The Egyptian Company for Mobile Services [Mobinil] Earnings Release First Half Mobinil continues to lead mobile telecommunications in the Egyptian market 11.901 million subscribers, 2.634 million net additions, Revenue growth of 32%, EBITDA growth of 25% and consolidated net income growth of 39% over the same period last year Cairo: August 5 th, The Egyptian Company for Mobile Services (Mobinil) announced its first half consolidated results. The reported figures reflect the following: 11.901 million subscribers reflecting an increase of 65% over the same period last year. Net additions for the first half reached 2.634 million subscribers, 1,402 in 1Q and 1,232 in. Net revenues reached 3,847 MEGP achieving an increase of 32% over same period last year, with revenues of 2,072 MEGP representing 37% YoY growth. EBITDA increased by 24.9% over the same period last year to reach 1,830 MEGP reflecting an EBITDA margin of 47.6%, where EBITDA has amounted to 979 MEGP, 47.2% representing 28.3% growth YoY. Net income increased by 38.9% over the same period last year to reach 913 MEGP, where amounted to 516 MEGP with 48.7% growth YoY. Commenting on 07, Naguib Sawiris, Chairman said: I am pleased to see Mobinil performing to our expectations delivering strong growth KPI s that confirm our vision and reflects successful execution of our targeted strategy. Mobinil will continue to steer the competitive landscape forward and maintain its leadership position and value creation. Commenting on -07, Alex Shalaby, President and CEO said: I am quite pleased to witness Mobinil approaching the 12 million subscribers milestone this quarter after only three months of accomplishing the 10 million subscriber mark. Moreover, this healthy subscriber addition contributed to our top line and profitability growth to indicate the success of our pre-defined long term strategy in action." Page 1 of 10
Mobinil has also crossed the 2 BnEGP revenue milestone this quarter for the first time after a strong growth of 37% YoY and 17% QoQ. Average usage per user (AUPU) reached 129 minutes for the quarter representing an increase of 12% YoY and 4% on QoQ basis in spite of the 1,232 million subscriber additions during this quarter. The relatively higher marginal usage continues to reflect positive elasticity resulting in increasing our prepaid quarterly ARPU to 40EGP, an increase of 3% QoQ, reflecting stability in prepaid ARPU for almost two years running, in spite of the increase of the prepaid base by 165% during that period. Postpaid quarterly ARPU has also increased to 295EGP, an increase of 9% QoQ. Global quarterly ARPU has stabilized at 59EGP in spite of the natural decline impact of increasing the prepaid subscriber's weight in the total subscriber's mix. Technology expenditure has reached 807MEGP during this quarter to push the first half expenditure to 1,547 MEGP. ECMS Board of Directors decided in its meeting held on July 11 th to approve in principle an application for a 3G license based on the terms and conditions discussed in a meeting held on July 9th between H.E. Dr. Tarek Kamel, Minister of Telecommunication and Information Technology and Eng. Naguib Sawiris, Chairman of ECMS. This quarter has witnessed the launch of the third mobile operator in the Egyptian market on May 1 st, and as previously highlighted, changes in the regulatory and competitive landscape will have future impacts on the current business model which will be reflected on the operational performance in the near term. Accordingly, Mobinil has decided to add another subscriber's definition to tackle the above mentioned point by announcing more informative definitions that tackles both subscribers' status and subscribers' activity fronts as clearly defined further on. Page 2 of 10
