giving the world - global...

Annual Report 2005

Givingthe World

a Voice

Page

Letter of the Chairman

Financial Highlights

OTH’s Organization

Milestones

History and Evolution of the Company

Disclosure & Shareholder Information

GSM Operations

Internet

GSM Operations Support

Board Members

2005 Financial Review

• Board Report

• Financial Statements (EAS)

• Financial Statements (IFRS)

01

05

09

11

15

19

23

51

57

69

73

75

88

108

Tabl

e of

Con

ten

ts

02

population under license of the two groups together reaching

approximately two billion.

Overall, we have performed well in meeting our 2005 goals and

objectives; we have delivered a substantial increase in shareholder

returns for the year 2005 and, for the first time, have started

paying dividends to our shareholders. We owe all this success

primarily to the loyalty and dedication of our team; I am grateful

to all of their countless efforts and hard work, and would like

to thank each and every one of you. At OTH it has always been

a priority to select the most skilled individuals from different

backgrounds, and I know their skills, experience and hard work

will be instrumental for more growth in the years ahead.

The mobile markets OTH operates in are expected to continue

to grow due to rapid economic growth, low mobile penetration

rate, limited fixed-line competition, and the relatively high cost

of fixed-line infrastructure deployment.

OTH intends to deliver very high double digit subscriber growth,

and expects to serve 50 million subscribers by year end 2006.

Revenues are expected to follow the same trend, although ARPU

is expected to continue to decrease as OTH penetrates lower

income segments.

Overall EBITDA margins are expected to remain more or less

stable. On one hand, scale and certain actions such as substitution

of leased lines by owned backbones in Algeria and Pakistan

should enhance overall margin. On the other hand, the continued

high growth, competition and new revenue sharing regime in

Iraq should negatively affect margins.

Though projected net additions for this year exceed 2005 levels,

capital expenditures are expected to remain stable as OTH has

negotiated better pricing with its suppliers and network investments

have become more capacity driven and less roll out driven.

Naguib SawirisChairman & CEO

In 2006, we will strive to capture the lion’s share of

the high subscriber growth in our existing markets

by capitalising on our leadership position in each of

our markets, by prudently investing in its network

coverage and quality, and by remaining at the forefront

of product and service innovation tailored to the

local market conditions. Moreover, we aim to deliver

shareholder value by having centralised network

infrastructure procurement through frame agreements,

financial discipline and reporting at our subsidiaries

and group-wide strategic initiatives, best practices,

and management expertise. Finally, we are still focused

on consolidating ownership by buying out minorities

in our various subsidiaries and selectively expanding

into new markets with large populations and low

mobile penetration with adequate risk and return profiles.

At OTH, we have managed to place ourselves in a superior

position in our markets, and we have maintained our dominant

leadership in all of our core assets: Algeria, Pakistan, Egypt and

Iraq. In Tunisia, we expanded our market share substantially, with

a view to becoming the leading operator in the near future.

Finally, after ten months of operation in Bangladesh, we managed

to increase our market share to 12% and our subscriber base

to over one million. In all of our markets, we were focused on

maintaining our subscriber growth though operating in extremely

competitive markets.

In 2005, we also initiated a paradigm shift by investing in one of

the fastest growing companies in Asia; Hutchison Telecom

International Limited “HTIL”. Combining the equipment

procurement of both our entities is expected to increase our

leverage with suppliers, reducing the costs of network expansion

in all our markets. Buying into HTIL is no doubt an important

first step for OTH, as we have always been keen to enter some

of the largest and highest growth mobile markets in the world,

such as India, Indonesia and Vietnam. The tie up with HTIL

presents OTH with exposure to these markets with the total

Dear Shareholders,

Building on the momentum and success of the previous years,

OTH grew to higher levels in 2005. We have accelerated the

momentum of penetration in our markets by pushing the

boundaries even further and at the same time maintaining our

leadership in these markets.

By the end of the year, we achieved over 30 million subscribers,

a 110% increase over last year, our revenues grew by 64% to

reach US$ 3.2 billion and our EBITDA grew by 42% to reach

US$ 1.4 billion, impressive growth for the year.

Again this year, we fulfilled our objective of focusing on our core

assets and consolidated ownership in our existing operations.

In a series of transactions in 2005, we acquired substantial

minority stakes in our Algerian and Tunisian GSM operations,

“Djezzy” and “Tunisiana”, bringing our ownership in these

subsidiaries to 87.68% from 58.35% and to 50% from 20.26%,

respectively. We also consolidated our interest in Iraq by acquiring

all minorities in our Iraqi operation “Iraqna” increasing our

ownership to 100% from 63%.

Letter ofthe Chairman

“In 2005, we also initiated a paradigm

shift by investing in one of the fastest

growing companies in Asia.”

FinancialHighlights

2004 2005

in US$ (Million) in US$ (Million)

Net Income 295 659

CAPEX 1,113 1,871

06

2004 2005

1,113 MillionUS$

1,871 MillionUS$

Net Income+123%

CAPEX+68%

2004 2005

295 MillionUS$

659 MillionUS$

Main Financial Data: (according to the IFRS)

2004 2005

in US$ (Million) in US$ (Million)

Revenues 1,966 3,226

EBITDA 958 1,358

EBITDA Margin 52.0% 42.1%

EBITDA Margin(9.9%)

Revenues+64%

FinancialHighlights

EBITDA+42%

2004 2005

1,966 MillionUS$

3,226 MillionUS$

2004 2005

958 MillionUS$

1,358 MillionUS$

2004 2005

52.0%42.1%

OTH’sOrganization

Chief Technology Officer

Tamer El Mahdi

OTH’sOrganization

Strategic Planning Officer

Khaled Saba

Chairman and CEO

Naguib Sawiris

PR & Communications Director

Sabrine El Hossamy

VP Legal Affairs

Amr El Bayoumi

Legal Affairs Director

Ragy Soliman

Executive Officer Operations

Emad Farid

Commercial Director

Ossama Bessada

Djezzy

Hassan Kabbani

Mobilink

Zouhair A. Khaliq

Mobinil

Alex Shalaby

Iraqna

Alain St. Marie

Technical Operations Director

Alaa Adly

IT Director

Moataz El Sayed

TelZim

JD Swain

CEOs of Operations

Banglalink

Lars P. Reichelt

Tunisiana

Jean Pierre Roeland

10

Internal Audit Director

Walid Bedair

VP HR & Administration

Wafaa Lotaief

Investment & BusinessDevelopment Officer

Mike O’Connor

Executive Officer Finance

Aldo Mareuse

Treasury Director

Amr Abaza

CEOs of Operations

ARPU+

Yassine El Oraby

LINKdotNET

Karim Bichara

OrasInvest

Emad Barsoum

Ring

Tarek Rizkallah

M-Link

Maan El Amine

Corporate Finance Officer

Karim Nasr

Corporate Accounting Officer

Mohamed Naguib

Budgeting, Planning &Control Officer

Ahmed Halawa

Investor Relations Director

Hatim El Gammal

May 2005

- Orascom Telecom Holding announced a dividend payment of

LE 2.5 per share.

- Orascom Telecom Holding acquired additional percent equity

stakes in Djezzy in Algeria and in Tunisiana in Tunisia to reach

87.66% and 50%, respectively, through a series of transactions.

June 2005

- Orascom Telecom Holding surpassed the 20 million subscriber base.

July 2005

- Orascom Telecom Holding acquired the remaining 37% equity

stakes in its Iraqi operation (“Iraqna”) to reach a 100% equity stake.

September 2005

- Orascom Telecom Holding completed the sale of its 100%

indirect equity stake in its operator in the Democratic Republic of

Congo (“Oasis”).

January 2005

- Djezzy successfully finalized non-recourse financing.

- Orascom Telecom Holding acquired an additional

2.83% and 2% equity stakes in its GSM operators

in Algeria (Djezzy) and Tunisia (Tunisiana).

February 2005

- Orascom Telecom Holding announced the launch of its GSM

mobile services in Bangladesh by its wholly owned subsidiary,

which operates under the name “Banglalink”.

March 2005

- Orascom Telecom Holding won a 15 year license to build and

operate a national fixed line network in Algeria as part of an

Egyptian Consortium with Telecom Egypt.

- Orascom Telecom Holding formed two fully funded subsidiaries

to build and operate undersea fiber optic cables to further

expand its non-GSM telecom services segment.

Milestones2005-2006

12

November 2005

- Orascom Telecom Holding announced a dividend payment of

LE 5 per share.

- Orascom Telecom Holding announced a two-for-one split of

its local shares on the Cairo & Alexandria Stock Exchange (CASE).

This split was implemented in January 2006.

December 2005

- Orascom Telecom Holding signed a definitive agreement to

sell its controlling 65% equity stake in its GSM operation in

Congo Brazzaville (“Libertis”).

- Orascom Telecom Holding acquired a strategic stake of 19.3%

in Hutchison Telecommunications International Limited

(“Hutchison Telecom”).

January 2006

- Orascom Telecom Holding surpassed the 30 million subscriber base.

- Orascom Telecom Holding announced that its Iraqi GSM

operation (“Iraqna”) has been granted a six month interim

license extension.

February 2006

- Orascom Telecom Holding secured a five year senior secured

debt facility totaling US$ 2 billion on a committed and

underwritten basis.

- Orascom Telecom Holding and Telecom Egypt launched the

fixed line telecommunication services in Algeria.

History andEvolution ofthe Company

• In September 1999

Purchase of a controlling stake in JMTS-Fastlink in Jordan.

• In March 2000

Greenfield license in Yemen was acquired.

• In April 2000

OTH purchased a 38.6% stake in PMCL- Mobilink in Pakistan

and an 80% stake in Telecel, including 11 licenses in Benin,

Burkina Faso, Burundi, CAR, Cote d’Ivoire, the Democratic

Republic of Congo, Gabon, Togo, Uganda, Zambia and

Zimbabwe. Moreover, in early 2000, Telecel acquired a new

GSM 900 license in Niger.

• In February 2001

BOT contract was awarded in Syria.


