financial liabilities 4 3,795 1,159 Current liabilities 18,795 17,679 TOTAL LIABILITIES AND EQUITY 35,102 37, First half report - Maroc Telecom 37

38 5 Consolidated income statement for the first halves of 2008 and 2007 (in millions of Moroccan dirhams) Note Consolidated revenues 14,308 13,007 Cost of purchases (2,238) (2,089) Payroll costs (1,412) (1,303) Sundry taxes and duties (351) (371) Other operating income and expenses (1,826) (1,514) Net depreciation, amortization and provisions (1,814) (1,731) Earnings from operations 6,666 5,999 Income from ordinary activities 0 2 Depreciation of Goodwill (8) 0 Income from equity affiliates (1) (12) Earnings from continuing operations 6,658 5,989 Income from cash and cash equivalents Finance expense (46) (52) Net finance costs Other finance income and expense (78) (9) Net financial items (50) 3 Tax expense 6 (2,119) (2,064) Earnings 4,489 3,928 Earnings from discountinued operations 0 0 Earnings 4,489 3,928 Attributable to the equity holders of the parents 4,526 3,850 Minority interests (37) 78 EARNINGS PER SHARE (in Moroccan dirhams) Earnings per share Diluted earnings per share First half report - Maroc Telecom

39 5. FINANCIAL REPORT Consolidated financial statements Consolidated statements of cash flows for the first halves of 2008 and 2007 (in millions of Moroccan dirhams) Consolidated earnings (including minority interests) 4,489 3,928 Net depreciation, impairment and provisions 1,930 1,517 Non-cash expenses/income 1 12 Capital gains and losses (35) (3) Net earnings after net finance costs 6,385 5,454 Net finance costs (28) (12) Income tax expense (including deferred taxes) 2,119 2,064 Net earnings before net finance costs (A) 8,476 7,506 Tax paid (B) (2,916) (2,024) Change in WCR related to operating activities (C) (786) (39) Cash flow from operating activities (D) = (A+B+C) 4,774 5,443 Purchase of PP&E and intangible assets (1,930) (2,143) Disposals of PP&E and intangible assets Purchase of non-consolidated investments (1) (334) Cash flow of long-term debt (12) 8 Cash flow of other financial assets (64) (6) Effects of changes in scope of consolidation Cash flow used in investing activities (E) (1,964) (2,322) Dividends paid during the year (8,220) (6,950) Principal payments on borrowings 2,514 3,968 Net interest Changes in blocked cash 26 0 Changes in share capital 19 0 Other (6) 0 Cash flow used in financing activities (F) (5,640) (2,962) Foreign currency translation adjustments (G) (3) 9 Change in cash and cash equivalents (D+E+F+G) (2,833) 168 Cash and cash equivalents at beginning of period 3,725 2,741 Cash and cash equivalents at end of period 892 2, First half report - Maroc Telecom 39

40 5 Consolidated statement of changes in equity as at June 30, 2008 and December 31, 2007 (in millions of Moroccan dirhams) Share capital Other adjustments Cumulative translation differences Earnings and retained earnings Group share Minority interests Total Balance at January 1, ,276 (12) (37) 10,986 16, ,853 Dividends (6,927) (6,927) (23) (6,950) Earnings 3,850 3, ,928 Income and charges recorded directly in equity Current charges and income 3,850 3, ,928 Treasury stock Cumulative translation differences Other adjustments (9) 0 Changes in scope of consolidation Balance at June 30, ,276 (4) (28) 7,926 13,201 1,349 14,550 Dividends (4) (4) Earnings 4,183 4, ,209 Income and charges recorded directly in equity Current charges and income 4,183 4, ,209 Treasury stock (8) (8) (8) (8) Cumulative translation differences (3) 0 Other adjustments Changes in scope of consolidation (114) (114) Balance at December 31, ,276 (11) (25) 12,105 17,380 1,254 18,634 Dividends (8,088) (8,088) (133) (8,220) Earnings 4,526 4,526 (37) 4,489 Income and charges recorded directly in equity (17) (17) (17) (34) Current charges and income 4,508 4,508 (54) 4,455 Treasury stock (7) (7) (7) (7) Cumulative translation differences (2) 4 Other adjustments (11) (11) Changes in scope of consolidation Balance at June 30, ,276 (18) (20) 8,524 13,799 1,075 14,874 As at June 30, 2008, 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 (SPT); Other: 17% First half report - Maroc Telecom