Key performance highlights for first half Commercial KPIs growth Closing Base 1 11,901 11,901 7,231 7,231 65% 65% Postpaid (KSub) 606 606 756 756-20% -20% Prepaid (KSub) 11,295 11,295 6,475 6,475 74% 74% Churn rate (KSub) -5.8% -12.4% -12.0% -20.3% -51.4% -39% Active Base 2 (KSub) 11,513 11,513 - - - - Postpaid (KSub) 606 606 - - - - Prepaid (KSub) 10,907 10,907 - - - - Blended ARPU "Annual Rolling" 62 62 72 72-13% -14% Postpaid ARPU "Annual Rolling" 280 280 273 273 3% 3% Prepaid ARPU "Annual Rolling" 40 40 39 39 2% 2% Global without visitor Roaming "Annual Rolling" 58 58 66 66-13% -13% Blended ARPU 3 59 59 69 68-15% -14% Postpaid ARPU 295 283 277 272 6% 4% Prepaid ARPU 40 40 37 37 9% 8% Global without visitor roaming 55 55 63 63-13% -13% Global AUPU 129 127 116 110 12% 15% Financial KPIs growth Global Revenue "MEGP" 2,072 3,847 1,512 2,912 37% 32% Connection fees 30 68 40 65-25% 4% Handset & others 66 77 35 55 90% 42% Service Revenue 1,839 3,621 1,316 2,567 40% 41% Roaming Revenue 137 236 120 225 14% 5% EBITDA "MEGP" 979 1,830 763 1,465 28% 25% EBITDA % 47.2% 47.6% 50.5% 50.3% -6.4% -5% Income before tax "MEGP" 661 1,173 449 848 47% 38% Net income "MEGP" 516 913 347 658 49% 39% Operational KPIs growth Total number of sites 2926 2926 2347 2347 25% 25% Total number of switches 26 26 20 20 30% 30% 1 Customers connected to the network at the end of the period. 2 Number of customers making an outgoing chargeable call during the last three months (including voice, messaging or other data services). 3 ARPU calculations has been based on the closing subscribers figures for comparative purposes. Page 3 of 10
Commercial highlights Mobinil celebrates 10 Million Subscribers Milestone April 07 France Telecom Chairman & CEO Didier Lombard visited Egypt from April 1-4 to participate in Mobinil s celebrations of its historic 10-million-subscriber milestone. At a ceremony attended by Mobinil s President & CEO Alex Shalaby, along with the company s top officials, Lombard presented a special award to Khadeja Khaled Moustafa, Mobinil s 10 million subscriber. During his visit, Lombard also met with Dr. Ahmad Nazif, Egypt s Prime Minister and Dr. Tarek Kamel, Minister of Telecommunication and Information Technology. Browse new features on Mobile TV April 07 Mobinil launched new features for Mobile TV on Mobinil Life enabling customers to enjoy different live channels using their mobiles. Now subscribers can stream eight live satellite channels through the "Mobile TV icon on the Mobinil Life website: Mazzika, Zoom, Al Arabia, News, Mehwar, Dream 1 & 2, OTV-Panorama FM [radio channel]. Mobile TV is available for all GPRS users at a browsing rate [EGP 0.015 / kb]. Mobinil launched Corporate Cash Collection service April 07 Mobinil launched a new payment method "Corporate Cash Collection" whereby any corporate account can pay their monthly bills in cash to be collected from their premises on a monthly basis. It is granted for free for our corporate accounts through First Service. Phase-I will be available in Cairo and Alexandria upon full or partial payment to be delivered to Nile City and Semouha Customer Centers. Customers may request the service by calling First Service Call Center [555] to request a visit. Mobinil offers a better way to chat April 07 Mobinil introduced the new features to Instant Messaging [IM SMS] exclusive to all Mobinil customers. The IM SMS enables all Mobinil Messenger users to send/receive messages to/from all Mobinil non-registered users via SMS. This means that customers can now chat with IM contacts even if their handsets are not GPRS enabled. The IM user adds a friend to their personal IM contact list. When the users wish to chat with their non-registered friends, they send them an invitation that is received in SMS format to chat. IM users exchange communication in IM format whereas the nonregistered users send and receive in SMS format. The service is limited to one on one chat only (when the non-registered user replies, the reply will be seen only by the recipient and not by all those that are chatting). Normal GPRS traffic rates apply to this service and SMS is charged as per the Mobinil tariff plan of the user. Page 4 of 10