OTH acquired Motorola’s stake in Fastlink in Jordan, ECMS

in Egypt and PMCL in Pakistan, and as a result, increased

its stake in Fastlink to 91.6%, in ECMS to 31.26% and in

PMCL to 68.69%.

• In July 2001

OTH acquired a Greenfield license in Algeria.

• In August 2001

OTH acquired a further 20% stake in PMCL and, as a result,

increased its ownership to 88.69%.

• In March 2002

OTH acquired a Greenfield license in Tunisia.

• In October 2002

OTH entered into a joint venture with Wataniya Telecom

to operate its GSM license in Tunisia.

Orascom Telecom Holding S.A.E. (or OTH) is part of the Orascom

group of companies, which was established in 1976.

Orascom entered the field of Information Technology and

Telecommunications by trading and distributing IT and telecom

equipment in Egypt. It became the market leader representing

industry leaders such as Microsoft, Hewlett Packard, Compaq,

IBM, Lucent Technologies (AT&T), Oracle and Novell.

Orascom spent nearly ten years establishing a foundation in IT

and telecom hardware. In 1994, it acquired an interest in Egypt’s

first ISP, InTouch. This acquisition was its first step in offering

services in the communications marketplace. As the

communications sector in Egypt began to be privatized, Orascom

continued to add more service companies to its portfolio, and

was a participant in a joint venture that was awarded Egypt’s

first license for VSAT technologies, and a lead member of a

consortium formed to create Egypt’s first private payphone

network. By 1997, Orascom was in a position to participate in

the bidding for a GSM license in Egypt, having proven itself in

the marketplace as an IT and telecom hardware leader, in addition

to building up the know-how and skills in managing large scale

projects and understanding local market conditions.

On July 27, 1997, OTH was incorporated to consolidate the

telecommunications and technology interests of the Orascom

family of companies and the controlling shareholders, the Sawiris

family. By 1998, OTH was the only company in Egypt with licenses

in all three privatized sectors: wireless, fixed line payphones and

VSAT technologies.

OTH entered into the GSM business in 1998 through

a series of acquisitions:

• In early 1998

GSM operations were commenced by acquiring 51% of

ECMS (Mobinil) with France Telecom and Motorola.

History andEvolution of

the Company

16

• In October 2003

OTH was awarded a Greenfield license in Iraq’s central

region as a result of a competitive bidding process.

• In July 2004

OTH agreed to renew the license of its Pakistani GSM

subsidiary, Mobilink, for another 15 years to begin after

the expiration of its current license in July 2007 and ending

in July 2022.


OTH purchased 100% of a GSM operation in Bangladesh

and re-branded it as “Banglalink”.

• In May 2005

OTH acquired additional equity stakes in Djezzy in Algeria

and in Tunisiana in Tunisia to reach 87.66% and 50%,

respectively, through a series of transactions.

• In July 2005

OTH acquired all minorities in its GSM operations in Iraq.

• In December 2005

OTH acquired a strategic stake of 19.3% in Hutchison

Telecommunications International Limited.

OTH acquired 19.3% in

Hutchison Telecommunications

International Limited (HTIL).

After operating 21 licenses in Africa and the Middle

East, OTH decided to divest smaller non-core assets

and focus on its core operations to build value:

• In January 2002

OTH started restructuring its 12 operations in sub-Saharan

Africa under Telecel.


SabaFon in Yemen was divested.


OTH sold Fastlink in Jordan for US$ 423 million.

• In May 2003

OTH finalized the sale of seven GSM assets in sub-Saharan Africa.


OTH announced the sale of 51.7% equity stake of Telecel

Loteny in the Ivory Coast.


OTH closed the sale of Oasis Telecom in the Democratic

Republic of Congo.


OTH signed a definitive agreement to sell its GSM operation

in Congo Brazzaville, Libertis Telecom (“Liberits”).

Disclosure &ShareholderInformation

Orascom Telecom Holding S.A.E. (“OTH”) maintains a trusting

relationship and a high level of disclosure with all its shareholders

through press releases, quarterly earning releases and an updated

website with all relevant operational and financial information

in addition to reporting its financials in Egyptian Accounting

Standards (LE) and International Financial Reporting Standards (US$).

Ownership Structure

Weather Investments owns 50% of OTH, the Sawiris family owns

6.5%, and the remaining 43.5% is free float.

Stock Split

As at January 8, 2006, OTH’s common stocks were split two-

for-one on the Cairo & Alexandria Stock Exchange (CASE),

changing the nominal value of the local shares from LE 10 to LE 5.

Share Ownership Program for Employees

As part of its commitment to motivation and retention of OTH’s

employees, an ESOP plan was launched, having an ownership of

less than 1% of OTH shares.

Paid in Captal

As at December 31, 2005, OTH’s paid in capital was LE 1.1 billion,

divided into 110 million shares, each with a nominal value of LE 10.

Dividends

The Board of Directors of OTH agreed to distribute dividends

to its shareholders twice during 2005. The first dividend was in

May, 2005 when a dividend payment of LE 2.5 per share was

distributed. The second dividend was in November, 2005 when

a dividend payment of LE 5 per share was distributed.

Disclosure &ShareholderInformation

MSCI

OT GDR

OTH’s GDR Performance in 2005

* MSCI: Morgan Stanley Emerging Markets Telecom Index

134%

21%

Price (US$) % Change

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

250

200

150

100

50

0

20

Dividend Policy

OTH’s primary goal is to maintain sufficient reserves and liquidity

to ensure operational and financial needs and maintain high

business growth and potential acquisitions. OTH intends to

operate a progressive distribution policy based on what are

believed to be sustainable levels of dividend payments

supplemented by variable distribution to shareholders of any

excess cash resources. Consequently, dividends will vary from

year to year.

Share Price Performance

At the beginning of 2005, the OTH shares were quoted at

LE 262.2 on the Cairo and Alexandria Stock Exchange (“CASE”).

The highest quotation during the year was LE 626.2, and the

lowest was LE 262.2. At year end, the quotation price was

LE 603.1; this amounted to a 130% increase in value. The market

value as of December 31, 2005 was LE 66.3 billion, which makes

OTH the largest capitalized company on the CASE.

OTH’s shares on the London Stock Exchange (“LSE”) at the

OTH maintains a high level of disclosure.

beginning of 2005 were quoted at US$ 22.9. The highest quotation

during the year was US$ 54, and the lowest was US$ 22.7. At

year end, the quotation price was US$ 53.5; this amounted to

a 134% increase in value. The market value as of December 31,

2005 was US$ 11.7 billion.

Trade

OTH is traded on both the Cairo & Alexandria Stock Exchange

and on the London Stock Exchange under the symbols (ORTE.CA,

ORAT EY) and (ORTEq.L, OTLD LI), respectively.

Disclosure

To ensure full disclosure and transparency, OTH reports its

holding and consolidated financials on a quarterly basis using the

Egyptian Accounting Standards (EAS) simultaneously using US$

consolidated financial statements in accordance with the

International Financial Reporting Standards (IFRS).

GSMOperations

• Djezzy

• Mobilink

• Mobinil

• Tunisiana

• Iraqna

• Banglalink

• Telecel Zimbabwe

OTH serves a population of 460 million

Note: Mobile Penetration is based on December 31, 2005 subscribers number & market share.

ALGERIA

Population: 33 millionMobile Penetration: 32.3%

EGYPT


TUNISIA


with an average penetration of 14.0%.

24

IRAQ

Population: 29 millionMobile Penetration : 15.6%

PAKISTAN


BANGLADESH


Orascom Telecom Algeria SPA operates a GSM network in Algeria

and provides a range of prepaid and postpaid voice, data and

multimedia telecommunications services, under the brand name

“Djezzy”. Djezzy launched its operations in February 2002.

As at December 31, 2005, Djezzy’s network covered approximately

87.6% of the total population of Algeria. Djezzy served over

seven million subscribers by year end, representing a market

share of 61.5 %. Djezzy accounted for 33.3% of OTH’s consolidated

net revenues from operations and 42.4% of OTH’s consolidated

EBITDA for year end 2005.

Despite launching approximately three years after Algerian Mobile

Network (“AMN”), the mobile subsidiary of the incumbent

telecommunications operator Algerie Telecom, Djezzy has

established a clear leadership position in the fast growing Algerian

mobile market. This has been achieved principally by leveraging

OTH’s expertise in network deployment, sales and marketing,

as well as the ability to act to competitive developments. These

skills have assisted Djezzy in the increasingly competitive market

following the award in August 2004 of a third mobile license to

Wataniya Telecom Algeria, the Algerian subsidiary of Wataniya

Telecom, a Kuwaiti telecommunications company.

Djezzy has already invested considerably in its network, it plans

to further invest in the capacity, coverage and quality of its

network to meet the anticipated growth in subscribers over the

next 12 months. Djezzy also intends to roll out a range of Value

Added Services based on GPRS and EDGE technologies.

Algerian Telecommunications Market.

Fixed telecommunications services in Algeria are provided

principally by Algerie Telecom, the incumbent state-owned fixed

telecommunications operator. In February 2006, OTH and Telecom

Egypt launched a fixed line telecommunication services in Algiers,

under the brand name “Lacom”. GSM services are provided by

three mobile operators, Djezzy, AMN and Wataniya Telecom

Algeria.

Djezzy’s aggressive commercial strategy drove revenues to reach

US$ 1,074 million, a 43% increase year-on-year. EBITDA for the

year end stood at US$ 576 million, with an EBITDA margin

of 53.7%.

Services and Marketing.

Djezzy provides both basic voice and Value Added Services to

its corporate and retail subscribers. In addition to basic voice

services, Djezzy provides its subscribers with Value Added Services

Djezzy-ALGERIA

CEO: Hassan Kabbani

CFO: Alain Piquemal

Djezzy the market leader

with a 67% market share.

26

such as: Voice Mail, Call Line Identification presentation or

restriction, Missed Call Alert, Call Waiting, Call Forwarding,

International Roaming, SMS and data services.