41 5. FINANCIAL REPORT Consolidated financial statements Note 1. Accounting principles and valuation methods Significants events The finalization of the convergence to IFRS standards of GabonTelecom group: (in millions of Moroccan dirhams) Balance of consolidated net position- group share as of March 1, IFRS adjustments (10) Fair value of financial debt (28) Retirement gratuity 6 Activation of deferred tax 9 Other 3 Allocation of goodwill 82 Customer base 5 Land 77 Balance of adjusted net position - group share 201 Acquisition price 343 Goodwill 142 Accounting principles and valuation methods 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) such as adopted by the European Union at today. The principles accounting retained for preparing the consolidated financial statements at June 30, 2008, are similar to these adopted for the full fiscal year The consolidated financial statements for the first half of the year 2008 have been prepared in accordance with IAS34 «Intermediate financial information» which allowed to present a selection of additional notes. These consolidated accounts must be read jointly with the consolidated financial statements of The half-year financial statements ended June 30, 2008 and notes were approved by the Management Board of Maroc Telecom on July 23, First half report - Maroc Telecom 41

42 5 Note 2. Scope of consolidation at June 30, 2008 and December 31, 2007 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. Company name Legal form % group interest % group control Consolidation method Maroc Telecom SA 100% 100% FC Avenue Annakhil Hay Riad Rabat - Morocco Compagnie Mauritanienne de Communication (CMC) SA June 30, % 80% FC December 31, % 80% FC December 31, % 80% FC Avenue Roi Fayçal Nouakchott - Mauritania Mauritel SA SA June 30, % 52% FC December 31, % 52% FC December 31, % 52% FC Avenue Roi Fayçal 7000 Nouakchott - Mauritania Mauritel Mobiles SA June 30, December 31, December 31, % 52% FC Av Charles De gaulle ilot Nouakchott -Mauritania Onatel SA June 30, % 51% FC December 31, % 51% FC 705, Av. de la nation 01 BP Ouagadougou Telmob SA June 30, % 51% FC December 31, % 51% FC 705, Av. de la nation 01 BP Ouagadougou Gabon Telecom SA June 30, % 51% FC December 31, % 51% FC B.P Libreville Gabon Libertis SA June 30, % 51% FC December 31, % 51% FC BP8900 immeuble 9 étages Libreville- Gabon Medi-1 Sat SA June 30, % 28% EM December 31, % 28% EM Zone franche, lot n 31 BP Tangier - Morocco Mobisud France SA June 30, % 66% FC December 31, % 66% FC December 31, % 66% FC 86, Avenue de Saint Ouen Paris - France Mobisud Belgium SA June 30, % 100% FC December 31, % 100% FC Avenue Louise 283 Bte Bruxelles First half report - Maroc Telecom

43 5. FINANCIAL REPORT Consolidated financial statements Note 3. Dividends at June 30, 2008 and December 31, 2007 (in millions of Moroccan dirhams) Dividends received from equity affiliates June 30, 2008 December 31, 2007 Medi-1 Sat Dividends paid by consolidated companies to their minority shareholders (a) Mauritel Onatel Gabon Telecom Other Dividends paid by Maroc Telecom to shareholders (b) Moroccan government 2,426 2,078 Vivendi 4,286 3,533 Other 1,375 1,316 8,088 6,927 Total dividend payout ( c ) = (a)+(b) 8,220 6, First half report - Maroc Telecom 43