Unlimited calls for Mobinil high value customers April 07 Mobinil launched the most exclusive benefit for the first time in Egypt whereby high value Star customers enjoy unlimited calls in an exclusive pack including four SIM cards with golden numbers. When Mobinil Star customers activate any or all of these lines, they create a group of frequently dialed numbers who all enjoy free unlimited calls between one another all the time in exchange for a fixed monthly fee. Mobinil.com now in Arabic May 07 Mobinil announced that all Internet users including existing and potential customers can now enjoy www.mobinil.com in both Arabic and English. The Arabic website was promoted via online advertising across several websites from May to July. Alohat even stronger and better May 07 Mobinil launched a weekend tariff, allowing Alohat customers to talk to any mobile number in Egypt on Fridays and Saturdays for only EGP 0.20 per minute during off peak and week nights from 01:00 am to 08:00 am. Moreover, the price per minute to any mobile during peak hours has been reduced to EGP 0.40 per minute, and the local SMS rate is now down to EGP 0.20, besides Alohat customers will continue to benefit from the Per Second Billing. Free handset for Star customers May 07 Mobinil launched the "Free Handset Program" exclusively for post-paid subscribers, offering them a choice of six free high-end handsets. Customers will pay around 50% of the handset price, which they will retrieved in the form of a monthly discount on their invoice over a period of 12 months. New mobile e-mail solutions from Mobinil June 07 Mobinil signed an exclusive deal with HTC handsets in order to promote our push e- mail technology [like e-mail server, corporate e-mail accounts] bundled with a highend, modern handset and other benefits introduced by LINKdotNET. HTC provides a 2-in-1 business solution whereby companies benefit from a total solution package with great savings. Corporate Customers buy three handsets and get six month free subscription fee for: domain, web hosting, three e-mail addresses [with push technology and calendar synchronization] free web premium for three months. Personal customers, on the other hand, get one handset, a golden dial, free browse and save for three months. Page 5 of 10
Primo: best yearly subscription in Egypt June 07 Mobinil launched Primo pricing awareness campaign to promote current market prices by positioning Primo as the "best yearly subscription" in Egypt at the following: subscription fees free minutes included 1-year subscription EGP 210 400 minutes 2-year subscription EGP 350 800 minutes 4-year subscription EGP 555 1200 minutes The price per minute [mobile to mobile] for all Primo subscriptions is EGP 0.30. Corporate Social Responsibility Injaz Egypt held a press conference May 07 Injaz Egypt held a press conference to announce the "Student Company Competition" winners of Injaz Program. Mobinil CEO attended the event as Chairman of Injaz Egypt, also acting as member of jury. The winning teams have expressed their deep appreciation for Injaz program and its supporters from the private sector, as it enriches their knowledge and helps them set goals and aspire for a brighter future. Celebrating the World Environmental Day June 07 Mobinil sponsored the World Environmental Day [WED] celebration that was held under the auspices of H.E. Dr. Maged George Minister of State for Environmental Affairs and co-ordinated by the British Council in Egypt and Wadi Environmental Science Center, an Egyptian Non-Governmental Organization working in the field of environmental protection. The World Environment Day slogan for was "Melting Ice a Hot Topic? and the selected theme focused around the effects that climate change is having on polar ecosystems and communities and its consequences around the world. The event was attended by over 3000 people. Nine years of leadership with our partners in success June 07 Mobinil celebrated nine years of leadership with the Egyptian media community, our partners in success, on Sunday June 10,. Mobinil key suppliers and distributors also joined the celebration, held at Aida Ballroom, Marriott Hotel. Mobinil President and CEO, Alex Shalaby welcomed Mobinil guests and answered a few questions on the current developments in the mobile industry and our position, stressing that Mobinil will always be the market leader in Egypt s mobile telecommunication scene. Page 6 of 10