Djezzy’s revenues are overwhelmingly driven by the voice services

it provides. Djezzy offers both prepaid and postpaid telephony

services. As at December 31, 2005, prepaid subscribers

represented approximately 97% of Djezzy’s total subscribers.

Djezzy markets its prepaid services using the “Djezzy Carte”

and “Allo” trade names and “Djezzy Enterprise” targeted at the

business segment.

During 2005, Djezzy launched a portfolio of products and services

that enhanced its competitive position in the market, such as

the E-voucher with the “Flexy” brand and the peer to peer credit

transfer under the “Credit-SOS” brand.

Djezzy is being integrated into the standard and prepaid roaming

capabilities supported by most of OTH’s country operations

and, as at December 31, 2005, provided its subscribers with

roaming in more than 111 countries with 264 international

operators.

Network.

As at December 31, 2005, Djezzy’s network covered approximately

87% of Algeria’s population, spreading its coverage over the 48

wilayas (provinces) in the country and providing on-road coverage

along major national highways. Djezzy’s growth was also sustained

by an aggressive network rollout which reached over 3,000 base

stations by year end, in comparison to 1,800 last year.

To reduce reliance on Algerie Telecom’s network, Djezzy in 2004

launched its own synchronous digital hierarchy (“SDH”) backbone

network on a national scale. These axes are currently being

expanded to provide additional capacity as well as redundancy

through the use of secured rings. Furthermore, the deployment

of a submarine cable between Algiers, Annaba and Marseilles will

extend national and international capacity and improve reliability

of the service.

Ownership and Governance.

OTH has an 87.68% economic interest in Djezzy, and it has

increased its stake in March 2005 from 58.35% to the current

ownership. Other shareholders include Emirates International

Investment Company (EIIC) and a local investor. Under the terms

of Djezzy’s license, OTH is required to retain more than 50% of

the share capital and voting rights of Djezzy at all times.

Djezzy-ALGERIA 28

Subsidiary Highlights

Financial Data

Revenues (US$ 000)

EBITDA (US$ 000)

EBITDA Margin

Capex (US$ m)

Subscribers

Prepaid

Postpaid

Market Share

ARPU (US$) (3 months)

MOU (YTD)

Churn (YTD)

748,887

459,046

61.3%

408

December 2004 December 2005

1,073,960

576,392

53.7%

457

%

43.4%

25.6%

(7.6%)

12.0%

Operational Data

3,418,367

3,236,830

181,537

73.0%

21.0

198

15.5%

7,109,009

6,866,200

242,809

61.5%

12.8

153

51.2%

108.0%

112.1%

33.8%

(11.5%)

(39.0%)

(22.7%)

35.7%

Pakistan Mobile Communications Ltd (“Mobilink” or “PMCL”)

operates a GSM network in Pakistan and provides a range of

prepaid and postpaid voice and data telecommunications services,

using the brand name “Mobilink”. Mobilink launched its operations

in August 1994.

As at December 31, 2005, Mobilink’s network covered over 95%

of the total urban population of Pakistan. Mobilink served

approximately 11 million subscribers as at December 31, 2005,

representing a market share of approximately 56.2% of the total

mobile subscribers in Pakistan.

The Pakistani mobile telecommunications market in general, and

Mobilink in particular, are currently experiencing significant

growth. A combination of factors affecting the market as a whole

have contributed to this growth, including the introduction in

2001 of tariffs based on the “Calling Party Pays” principle, the

strong performance of the Pakistani economy, which has been

a function of both economic reform and increased political

stability, and the recent entry of new operators.

The entry in March and May 2005 of two new operators, Telenor

and Al Warid Telecom, into the mobile telecommunications

market in Pakistan has aided in increasing the market size and

competition. Nevertheless, Mobilink’s recognition within the

market, its history of cash generation and profitability, the support

of its majority shareholder, and the existing coverage and quality

of its network provide Mobilink with a strong foundation on

which to consolidate its market leadership.

Pakistani Telecommunications Market.

Fixed telecommunications services in Pakistan are provided

principally by Pakistan Telecommunications Limited (“PTCL”), of

which 74% is state owned and the remaining 26% is held by

CEO: Zouhair A. Khaliq

CFO: Ehab Rochdy

Mobilink-PAKISTAN

Serving over 11 million

subscribers.

30

Etisalat. There are six mobile operators; Pakcom (Pvt.) Limited

(“Pakcom”), Mobilink, Paktel (Pvt.) Limited (“Paktel”), Pakistan

Telecom Mobile Limited, a subsidiary of PTCL, Telenor and Al

Warid Telecom. Telenor commenced operations in March 2005

and Al Warid Telecom launched operations in May 2005.

Mobilink’s management estimates that, as at December 31, 2005,

fixed line teledensity in Pakistan was 3.4% and mobile penetration

was 12.4%.

During 2005, revenue performance followed the growth in

customer base, growing to reach US$ 733 million in the year

ending on December 31, 2005 in comparison to US$ 379 million

in 2004, a 93% increase from the same period last year. EBITDA

for the year end stood at US$ 298 million, with an EBITDA

margin of 40.6%.


Mobilink provides both voice and Value Added Services to its

corporate and retail subscribers. Mobilink provides its subscribers

with Value Added Services such as: Voice Mail, Close User Group,

SMS, Call Waiting/Holding, Call Forwarding, Call Line Identification

presentation and restriction, free minutes and services such as

MMS through its GPRS platform.

Mobilink’s revenues are overwhelmingly driven by the voice

services it provides. Mobilink offers both prepaid and postpaid

services. As at December 31, 2005, prepaid customers accounted

for approximately 97% of total subscribers. Mobilink markets its

prepaid services using the “Jazz” trade name, and markets its

postpaid services using the brand names “Indigo”.

During 2005, Value Added Services were a focus. The year saw

the introduction of GPRS for both the prepaid and the postpaid

segments. Moreover, the launch of Blackberry services during

the last quarter of 2005 was a major milestone for Mobilink.

During the 3GSM World Congress in Barcelona, Mobilink received

the Research in Motion (RIM) Blackberry Award of Excellence

for 2005. The service, being exclusively offered by Mobilink, is

aimed at the high-end market and is fast becoming a major

offering in the corporate portfolio.

On the postpaid side, Indigo launched “Freedom Plans”, catering

to the needs of the high end corporate market. Keeping in pace

with market trends and liberal regulation, international calling

prices were also reduced significantly for the prepaid and postpaid

Mobilink-PAKISTAN

segment. As at December 31, 2005, Mobilink had entered into

more than 230 roaming agreements with foreign operators in

approximately 100 countries.

Network.

As at December 31, 2005, Mobilink’s network covered over 95%

of Pakistani cities and towns and provided on-road coverage

along major highways. Moreover, its mobile networks were

comprised of 24 switches and 3,267 cell sites in more than 415

cities and towns.


OTH has an 88.69% economic interest in PMCL and the remaining

equity is owned by a strategic local investor.

32


Financial Data

Revenues (US$ 000)

EBITDA (US$ 000)

EBITDA Margin

Capex (US$ m)

Subscribers

Prepaid

Postpaid

Market Share


MOU (YTD)

Churn (YTD)

379,484

212,410

56.0%

340


732,594

297,663

40.6%

615

%

93.1%

40.1%

(15.4%)

80.9%

Operational Data

5,065,732

4,870,855

194,877

63.8%

9.7

173

8.0%

11,119,196

10,831,067

288,129

56.2%

6.7

156

17.3%

119.4%

122.4%

47.9%

(7.6%)

(30.9%)

(9.8%)

9.3%

The Egyptian Company for Mobile Services (“Mobinil” or “ECMS”)

operates a GSM network in Egypt and provides a range of prepaid

and postpaid voice and data telecommunications services, using

the brand name “Mobinil”. Mobinil launched its operations in

May 1998.

As at December 31, 2005, Mobinil’s network covered

approximately 91% of the total population of Egypt. Mobinil

served approximately 6.7 million subscribers, representing a

market share of approximately 52.2% of total mobile subscribers.

Mobinil’s shares were listed on the Cairo and Alexandria Stock

Exchange (CASE) since May 10, 1998. Mobinil is among Egypt’s

five largest companies by market capitalization and is among

Egypt’s five most heavily traded companies (by value).

In 2005, the Egyptian mobile telecommunications market in

general, and Mobinil in particular, have experienced a re-

acceleration of growth. This growth is driven by a combination

of factors, including significantly improved macroeconomic

conditions in Egypt and an increased focus on consolidation of

market share by the existing operators, Mobinil and Vodafone

Egypt, prior to the anticipated entry of a third operator in the

market in 2007.

Egyptian Telecommunications Market.

Fixed telecommunications services in Egypt are provided principally

by Telecom Egypt, the incumbent government-owned fixed line

operator. There are two GSM mobile operators, Mobinil and

Vodafone Egypt. Telecom Egypt owns 25.5% of Vodafone Egypt.

The Egyptian telecommunications regulator has invited bids for

a third GSM license which will incorporate an entitlement to

use frequencies enabling 2G and 3G services. The process started

in mid-February 2006 with final bids to be presented in May 2007.

Mobinil’s management estimates that, as at December 31, 2005,

fixed line teledensity in Egypt was 14.4%. As of December 31,

2005, Egypt had a mobile penetration rate of 17.3%, Mobinil had

a 52.2% market share in the Egyptian mobile market by subscribers

and Vodafone Egypt had a 47.8% share.

CEO: Alex Shalaby

CFO: Rana Abbadi

Mobinil-EGYPT

The leading mobile

operator on the Nile.

34

For the year ending 2005, revenues stood at US$ 924 million,

an increase of 27% year-on-year, with an EBITDA margin of

51.4%. Net income increased by 65% year-on-year, reaching US$

249 million. Mobinil completed the last payment of its US$ 220

million loan during the fourth quarter of 2005. In the second

and third quarters of 2005, the company drew down LE 1 billion

of the LE 1.8 billion eight-year long-term loan facility established

during the second quarter of 2005.