44 5 Note 4. Borrowings and other financial liabilities as at June 30, 2008 and December 31, 2007 Net cash position (in millions of Moroccan dirhams) June 30, 2008 December 31, 2007 Borrowings due less than one year Borrowings due more than one year 1,212 1,233 Facilities and overdrafts 3, Borrowings and financial liabilities 5,006 2,392 Cash 892 3,725 Blocked cash Net cash position (4,018) 1,451 Breakdown by maturity of net cash position The breakdown by maturity is based on the repayment terms and conditions of the borrowings. Half year ended June 30, 2008 (in millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings 562 1, ,774 Facilities and overdrafts 3,232 3,232 Borrowings and financial liabilities 3,794 1, ,006 Cash Blocked cash Net cash position (2,806) (1,078) (134) (4,018) Fiscal year ended December 31, 2007 (in millions of Moroccan dirhams) < 1 year 1 to 5 years > 5 years Total Borrowings 331 1, ,564 Facilities and overdrafts Borrowings and financial liabilities 1,159 1, ,392 Cash 3,725 3,725 Blocked cash Net cash position 2,684 (1,125) (108) 1, First half report - Maroc Telecom

45 5. FINANCIAL REPORT Consolidated financial statements Table of analysis (in millions of Moroccan dirhams) Interest rate % Maturity Companies June 30, 2008 December 31, 2007 Mobile license borrowings (October 2000) 8.0% January 08 Mauritel 11 Borrowing SBIF % June-11 Onatel CONS.BIB-ECOBANK-BICIA 7.7% July-12 Onatel Interior borrowing reassigned by government 7.5% December-08 Onatel 3 9 Borrowing BOAD % July-11 Onatel Borrowing BEI 2.0% December-10 Onatel Borrowing AFD % October-09 Onatel 3 5 Borrowing AFD % October-18 Onatel Borrowing SGBB % November-13 Onatel Borrowing BOA % December-14 Onatel Borrowing BOAD % July-10 Onatel Borrowing SFI % July-13 Onatel 86 Borrowing BEI 3.0% March-12 Gabon Telecom Borrowing BID 8.0% December-12 Gabon Telecom Borrowing AFD 5.0% October-09 Gabon Telecom 2 2 Borrowing COMMERZBANK 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 8 12 Borrowing Saoudien fund of development 2.5% - Mauritel 1 1 Banks, overdrafts IAM 3.9% June-08 IAM 3, Banks, overdrafts Onatel 8.5% - Onatel Banks, GT credits balance - - Gabon Telecom Other 8.0% Borrowings and other financial liabilities 5,006 2, First half report - Maroc Telecom 45

46 5 Note 5. Restructuring for the first halves of 2008 and 2007 The current provisions mainly comprise restructuring provisions. (in millions of Moroccan dirhams) Maroc Telecom Mauritel group Gabon Telecom group Mobisud France Mobisud Belgium Total Maroc Telecom group Balance at December 31, Restructuring Change in scope of consolidation and adjustments of allocation of acquisition price Addition Utilization (193) (193) Release (100) (100) Balance at December 31, Restructuring Change in scope of consolidation and adjustments of allocation of acquisition price Addition Utilization (8) (8) Release Balance at June 30, Note 6. Tax expense for the first halves of 2008 and 2007 (in millions of Moroccan dirhams) June 30, 2008 June 30, 2007 Income tax 1,954 2,056 Deferred taxes Current tax 2,119 2,064 Consolidated effective tax rate* 32% 34% * Income tax/earnings before taxes First half report - Maroc Telecom

47 5. FINANCIAL REPORT Consolidated financial statements Note 7. Segment data for the first halves of 2008 and 2007 Breakdown of earnings by business segment First half of 2008 (in millions of Moroccan dirhams) Fixe-line Mobile Eliminations Total Revenues 5,544 10,161 (1,397) 14,308 Earnings from operations 1,533 5,132 6,666 Net depreciation and impairment (823) (1,045) (1,868) First half of 2007 Fixed-line Mobile Eliminations Total (in millions of Moroccan dirhams) Revenues 5,532 8,889 (1,413) 13,007 Earnings from operations 1,411 4,588 5,999 Net depreciation and impairment (809) (843) (1,652) 2008 First half report - Maroc Telecom 47