Currency : EGP in (000)'s The Egyptian Company for Mobile Services Consolidated Balance Sheet For the year ended June 30, June-07 Dec-06 YOY % Assets Current assets 1,508,257 968,324 539,933 56% Net fixed assets 4,728,752 4,036,600 692,152 17% Projects under construction 1,510,110 1,123,627 386,483 34% Net intangible assets 1,143,823 1,241,299-97,476-8% Rent deposit 6,446 5,208 1,238 24% Investment available for sale 900 900-0% Total assets 8,898,288 7,375,958 1,522,330 21% Liabilities and Shareholders equity Current liabilities 3,948,218 3,584,396 363,822 11% Current portion of long term debt 863,600-863,600 100% Long term liabilities 1,893,794 2,161,040-267,246-12% Total liabilities 6,705,612 5,745,436 960,176 17% Shareholders Equity Paid-up capital 1,000,000 1,000,000-0% Treasury stock (18,960) (18,960) - 0% Reserve of treasury stock gain 50,914 50,914-0% Legal reserve 200,000 200,000-0% Current year earnings 913,015 1,525,890-612,875-40% Retained earnings 47,707 36,292 11,415 31% Interim distributions - (1,163,614) 1,163,614 0% Total shareholders equity 2,192,676 1,630,522 562,154 35% Total liabilities & shareholders equity 8,898,288 7,375,958 1,522,330 21% Page 7 of 10
Currency : EGP in (000)'s The Egyptian Company for Mobile Services Consolidated Income Statement For the year ended June 30, (1) (2) (3) (4) Variance (2)-(4) % Revenues 2,072,392 3,846,895 1,511,744 2,911,735 935,160 32% Cost of Sales 403,429 729,630 279,407 530,208 199,422 38% Gross Margin 1,668,963 3,117,265 1,232,337 2,381,527 735,738 31% Gross Margin % 80.53% 81.03% 81.52% 81.79% (0.76) -1% Operating Expenses excluding D & A Depreciation and Amortization 690,045 1,287,038 469,095 916,372 370,666 40% 264,154 566,182 271,404 532,123 34,059 6% Operating Margin 714,764 1,264,045 491,838 933,032 331,013 35% Operating Margin % 34.49 % 32.86 % 32.53 % 32.04 % 0.82 2.6% EBITDA 978,918 1,830,227 763,242 1,465,155 365,073 25% EBITDA % 47.24 % 47.58 % 50.49 % 50.32 % -2.74 % -5% Non Operating Expenses Interest 51,833 94,574 37,931 79,472 15,102 19% Other Non-Operating Income / Expenses Total Non Operating Expenses Net Income /(loss) before taxes 2,182-3,968 4,422 5,729-9,697-169% 54,015 90,606 42,353 85,201 5,405 6% 660,749 1,173,439 449,485 847,831 325,608 38% Net Income /(loss) after taxes 516,072 913,120 346,955 657,605 255,515 39% Page 8 of 10
Currency : EGP in (000)'s The Egyptian Company for Mobile Services Consolidated Cash Flows Statement For the year ended June 30, Jun-07 Jun-06 Variance % Cash flow from operating activities 977,193 842,401 134,792 16% Cash flow from Investment activities (1,383,956) (1,135,470) (248,486) 22% Free Cash Flow (406,763) (293,069) (113,694) 39% Cash flow from financing activities 262,454 309,903 (47,449) -15% Net Cash Flow changes (144,309) 16,834 (161,143) -957% Beginning cash balances 128,711 394,124 (265,413) -67% Ending cash balances (15,598) 410,958 (426,556) -104% Page 9 of 10
About the company Activity Listing To establish, operate and maintain a GSM wireless communication network in co-operation with the Egyptian authority for telecommunications according to law no. 8 issued in 1997, and to provide mobile communication services inside the Arab Republic of Egypt in accordance with its license agreement ECMS is listed on the Cairo and Alexandria Stock Exchange RIC: EMOB.CA Capital Authorized capital EGP 3,000,000,000 Structure Issued and fully paid in capital EGP 1,000,000,000 (100,000,000 shares @ EGP10.00 / share) Mobinil Telecom 51.0% Shareholder FT Orange Group 71.25% Structure Orascom Telecom Holding 28.75% Orascom Telecom Holding 20% Free Float 29% More information Mobinil Investor Relations Asser ElShanawany Sr. Manager, Investor Relations Marwa Nabil Principal Analyst, Investor Relations Mobinil Media Relation Taha Saifullah Manager, Media Relations Nelly Abdel-Hamid Media Relations Expert Telephone +20 12 320-6178 Fax +2 012 320 6195 e-mail investors@mobinil.com Telephone +20 12 320-6179 Fax +2 012 320 6195 e-mail investors@mobinil.com Telephone +20 12 320-6770 Mobile +20 12 313-8955 Fax +2 012 320 6755 e-mail mediarelations@mobinil.com Telephone +20 12 320-6771 Mobile +20 12 226-7023 Fax +20 12 320-6755 e-mail mediarelations@mobinil.com Page 10 of 10