Mobinil provides both basic voice and Value Added Services to


services, Mobinil provides its mobile subscribers with Value Added

Services such as: Voice Mail, Caller Identification, Call Waiting/

Holding, Call Forwarding and data services such as SMS,

Information Services, MMS and WAP based on GPRS technologies.

Mobinil’s revenues are overwhelmingly driven by the voice

services it provides. “Mobinil Life” was launched in September

2003 in partnership with ARPU+ and LINKdotNET, both of

which are majority owned and controlled affiliates of Orascom

Telecom, to meet the rising demand for the personalization of

mobile services, video messages, downloading Java based three

dimensional games, polyphonic ring tones and animated greeting cards.

Mobinil offers both prepaid and postpaid telephony services. On

December 31, 2005, prepaid subscribers represented

approximately 86% of Mobinil’s total subscribers. Mobinil markets

its prepaid services using the “Mobinil ALO” trade name.

Mobinil’s pricing strategy is to offer subscribers a variety of

subscription options designed to suit their different usage levels

while still providing Mobinil with stable revenues from monthly

subscription fees. In its postpaid services offering, Mobinil has

promotional packages that reduce the price per minute depending

on the intensity of use.

In anticipation of increased competition from a potential new

operator, and in order to address continued rapid growth for

mobile services in Egypt, Mobinil is developing a strategy to

address lower income customers in Egypt. Such lower spending

customers are expected to represent an important component

of increased mobile market penetration in the future.

Mobinil-EGYPT 36

In January 2005, Mobinil launched an innovative new tariff plan

branded “Alo Magic”, targeting lower spending customers through

a low priced option. Mobinil is focused on reducing barriers to

entry for its customers through the introduction of lower-priced

handsets.

In addition, Mobinil is also focused on enhancing its service

provision to the more affluent, postpaid segment. In 2005, Mobinil

launched the postpaid call and control “Primo” offer to combine

the benefits and rates of a postpaid subscription with the flexibility

and convenience of prepaid usage.

As of December 31, 2005, Mobinil had entered into roaming

agreements with 261 foreign operators, including 2 satellites, in

112 countries.

Mobinil’s brand name “Mobinil” is a well established and recognized

brand in Egypt. Mobinil also has sub-brands “Mobinil Alo”, “Mobinil

Monthly Subscription” and “Mobinil Business”.

Network.

As at December 31, 2005, Mobinil’s network covered

approximately 8% of Egypt’s territory, 91% of the population,

including 322 towns and cities and 69 major roads and highways.


ECMS is owned by OTH, subsidiaries of Orange S.A. and public

market equity investors. OTH has a 31.26% economic interest

and subsidiaries of Orange S.A. have a 36.34% economic interest

in ECMS, respectively. The remaining shares of ECMS are publicly

traded on the Cairo and Alexandria Stock Exchange.


Financial Data

Revenues (US$ 000)

EBITDA (US$ 000)

EBITDA Margin

Capex (US$ m)

Subscribers

Prepaid

Postpaid

Market Share


MOU (YTD)

Churn (YTD)

729,513

358,088

49.1%

110


923,752

474,360

51.4%

427

%

26.6%

32.5%

2.3%

288.2%

Operational Data

4,015,948

3,152,313

863,635

53.5%

15.3

207

14.6%

6,695,993

5,770,380

925,613

52.2%

11.1

161

11.4%

66.7%

83.1%

7.2%

(1.3%)

(27.5%)

(22.2%)

(3.2%)

Orascom Telecom Tunisie Limited (“Tunisiana” or “OTT”) operates

a GSM network in Tunisia and provides a range of prepaid and

postpaid voice and data telecommunications services, using the

brand name “Tunisiana”. Tunisiana launched its operations in

December 2002.

As at December 31, 2005, Tunisiana’s network covered

approximately 99% of the total population of Tunisia. Tunisiana

served approximately 2.3 million subscribers, representing a

market share of approximately 42.8% of total mobile subscribers

in Tunisia.

The Tunisian mobile telecommunications market in general, and

Tunisiana in particular, are currently experiencing growth, which

is driven by a combination of factors, including strong economic

growth and political stability in Tunisia.

Tunisiana intends to increase its market share primarily through

the quality of the products and services it offers and by enhancing

its customer focus. This strategy has resulted in market share

gains in recent months.

Tunisian Telecommunications Market.

Fixed telecommunications services in Tunisia are provided

principally by Tunisie Telecom, the incumbent state-owned fixed

line operator. There are two GSM mobile operators, Tunisiana and

Tunisie Telecom. The duopoly in the GSM mobile market shared

by Tunisiana and Tunisie Telecom expired on November 30, 2004.

The Tunisian government has privatized Tunisie Telecom by offering

35% stake of the company and commenced this process in the

end of 2005.

CEO: Jean Pierre Roeland

CFO: Scott Gegenheimer

Tunisiana-TUNISIA

Tunisiana became one of

the most vibrant and

innovative companies

within Tunisia.

38

Tunisiana’s management estimates that, as at December 31, 2005,

fixed line teledensity in Tunisia was more than 12% and mobile

penetration was 53%. Considering the small population and

wealth distribution of Tunisia, a prevailing penetration rate of

53% might represent a significant challenge for any prospective

third GSM operator.

Tunisiana’s positive performance is reflected in its revenues which

stood at US$ 321 million, a 41% increase over the same period

last year, driven by the growth of the customer base. EBITDA

for the year ending 2005 stood at US$ 122 million, 45% higher

than year end 2004. EBITDA margin stood at 37.9% in December 2005.


Tunisiana provides both basic voice and Value Added Services to


services, Tunisiana provides its subscribers with Value Added

Services such as: Voice Mail, detailed monthly billing, Call Line

Identification presentation or restriction, Call Waiting/Holding,

Call Forwarding, International Roaming and data services such

as SMS. Tunisiana’s network deploys EDGE and GPRS technologies

and Tunisiana provides a range of Value Added Services based on

these technologies. Tunisiana is also being integrated into the

standard roaming and prepaid roaming capabilities supported by

most of OTH’s country having 276 standard roaming agreements

in 132 countries.

Tunisiana’s revenues are overwhelmingly driven by the voice

services it provides. Tunisiana offers both prepaid and postpaid

telephony services. As at December 31, 2005, prepaid subscribers

represented approximately 98.7% of Tunisiana’s total subscribers.

Tunisiana offers seasonal promotions, such as those in the summer

and during Ramadan, which have helped Tunisiana to increase its

Tunisiana-TUNISIA 40

subscriber base to more than one million. Tunisiana also has

developed the following sub-brands: ‘‘Carta’’, ‘‘Carta+’’, a prepaid

offer for new subscribers and low-end users, ‘‘Awal’’ for frequent

users of both its prepaid and postpaid services and ‘‘Business’’

and ‘‘Business Control’’ for corporate customers.

Network.

As at December 31, 2005, Tunisia’s network provided coverage

from Bizerte and Tunis in the north to Djerba and Kairouan in

the south, offering service over an area covering 99% of Tunisia’s

population.


OTH has a 50% economic interest in OTT through two wholly-

owned subsidiaries which own 35% and 15% of the shares in

OTT, respectively. In a series of transactions during 2005, OTH

increased its economic interest in OTT from 20.26% to 50.00%.


Financial Data

Revenues (US$ 000)

EBITDA (US$ 000)

EBITDA Margin

Capex (US$ m)

Subscribers

Prepaid

Postpaid

Market Share


MOU (YTD)

Churn (YTD)

227,352

83,847

36.9%

121


320,990

121,506

37.9%

106

%

41.2%

44.9%

1.0%

(12.4%)

Operational Data

1,047,516

1,028,156

19,360

29.4%

21.4

173

15.0%

2,257,662

2,228,638

29,024

42.8%

12.5

129

23.7%

115.5%

116.8%

49.9%

13.4%

(41.6%)

(25.4%)

8.7%

Orascom Telecom Iraq Corp. (‘‘Iraqna’’ or ‘‘OTI’’) operates a

GSM network in Iraq, and provides a range of prepaid and

postpaid voice and data telecommunications services using the

brand name ‘‘Iraqna’. Iraqna launched its operations in

December 2003.

As at December 31, 2005, Iraqna’s network covered 100% of

Iraq’s total population in the central region of Iraq. Of the three

regions for which individual licenses have been granted, the

central region is the most populous, containing over 33% of

Iraq’s population, or approximately 9.6 million inhabitants. The

central region contains some of Iraq’s wealthiest, most urbanised

and most industrial areas, including Baghdad and the governorates

of Anbar and Diyala. Iraqna served approximately 1.8 million

subscribers as of December 31, 2005, representing a market

share of approximately 40.5% of total mobile subscribers in Iraq.

Despite having been granted its license only two years ago, Iraqna

has achieved a leadership position in the fast-growing mobile

market of central Iraq.

Iraqna faces operational difficulties ranging from security risks

affecting its employees and assets, lack of consistent electricity,

shortage of gasoline for generators, no insurance companies and

logistical issues relating to the delivery and storage of network

equipment. As a result of these difficulties, Iraqna has not been

able to deploy the network at a pace that it otherwise would

have been able to do.

Iraqi Telecommunications Market.

Fixed telecommunications services in Iraq are provided principally

by the Iraq Telephone and Post Company (the ‘‘ITPC’’). There

are five GSM mobile operators, Iraqna, Asia-Cell, MTC Atheer,

Korek Telecom and Sanatel (the latter two Kurdish operators

operating in the north part of Iraq).

Iraqna’s management estimates that, as at December 31, 2005,

fixed line teledensity in Iraq was approximately 3.4% and mobile

penetration was 15.6%.

CEO: Alain Saint Marie

CFO: Leo Skarlados

Iraqna-IRAQ

Operating in adverse

conditions.

42

During 2005, revenues continued to soar growing from US$ 161

million in December 2004 to US$ 333 million in December

2005, a 107% increase year-over-year. EBITDA stood at US$ 233

million and EBITDA margin at 69.8%.