48 5 Note 8. 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 1 year Due 1 to 5 years Due more than 5 years Long-term debts Capital lease obligations Operating leases* Irrevocable purchase obligations Other long-term commitments Total * long-term vehicle leases (excluding tax) Other commitments given and received relating to ordinary operations Commitments given Commitments given include: Commitment to invest MAD3,483 million made up of: MAD2,907 million related to the commitment given by Maroc Telecom to the suppliers of fixed assets; MAD576 million related to the commitments given by the companies of group to the suppliers of fixed-assets. Mauritel s commitment to invest MAD159 million in the third generation license; Banks guarantees for an amount of MAD65 million; Acquiring stake for an amount of MAD5 million mainly due to the commitment relating to quasi capital of Casanet (MAD4 million); Partnership with Forum de Casablanca s association for an amount of MAD5 million; Operating leases amounted to MAD12 million; Satellite s lease amounted to MAD154 million; Various Maroc Telecom s commitments for an amount of 0.2 million. Commitments received Commitments received comprise: Guarantees of MAD1,426 million; Commitment to purchase Maroc Telecom land for an amount of MAD40 million; Other guarantees for an amount of MAD58 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 for MAD7.4 billion and create 150 new jobs over the period First half report - Maroc Telecom

49 5. FINANCIAL REPORT Consolidated financial statements Note 9. Post-balance sheet events 2008 First half report - Maroc Telecom 49

50 CORPORATE GOVERNANCE First half report - Maroc Telecom

51 6. CORPORATE GOVERNANCE Management and Supervisory Boards 6.1 MANAGEMENT AND SUPERVISORY BOARDS Composition and roles of the Management Board Name (age) Abdeslam AHIZOUNE (52) Arnaud CASTILLE (36) Current office and main duties Date of appointment Chairman First appointed February 20, 2001 Renewed on March 1, 2007 Managing Director Administration and Finance First appointed February 24, 2006 with effect on April 1, 2006 Renewed on March 1, 2007 Expiry of term office 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, Composition and roles of the Supervisory Board 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-René FOURTOU (68) Jacques ESPINASSE (65) Frank ESSER (49) Member Member Member Supervisory Board Meeting of January 4, 2005 Supervisory Board Meeting of December 17, 2002 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 Chairman of the Supervisory Board of Vivendi Company Director Chairman and CEO of SFR group / Member of the Management Board of Vivendi Regis TURRINI (48) Member Philippe CAPRON (50) Member 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 2009 Executive Vice President of Strategy and development of Vivendi Financial Director of Vivendi / Member of the Management Board of Vivendi 2008 First half report - Maroc Telecom 51

52 6 6.2 CORPORATE GOVERNANCE Audit committee The Audit Committee is composed of the following members: Name (age) Current office Date of appointment Principal post or occupation Philippe Capron (50) Jacques ESPINASSE (65) Noureddine BOUTAYEB (50) Abdelaziz TALBI (58) Monkid MESTASSI (55) Pierre TROTOT (53) Sandrine DUFOUR (41) Chairman 2007 Chief financial officer of Vivendi Member of Vivendi s Management Board Member 2003 Company 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 Member 2008 Assistant chief financial of Vivendi Chairman of Vivendi Mobile Entertainment 6.3 RELATED PARTY TRANSACTIONS By reference, related party transactions mentioned on pages 280 to 283 of the 2007 Registration Document, are still effective and only the agreement signed with Medi-1-Sat has been modified during the first half of The Supervisory Board s meeting dated May 29, 2008, approved a new advance in current accounts for an amount of 4 million, distributed between the shareholders in proportion to their participation ( 1.12 million for Maroc Telecom) First half report - Maroc Telecom

53 6. CORPORATE GOVERNANCE Corporate governance 2008 First half report - Maroc Telecom 53

54 RECENT DEVELOPMENT AND MARKET OUTLOOK First half report - Maroc Telecom

55 7. RECENT DEVELOPMENT AND MARKET OUTLOOK Market outlook 7.1 RECENT DEVELOPMENT None 7.2 MARKET OUTLOOK 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 warranties 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 erroneous. Investors are invited to take into consideration the fact that some of the risks described in section 4.14 Risk factors in the 2007 Registration Document may affect the Company s operations and its ability to achieve its targets (See section 7.2 Market outlook of the 2007 Registration Document). Given continuing growth in the mobile market in Morocco as weel as in Maroc Telecom subsidiaries, 2008 forecasts are upgraded: The consolidated revenues growth will exceed 8%; The consolidated earnings from operations growth will exceed 11% First half report - Maroc Telecom 55