Iraqna offers both basic voice and Value Added Services to its

corporate and retail subscribers. Iraqna provides its subscribers

with Value Added Services such as Voice Mail, detailed monthly

billing, Call Line Identification presentation, Call Waiting/Holding,Call Forwarding and International Roaming and data servicessuch as SMS. Iraqna offers both prepaid and postpaid telephonyservices. As of December 31, 2005, prepaid subscribers representedapproximately 96% of Iraqna’s total subscribers.

The postpaid segment has experienced difficulties in the pastand is currently available only for corporate customers andrequires significant documentation.

44


Financial Data

Revenues (US$ 000)

EBITDA (US$ 000)

EBITDA Margin

Capex (US$ m)

Subscribers

Prepaid

Postpaid

Market Share


MOU (YTD)

Churn (YTD)

161,211

94,307

58.5%

89


333,267

232,736

69.8%

125

%

106.7%

146.8%

11.3%

40.4%

Operational Data

573,944

426,530

147,414

100.0%*

29.1

253

5.6%

1,849,602

1,780,438

69,164

40.5%

20.8

344

20.3%

222.3%

317.4%

(53.1%)

na

(28.5%)

36.0%

14.7%

* Iraqna was the only mobile company that provided GSM services in Iraq’s central region until March 2005.

Iraqna-IRAQ

There is also a growing demand for international access and

roaming. Accordingly, Iraqna has established three product

offerings to appeal to those customers seeking prepaid, postpaid

and international services.

Network.

As at December 31, 2005, Iraqna’s network covered approximately

90% of the cities and towns in the central region of Iraq. Since

November 2004, Iraqna’s network coverage has included Basra,

Naiaf and Karbala in the southern region of Iraq.


OTH has a 100% economic interest in OTI, having acquired the

remaining shares which were owned by financial investors and

repaid certain shareholder loans for approximately US$ 46 million.

Sheba Telecom (Pvt.) Limited (‘‘Banglalink’’ or ‘‘Sheba’’) operates

a GSM telecommunications business in Bangladesh and provides

a range of prepaid and postpaid voice and data telecommunications

services, using the brand name ‘‘Banglalink’’.

As at December 2005, Banglalink’s network covered approximately

82% of the total population of Bangladesh. Banglalink served

approximately 1.2 million subscribers as of December 31, 2005,

representing a market share of approximately 12% of total mobile

subscribers in Bangladesh.

In September 2004, OTH purchased 100% of the shares of

Banglalink. Since then, OTH has installed new management,

upgraded the network, set up a distribution network and points

of sale, and rebranded the operation ‘‘Banglalink’’. In February

2005, Banglalink relaunched its network, capable of offering

prepaid services for the first time in nine major cities in Bangladesh,

and began to rapidly acquire new customers.

Since it re-launched in February 2005, Banglalink’s strategy has

focused on actively promoting its products and services in order

to create brand awareness. It launched services with special

offers and has offered airtime and SMS bonus offers for customers

with high-usage.

Bangladeshi Telecommunications Market.

Fixed telecommunications services in Bangladesh are provided

principally by the Bangladeshi Telegraph and Telephone Board

(the ‘‘BTTB’’), the incumbent state-owned fixed line operator.

There are five GSM mobile operators, Sheba (‘‘Banglalink’’),

GrameenPhone, TM International (Bangladesh) Ltd. (‘‘TMIB’’),

Pacific Bangladesh Telecom Ltd. (‘‘PBTL’’) and Teletalk Bangladesh

Ltd. (‘‘Teletalk’’), a subsidiary of BTTB. A sixth GSM mobile

operator, Al Warid Telecom, was recently awarded a license.

Banglalink’s management estimates that, as at December 31,

2005, fixed line teledensity in Bangladesh was 0.7% and mobile

penetration was 7.3%.


Banglalink provides its subscribers with basic voice services,

messaging services, including SMS, SMS e-mail and SMS chat, and

Value Added Services such as: Voice Mail, detailed monthly billing,

Call Line Identification presentation or restriction, Call

Waiting/Holding, Call Forwarding and International Roaming.

Banglalink offers prepaid and postpaid telephony service.

As at December 31, 2005, prepaid subscribers represented

approximately 96% of Banglalink’s total subscribers.

CEO: Lars P. Reichelt

CFO: Ezz Heikel

In ten months only,Banglalink crosses onemillion subscribers.It is the fastest growingOTH company.

46

Banglalink has entered into international roaming agreements

with 295 operators. Banglalink’s marketing strategy is focused

on rapidly expanding its network coverage and competing

on price.

Network.

As at December 31, 2005, Banglalink covered 61 districts with

767 cell sites on air, as compared to 67 sites on air when Banglalink

was acquired. OTH owns 100% of the shares of Banglalink.


Financial Data

Revenues (US$ 000)

EBITDA (US$ 000)

EBITDA Margin

Capex (US$ m)

Subscribers

Prepaid

Postpaid

Market Share


MOU (YTD)

Churn (YTD)

—

—

—

—


39,036

(38,842)

(99.5%)

113

%

na

na

na

na

Operational Data

25,709

—

—

1.0%

—

—

—

1,221,761

1,176,704

45,057

12.0%

4.9

167

0.2%

4652.3%

na

na

11.0%

na

na

na

Telecel Zimbabwe increased its subscriber base in 2005 to reach

129,391 while significantly reducing network congestion.

The year started on a high note for the Company’s commitment

to quality with Telecel Zimbabwe obtaining ISO 9001 certification,

and becoming the first telecommunications company in the

sub-Saharan region to achieve this certification.

Underlining the changes brought about by the ISO process and

the focus on customer value, Telecel re-branded its flagship

prepaid service as “JuiceChat”. The new brand name captures

the brand equity emanating from the concept of “juicing up” or

recharging an account, which was introduced at the introduction of

prepaid services.

Telecel Zimbabwe expanded its network in 2005. As the

installation of 26 new base stations progressed, radio network

congestion was relieved as a result of capacity being increased

by over 25%. As with the payphone initiative, the goal of this

expansion is to see the Company serving an increased portion

of the Zimbabwean population. Towards the end of the year, a

new Short Message Service platform was commissioned to meet

increased demand for SMS services. The year ended on a solid

note with the implementation of coverage of one of the country’s

busiest entry/exit ports at Plumtree.

CEO: JD Swaim

CFO: Rex Chibesa

Telecel-ZIMBABWE

Internet• LINKdotNET

52

Infrastructure

• It upgraded the international bandwidth, due to the continuing

growth and demand of both the Internet and data connectivity

solutions. LDN now has six STM1 and one back-up;

• It prepared a highly reliable Network Infrastructure to support

new protocols and technologies to enable triple play services

in the future;

• It migrated the mail system to a Hosted Exchange environment,

offering messaging and collaboration features to the mailboxes,

making them accessible through different devices;

• LINKdotNET data center has grown to hold the largest data

traffic in Egypt;

• It enlarged the DSL coverage by opening new DSL pops in

several new areas.

Link Development

Founded in 1996 as a subsidiary of LINKdotNET, Link

Development has also developed, applied and refined methods

for delivering leading-edge technology solutions. Recently, Link

Development achieved ISO 9001:2000 Certification, further

complementing the company's current standing as a world-class

provider of business solutions.

Some of the projects that were delivered in 2005:

• E-Government Projects:

• Sales Tax Authority Services:

The STA currently has 128 service branches all over the

country, with over 132,000 registered companies.

The system, designed by LINKdotNET, allows these companies

to access all sales-tax related services online, including

registration, submitting tax forms, balance inquiries, installments,

and appeals;

• Mega Club Portal:

An exciting new portal, providing extensive Arabic content

and e-learning materials to all members of the 1000 IT clubs

covering Egypt;

• Telecom Egypt Intranet:

Arabic intranet for Telecom Egypt’s 54,000 employees;

• Showtime Intranet:

Regional bilingual intranet for Showtime employees in Saudi

Arabia, the UAE, Egypt, and the United Kingdom;

For over a decade, LINKdotNET (LDN) has developed,

applied and refined methods for delivering leading-edge

technology solutions. The line of services ranges from data

communication to hosting, from e-Solutions to online

advertising, and from consultancy to content provision. The

experienced team, along with the quality standards, enables

LDN to offer leading, fully-integrated technology solutions.

LDN is, in brief, a regional powerhouse, which provides, maintains,

develops and promotes Internet solutions and services.

LINKdotNET Quick Facts

1992 The first ISP in Egypt was established (Infonet and other

online services);

1995 It provided Internet dial-up access to the Egyptian market;

1996 Link Development emerged as a subsidiary;

1998 Dubai operations were launched;

2000 Merger of Link Egypt and InTouch Communications to

form LINKdotNET;

2000 First online advertising agency in Egypt;

2002 Acquisition of eight Internet companies;

2003 Launch of new high-tech network with DSL capability;

2004 Market Leader in ADSL;

2004 Exclusive sales house for Hotmail and Messenger;

2005 Expansion of operations in Pakistan;

2005 First ISP to sign VoIP license in Egypt.

LINKdotNET launched the following during the year

2005:

• Multiple Voice over IP Solutions over VPN Network, which

offer a range of new features and advantages over traditional

phone lines;

• Various mail packages of the new Hosted Exchange Services

for clients with different mailbox needs;

• Connecting Enterprises, SMEs and companies through the

VPN Solutions;

• Web Statistics Solutions, which provide statistical analysis of

any site in terms of number of hits, top referrers, most popular

pages and browsers;

• LINKDSL Max service, allowing its LINKDSL subscribers to

upgrade their speeds to various levels depending on custom needs.

LINKdotNETEGYPT

LDN is a regional

powerhouse, which

provides, maintains,

develops and promotes

Internet solutions and

services.

54

* LINKdotNET was granted ISO 9001:2000 Certification.

* LINKdotNET Data Center was elected to become a member

of Global Infrastructure Alliance for Internet Safety (GIAIS). The

aim of this alliance is to help protect Internet users worldwide

from threats, such as viruses, worms, and other harmful codes,

by providing education and Internet security services.

LINKdotNET OfficesLINKdotNET has its head office in Cairo, Egypt. The company

has more than 10 offices in Cairo and Alexandria. In addition,

LINKdotNET has regional offices in Dubai, UAE, Riyadh, Saudi

Arabia, and Islamabad, Pakistan. The company employs more

than 700 consultants, web developers and support staff in Egypt

and the region to deliver world class Internet and e-solutions

to its users and clients.

• Tejari Portal:

Tejari – The leading business-to-business marketplace in the

Middle East;

• Microsoft ME Partners Portal:

Allows Microsoft partners in the Middle East and Africa to

exchange information related to solutions, business

opportunities, events, case studies, and feedback received from

customers;

• Al Ahly Club Official Portal:

It developed the official web portal for Al Ahly Club; thereby

making an important contribution to Egyptian sports.

• Consumer Business• In terms of the dial-up service 07770777, LDN was able to

maintain its position as the number one free Internet number

in Egypt with the highest market share;

• As regards LINKDSL, LDN was also able to sustain its market

leadership of ADSL service in Egypt, as well as launching the

new LINKDSL Max service to its clients.

Over 500 Million pages views

Over 5 Million unique visitors

• MSN Arabia – Leading network in the region, with a dual-

language interface catering to Arabic and English speakers in

the Arab world, while offering a vast array of content and

services, which include Hotmail, Messenger, a search engine,

and portal services.

• Masrawy.com – Leading Egyptian portal, providing a wide

range of diversified content, Value Added Services and interactive

features which attract a vast number of Arabic-reading

Internet users.

• CareerMidEast.com – The pioneer online recruitment

and career development medium in the region, catering to

job seekers, employers, recruiters and training centers in the

Middle East and North Africa.

• Yallakora.com – The first Arabic football enthusiast's

website, housing fantasy football and prediction games.

• Otlob.com – Egypt's first online food delivery service and

e-commerce portal.

• Yallabina.com – The region's premier online entertainment

guide.

• ArabFinance.com – The leading financial portal in Egypt

offers a turnkey solution for online trading in the Egyptian

Stock Market.

• El3ab.com – The online gaming site for the Middle East,

featuring Arab traditional games: Tarneeb, Estimation, Basra,

KonKan and Tawla. An interactive site with alluring content,

making it today’s ideal online gaming playground.

• Mazika.com - The largest music portal in the Middle East.

• bSolutions - The pioneer business website that helps small

businesses in the Middle East manage everyday processes –

anytime, anywhere and on any device.

Top Achievements for 2005:* Microsoft Worldwide selected LINKdotNET for the '2005

Winning Customer Award Winner' in the .NET Application

Platform category. This award is on the EMEA region-level

(Europe, Middle East and Africa).

* LINKdotNET was awarded “Telecommunications Partner of

the Year” during the Microsoft Egypt Partners Awards Ceremony

that took place at the Hyatt Hotel, Egypt, June 2005. The award

came in recognition of LINKdotNET’s continuous work and

excellence in the services and solutions provided.

* In 2005, LINKdotNET earned the Microsoft Certified Gold

Partnership in Microsoft Business Solutions. This new Microsoft

certification comes for the implementation of the Microsoft Business

Solutions Customer Relationship Management (CRM) solution.

LINKdotNETEGYPT

GSMOperations Support

• International Gateway

M-Link

• Value Added Services

Arpu+

• Handsets and Distribution

Ring

• Infrastructure and Services

Oraslnvest

58

M-Link, a 100%-owned subsidiary of the OTH, has provided

international voice and data communications services since 2001,

as well as other related support services such as STP transit,

Internet access, and coordination of roaming contracts.

In 2005, M-Link reinforced its unique position into Africa, the

Middle-East and Asia with 20 direct interconnections relayed by

50 international carriers, including most of the top 20 worldwide.

Also in 2005, Tunisia, Pakistan and Algeria were connected to M-

Link via submarine cables in order to enhance overall quality

of service.

MedCable, the Orascom trans-Mediterranean undersea cable,

was switched on between Marseilles in France and Annaba in

Algeria in November 2005. Further extensions in Algeria will

become operational in 2006.

M-Link’s optical fiber access backbone was also secured to the

international POPs in Paris, London and Brussels, and extended

to New-York, Amsterdam and Frankfurt.

To support that growth, M-Link developed a unique non-intrusive

permanent Voice Quality monitoring system. Finally, M-Link

deployed a full IP switching and transmission infrastructure in

order to provide quality and direct gateway to emerging

technologies in MEA and major countries in the world.

This network serves both mobile and fixed line subscribers, and

supports multiple transmission technologies from traditional

voice communications to Voice over Internet Protocol and data

transmission. It also supports Internet and Intranet applications

for public and corporate usage, as well as C7 signaling links used

in many GSM applications for roaming or SMS messages conveyance.

M-LinkBELGIUM

International Gateway

MedCable, the Orascom

trans-Mediterranean

undersea cable, was

switched on between

France and Algeria.

ARPU+, a rapidly growing OTH subsidiary specialized in providing

Value Added Services (VAS) through its combined GSM market

expertise and application development capabilities, was launched

in October 2003. Boasting a heritage straddling both the GSM

and Internet worlds, ARPU+ is well positioned to be a leading

regional Data Service Provider in North Africa and the Middle

East, with its main offices in Algeria, Dubai, and Pakistan, and its

head office in Egypt, as well as an expansion of its activities in

Europe, with an office in Italy and an affiliate in France.

ARPU+ relies heavily on ongoing development and innovation

of its products, services and offerings to its consumers, helping

the company secure a prominent name and established status

in a short time. Creative applications built on solid service layers,

coupled with premium content that is of interest to the consumer,

help to maximize the consumer’s experience through the mobile

channel.

ARPU+ works together with an extensive array of global and

local strategic partners to provide its clients with locally-based

solutions. These include: Application Providers, such as GameLoft;

Technology Providers, such as Microsoft, Logica and Alcatel; and

Content Providers, such as Universal, EMI, Rotana, Alam EL Phan,

Melody, BBC News, Reuters and others. This is to facilitate all

its operations in the different markets with diverse content to

cater to all segments and varied tastes.

ARPU+ operates on a wide economic scale, to uniquely provide

services at competitive prices. Moreover, what distinguishes

ARPU+ is the multitude of its services, which range from applicable

services for speedy integration of businesses, to utilization of its

planning networks in all specializations.

All these features have enabled ARPU+ to be a pioneer and the

leading company in integrated (VAS) services in the Middle East

and North Africa in a very short time.

During 2004 and 2005, ARPU+ grew in numerous ways:

Customer base expansion

Customers in the wide spectrum of the target market consist

of network operators, corporate and business partners and

end users. These customers are connected to a world of

enriching experiences, ranging from mobile entertainment

and animated jokes, all the way to infotainment and community

applications.

Network operators offered services: ARPU+ offers its

network operators gateway solutions (SMS, MMS, & IVR),

multimedia portal development, content management and

aggregation, in addition to turnkey solutions for ring-back

tones and over-the-air JAVA applications.

Arpu+EGYPT

Value Added Services

ARPU+ is well positioned

to be a leading regional

Data Service Provider in

North Africa & the Middle

East.

60

Corporate clients' applications: ARPU+ serves this type of

customer with different mobile and telecom applications,

such as SMS services, advertising mobile promotions, messaging

tools, m-commerce, tele-banking, and tele-marketing. ARPU+

provides business partners with network connectivity for

different parties on IVR, SMS, MMS or WAP, as well as different

applications in various countries.

End-Users integrated entertainment: ARPU's brand

"Mobizone" comprises services and products related to

mobile entertainment and info and multimedia services.

Everything, from the latest ring-tones, logos, graphics and

picture messages, to song dedication, chatting, JAVA games

and competitions, keeps ARPU+ users truly engaged.

ARPU+ achieved the following:

• It offered a total of 35 different services;

• It notched up 22 content partners and acquired exclusive

rights on numerous artists on a global contract basis,

becoming the biggest content aggregator in the Middle

East, with access to more than 20,000 songs, 1,600 films,

and 1,000 video clips;

• It joined forces with 10 Product Development partners;

• ARPU+ catered to 12 operators: Mobinil, Vodafone,

Djezzy, Iraqna, Tunisiana, FastLink, Mobilecom, Etisalat,

Wataniya, Mobilink, Batelco and SabaFon;

• It combined core GSM functionalities (C7, billing and

IN) with high front-end development (JAVA, Macromedia,

and dot net);

• It developed Portals, such as WEB and WAP, Mobizone

MegaStore, video mobile downloads and dedications, TV

chatting and voting services;

• ARPU+ was the first to introduce Ring-Back Tones

(RBT) in North Africa and the Middle East. What is more,

the "Killer Application" PRBT, allows mobile subscribers

to replace the standard network call connecting tone

"ring ring" with a variety of options, ranging from any

song or tune, to a personal voice message, corporate

commercial, or a joke. It was first launched in Egypt in

September 2004, and it achieved 50,000 subscribers in

a very short time period;

• Following its success in introducing diversified and

technologically developed services, during 2005, ARPU+

had to take these services to a new level. Thus, it launched

its RBT service in Syria and Jordan.

• It established an office in Italy, as the European hub of

ARPU+, in November 2005. Finally, it acquired a Moroccan

company, thereby establishing the fourth office in North

Africa, adding to those in Egypt, Algeria, and Tunisia.

Handsets & Distribution

Ring was established in 2001 as a fully owned Orascom Telecom

Holding affiliate that focuses on GSM products, distribution and

related services. Today Ring has grown to be the leading NOKIA

wholesaler in Egypt and North Africa. Since 2003, Ring has

established three more centers, and now operates eight major

logistics centers in Algeria, Bangladesh, Dubai, Egypt, Iraq, Jordan,

Tunisia and Pakistan in order to provide network operators with

in-country logistic services, local distribution and prepaid solutions.

Ring is also developing franchise retail business with OTH

operators to increase its market penetration across the region.

The Distributor of Services

Ring distribution focuses on GSM products distribution and

related services. The company provides its customers with

outsourced distribution logistics through its authorized dealer

channels and retail outlets. Ring’s logistic centers also undertake

several services on behalf of network operators or handset

manufacturers, such as SIM kitting, handset software upgrades,

custom branding and special bundle packaging. E-commerce and

B2B applications developed in cooperation with ISPs are also

offered to further ease the business with the dealer’s channel

of the network operator.

Quality is Important

Ring has built state-of-the-art service centers for NOKIA mobile

phone sets. Supported by top technology equipment and software

from Nokia and a highly trained team, Ring service centers are

among the most advanced in the Middle East. Introducing the

concept of visible service centers for the first time in Egypt and

North Africa, Ring provides its clients with the comfort and

confidence which places Ring in pole position for quality service

and customer satisfaction. The concepts of its shops are not

merely a place to sell or repair mobile phones. Instead, they are

modern lifestyle outlets, providing customers with the advantages

of today’s hi-tech world.

To mention just a few of the services that Ring offers, they include:

Supply Chain management, Logistics Services; In-Country

Distribution; Wireless Products Procurement; Product

Customization; Prepaid Total Solutions; Business2Business;

Customer Care and Service Centers and Retail franchise.

Managing the supply chain for its customers has been very

challenging to Ring, yet it is one of its key roles, as it manages

product forecasts, ordering & delivering logistics from factories

until products/services are carried into retail and wholesale channels.

Ring-EGYPTHandsets and Distribution

The leading NOKIA

wholesaler, not only in

Egypt, but also in North

Africa.

62

Logistics Services

Ring carries inventory, manages it and handles its related automated

distribution logistics on behalf of its customers. State-of-the art

inventory management and distribution systems are applied to

handle and report business to its customers.

In-Country Distribution

Ring provides its customers with outsourced distribution logistics

to their authorized dealer channels and retail outlets. Automated

services are implemented to help assure its customers are fast

attuned to the market and maximize their market coverage.

Prepaid Total Solutions

Ring provides its customers with a full prepaid product package

and its related distribution logistics. Data management and

activation services are also integrated with the network

operator systems.

Business2Business

E-commerce and B2B applications are offered to further ease

the business with the dealer channels of the network operator.

These applications are co-developed with local ISPs.

Ring 2005 Performance Indicators

2005 was a growth year for Ring, adding a major logistics center:

Ring Pakistan (100 percent owned affiliate) that provides its

partners with In-country prepaid solutions, Distributions and

Data Management

Ring Pakistan will play a major role in the penetration of Ring’s

emerging markets handsets program.

Ring Staff

Ring is dedicated to provide the best quality services to its

customers and a dynamic working environment for its nearly

845 employees, intended to be 1022 employees in 2006.

Ring Offices

Ring’s headquarters are located in Egypt. The company also

covers North African and Middle Eastern markets through its

subsidiaries in Algeria, Bangladesh, Dubai, Jordan, Iraq, Pakistan,

Tunisia, with plans to setup in Saudi Arabia and Italy.

Commercial Background

2005 was a year of enhancement Ring Group image through the

active marketing activities that affected positively on sales &

trading by taking the sponsorship of the most important national

events which gave the chance of having as much awareness and

exposure as possible to different classes of market segment.

OrasInvest, a wholly owned OTH subsidiary, was established in

2003, and subsequently major developments took place in the

different segments, i.e. expansion in operating regions,

reinforcement and increase of the workforce, service quality

enhancement and business portfolio enrichment.

OrasInvest, through its subsidiaries MobiServe, First Service and

Collect, continued to sustain growth and expansion during 2005.

The group is currently providing services in Egypt, Algeria, Tunisia,

Pakistan, Bangladesh and Iraq. In 2006 OrasInvest intends to go

beyond its achievements in 2005 and plans further growth by

entering new territories in countries which it had not ventured

in before, in addition to offering its clients new services and

products.

OrasInvest is the Holding

company of MobiServe,

First Service and Collect.

OrasInvestEGYPT

Infrastructure and Services 64

MobiServe is recognized in the region as the leading company

for providing specialized contracting activities in the field of

telecommunications infrastructures. In the six years since it has

been established, MobiServe has transformed through its

subsidiaries into a foremost global telecom player.

Major Services:

Site acquisition: Begins by surveying, selecting, negotiating and

finalizing either site purchase or lease.

Civil contracting: Involves securing and obtaining all necessary

permits and approvals.

Site construction (BTS, BSC, MSC, transmission): Includes civil

work, power and electrical work, grounding system, fire fighting

system, false ceiling, raised floor, generator system, security

system, Main Digital Frame (MDF), precision-type air conditioning,

MW (Antenna IDU and ODU) installation and commissioning,

design and manufacturing of masts and towers.

Telecommunication Equipment Deployment: Installation,

commissioning, testing, and maintenance of Radio, MW and

transmission equipment.

Telecommunication Towers Manufacturing: MobiServe, through

its newly established subsidiary MobiFactory, manufactures its

own needs of towers of different heights, up to 75 meters.

Satellite Communications: holding one of only four VSAT licenses

in Egypt that allows it to provide a wide range of services,

including Satellite Internet, trunking services, Voice Gateway,

International Voice Traffic and licensing services when applicable.

MobiServe has major clients such as Mobinil, Djezzy, Iraqna,

Mobilink, Nokia, Lucent, NEC, Tellabs, Nortel, Alcatel, ZTE and

Ditech Communications.

During 2005, MobiServe began operating in Bangladesh. It

completed many MSCs, BTS, BSC, SDH and Transmission Sites.

Moreover, in 2005 MobiServe acquired Contra, a former OTH

owned company to be fully integrated within MobiServe to fully

benefit from the economies of scale to provide its clients with

more competitive quality and pricing. Furthermore, MobiFactory

was founded in June 2005 in 6th of October City. MobiFactory

manufactures its own needs of standard towers, tubular and

angular masts and short towers of different heights, up to 75

meters. MobiFactory also extended its activities, to manufacturing

fences, gates and special design towers.

First Service is a pioneer in providing fully integrated business

services in the areas of printing, delivery, cash collection and

customer call center functions. First Service maintains international

standards in its business, as it expands its operations across the

Egyptian borders to reach countries like Algeria, Tunisia and

Bangladesh.

Some of the additional services it provides are: enveloping, CD

burning, packaging and inventory management.

During 2005, First Service managed to proliferate and expand.

Some of the highlights during the year were the introduction of

SIM packaging and inventory management in Bangladesh serving

OTH’s operation Banglalink in the first quarter of 2005 and the

addition of OTH’s Algerian operation Djezzy during the fourth

quarter. New clients were added in the Egyptian market during

2005, which included HSBC, ABC Bank, Toys R US, B.Tech, Raya

Telecom, Unilever, Bahrain Financial Company and Contact. And

finally, door to door commercial distribution of Mobinil’s scratch

cards was introduced during the third quarter.

First Service provides

printing, enveloping,

delivery, packaging and

inventory management.

66

The region’s leading debt

collection firm.

Collect is the region’s leading debt collection firm with the

highest collection rate.

Some of the services it provides are: investigation, fresh debt

collection and bad debt collection. Collect’s client list includes

major corporations such as, Mobinil, Vodafone, Citibank, BNP,

Arab African International Bank, National Bank of Abu Dhabi,

Sadko, B-Tech, Unilever, IBN Sina Laborex Pharma and Trane.

During 2005, Collect established a branch in the Egyptian Delta

to achieve expanded coverage, along with its networks covering

all Egypt through regular shuttle visits. Moreover, it established

new offices in various Algerian cities and it is currently covering

Algiers, Oran, Anaba, Constantine and Setif.

BoardMembers

Board Members

Naguib Sawiris

Chairman & CEO

Since his appointment with Orascom began in 1979, Mr. Sawiris

has continuously contributed to the growth and diversification

of the company into what it is today – one of Egypt’s largest and

most diversified conglomerates, employers and investors with

the largest market capitalization. Mr. Sawiris established and built

the railway, information technology, and telecommunications

sectors of Orascom. The extraordinary success of these ventures

as well as the other sectors of the company led to the management

decision to split Orascom into separate operating companies.

Hence, in late 1990 OTH and Orascom Technology Systems

(OTS) were established and chaired by Mr. Sawiris.

As Chairman of OTH, Mr. Sawiris has led the growth of the

company at a very dynamic pace, to be the leading regional

telecom player, operating GSM networks in seven different

countries in the Middle East, Africa, and the Indian Subcontinent

with over 30 million subscribers as at December 2005, in addition

to a number of Internet Service Providers (ISPs), and satellite

service providers serving a population of 460 million people,

with an average penetration rate of 14%.

In August 2005, Mr. Sawiris was appointed Chairman of the Board

of Wind Telecomunicazioni S.p.A., following the acquisition of a

controlling 62.33% stake of the Italian Telecom Operator by

Weather Investments, the Sawiris family majority owned company.

In parallel to the acquisition, Mr. Sawiris, as Chairman & CEO of

Weather Investments, led the successful closing of the largest

LBO in the history of Europe. Both transactions mark a new

milestone in Mr. Sawiris’s long and successful career journey in

leading the international growth of the Sawiris family enterprises.

Earlier on, in January 2003, OTH represented by Mr. Sawiris,

was appointed as Board Member in the GSM Association. The

appointment came as well earned recognition for the regional

role OTH plays in the telecommunication business and an

acknowledgement of the efforts exerted by its founder, Mr. Sawiris,

who has been the driving force behind OTH’s strategic success

and visionary regional expansion.

In addition, Mr. Sawiris is Chairman of the Board of Orascom

Technology Systems and the Egyptian Company for Mobile

Services (ECMS), also known as Mobinil.

Mr. Sawiris is a member of both the Board of Trustees and the

board of Directors of the Arab Thought Foundation, a board of

Trustees member and Head of the Financial Committee of the

French University in Cairo, a board member of the Egyptian

Counsel for Foreign Affairs, the Consumer Rights Protection

Association, and the Cancer Society of Egypt. Moreover, he is

a member of the newly formed International Advisory Committee

to the New York Stock Exchange of Directors. He holds a diploma

of Mechanical Engineering with a Masters in Technical

Administration from the Swiss Institute of Technology, ETH

Switzerland and a Diploma from the German Evangelical School,

Cairo, Egypt.

Ahmed Maher El Sayed

Board Member

Born September 14, 1935, graduated from the Faculty of Law,

Cairo University in 1956. He joined the Foreign Ministry in 1957

and served in Zurich, Kinshasa and Paris. Moreover, he served

in the departments of Arab Affairs, Consular Affairs and European

Department. From 1972-1974, he served in the Office of the

President’s National Security Advisor, Chief of Cabinet of Minister

of Foreign Affairs from 1974-1980 and as a member of the

Egyptian delegation at the Camp David negotiations in 1978 and

member of the Taba arbitration team.

Mr. El Sayed held the following positions:

Ambassador to Portugal (1980-1982), Ambassador to Belgium

70

Ala M. El Khawaja

Board Member

Mr. El Khawaja was involved in his family business in 1984, which

focused on contracting in Kuwait and Jordan. He then went into

the hotelerie business, became Chairman & CEO of International

Continental Hotels Co., a company that owns Inter-Continental

Hotel in Hurghada. He became involved in other hotels in Tunisia,

Jordan, and other locations in the region. He is the Chairman of

Sea Front Diamond, Real Estate Company in Lebanon.

Soon after, he became a shareholder in different financial institutions

& industrial companies and slowly started to get involved in the

telecom sector in Jordan.

Alex Shalaby

Board Member

Mr. Shalaby is the President and CEO of ECMS (Mobinil). Before

joining OTH and Mobinil in 1998, he was the Director of

Government Affairs for AT&T based in Washington, DC.

Mr. Shalaby has more than 28 years of experience in the telecom

industry with AT&T.

Between 1970-1993, he was the Managing Director for AT&T

in Egypt, and General Manager for the Middle East and North

Carlo Tamburi

Enel S.P.A representee

Board Member

Mr. Tamburi is an Italian citizen, studied statistics and is currently

the Head of Services and Procurement Department at Enel S.p.A,

one of the major utility companies in Europe. He is also CEO

of Dalmazia Trieste, the Real Estate Company of the Enel Group.

He is Vice Chairman of Weather Investments and Wind.

He served for a total of more than 20 years in Citibank NA, IRI

(Istituto per la Ricostruzione Industriale), Italian Ministry of

Economy and Finance and Enel. He was also Chairman of Tirrenia

di Navigazione, as well as a Member of the Board of Directors

of many Italian companies such as Finmeccanica, Alitalia and Enel.

and to the European Community (1983-1984), Head of Policy

Planning department (1984-1986), Head of Legal department

(1987-1988), participated in negotiations about Taba and arbitration

procedures, Ambassador to the USSR and then Russia (1988-

1992), Ambassador to the USA (1992-1999), Head of Arab League

Fund for Africa (2000-2001), Minister of Foreign Affairs (2001-

2004). He also publishes weekly articles in the leading newspaper

“Al Sharq Al Awsat”.

Africa region. During this period, he established and secured a

solid position for AT&T in Egypt and a number of markets in

North Africa and the Gulf Region.

Between 1993-1995, he was the Regional Director for International

Public Affairs for AT&T, based in Cairo, Egypt, where he was the

principal interface with key agencies within the governments in

the region on matters impacting AT&T’s operations. This was a

critical period preceding the wave of privatization within the

telecommunication sector. He established the first presence for

AT&T in a number of countries of the Middle East, as well as in

South Africa.

Mr. Shalaby holds a Bachelors of Science degree in Electrical

Engineering from Alexandria University and a Master of Science

degree in Electrical Engineering and Computer Sciences from

San Jose State University, California.

72

Khaled G. Bichara

Board Member

Mr. Bichara is the head of Fixed and Portal Business Unit of Wind

Telecomunicazioni S.p.A. He is also the co-founder and Chairman

of LINKdotNET (LDN) the largest private Internet Service

Provider (ISP) in the Middle East.

Mr. Bichara sits on the board of Tellas S.A., on the board of

ARPU+, as well as the board of MOBI mtld ltd.

Since September 2005, Mr. Bichara is undertaking the restructuring

of Wind’s Fixed and Portal Business unit.

In his previous capacity as LINKdotNET CEO, Mr. Bichara

instituted many firsts in the Internet market. He developed and

launched MSN Arabia in partnership with Microsoft.

He has spearheaded many mergers and acquisitions for

LINKdotNET starting with LINK Egypt and InTouch

Communications in June 2000. The latest being the acquisition

of nine leading Egyptian Internet companies, officially announced

May 2002, in a share swap deal.

Mr. Bichara earned his BSc. Degree from the American University

in Cairo with a major in Computer Science and a minor in

Business Administration in 1993. He is an active member of the

software community in the Middle East; a founding member of

Egyptian Software Association, Internet Society of Egypt and The

Egyptian Electronic Commerce Committee.

Onsi Sawiris

Board Member

Mr. Sawiris is an Egyptian citizen born in Sohag, Egypt in 1930

and holds a Bachelor Degree of Science in Engineering from the

Cairo University.

Mr. Sawiris serves as the Chairman of Orascom for Hotel &

Development, Orascom Technology Systems, Orascom Trading

Co., Orascom Construction Industries (OCI), the Egyptian

Cement Co. (ECC) and Orascom Telecom.

Mr. Sawiris also serves as a Chairman of the Board of Directors

for Misr Exterior Bank, Pharaonic AIG Insurance Co and YMCA

in Cairo.

IEEE honorary society) Recognition as the Young Electrical

Engineer of the Year (1994) in the USA, and the Shuman Award

as the Young Arab Engineer of the Year (1995) in the Arab World.François Dopffer

Board Member

Mr. Dopffer is a former French Ambassador to Turkey (1991-96)

and to Egypt (2000-2002). He has extensive knowledge of North

Africa, Middle East and Asian countries where he served in

different positions. He holds degrees in political science (IEP

Paris), public management (ENA) and law (Paris University).

Board Members

Khaled E. Ismail

Board Member

Mr. Ismail is President and Founder of SysDSoft, a newly established

company specialized in the field of development and design of

digital communication systems.

Currently, Mr. Ismail also advises the Egyptian Ministry of

Communication and Information Technology (MCIT). He is also

the Chairman of the Technology Development Fund, a venture

capital fund established to finance Egyptians startups in the field

of ICT. He is also member of the board of the Egyptian Academy

for Scientific Research.

Between 2000 and 2002, he was General Manager of Ellipsis

Digital Systems in Cairo, and Senior VP of Engineering of Ellipsis

Digital Systems in California.

Prior to that, he was Technical Director of EZZ Group, and also

Managing Director of GEMMA, one of the Group’s subsidiaries,

specialized in manufacturing ceramic products.

Between 1995 and 1998, he lead a team at IBM T.J. Watson

Research Center. He is considered one of the experts in the

field of SiGe materials and devices, and is the recipient of the

IBM Invention Achievement Award and the IBM Outstanding

Technical Achievement Award in 1997 and 1995, respectively.

Mr. Ismail received his Ph.D. from Massachusetts Institute of

Technology in 1989, and has published over 150 papers in

international journals, and holds 14 patents. Mr. Ismail is an IEEE

Fellow since 1997, and is the recipient of the Eta Kappa Nu (an

Hassan Abdou

Board Member

Mr. Abdou is currently Chief Financial Officer of Weather

Investments, which was formed in 2005 as a global telecom

company owning and controlling both Orascom Telecom and

Wind Telecommunications, Italy. Mr. Abdou is also CEO of CYLO

Investments, a founding owner of Weather. CYLO is a regional

private equity company owning and managing a diversified

portfolio of companies. Mr. Abdou sits on the board and executive

committees of several IT, telecom and entertainment companies

in Egypt and the Middle East.

Prior to the founding of CYLO, he was Chief Investment Officer

of EFG-Hermes Private Equity and the Horus Private Equity

Fund where he was Fund Manager since 1997.

Prior to his return to Egypt, he was a consultant in the New

York office of the Boston Consulting Group where he worked

with Fortune 500 companies in such areas as Telecommunications,

Media & Entertainment, Energy and Pharmaceuticals.

In addition to his activities in the region, Mr. Abdou is a member

of the Advisory Board of the New York Private Placement

Exchange (NYPPE).

Mr. Abdou received his Bachelor of Science in Mechanical

Engineering from the University of Pennsylvania and a Bachelor

of Science in Economics from the Wharton Business School. In

addition, he received his MBA from the Harvard Business School.

2005 FinancialReview

• Board Report

• Financial Statements: - Egyptian Accounting Standards (in LE) - International Financial Reporting Standards (in US$)

OTH has increased its proportionate subscribers from 8.6 million to 22.5 million from 31 December 2004 to 31 December 2005, primarily due to selectivelypurchasing minority equity stakes in its Algerian, Tunisian and Iraqi operations. OTH saw a 22% increase from the third quarter.

Table 1: Total SubscribersSubsidiary 31 December

200430 September

200531 December

2005Inc/(dec)

Dec. 2005 vs.Dec. 2004

Djezzy (Algeria)Mobilink (Pakistan)Mobinil (Egypt)Iraqna (Iraq)Tunisiana (Tunisia)Banglalink (Bangladesh)Telecel (Africa)2

Libertis (Congo Brazzaville)3

Grand Total

3,418,3675,065,7324,015,948

573,9441,047,516

25,709189,892162,700

14,499,808

6,158,6249,000,6385,994,1611

1,418,7621,986,918

601,611129,809194,697

25,485,220

7,109,00911,119,1966,695,9931,849,6022,257,6621,221,761129,391

—

30,382,614

108%119%67%

222%116%

4,652%(32%)

na

110%

1. Subscribers who have made at least two calls in the last 3 months.

2. During the third quarter of 2005, Telecel divested its DRC subsidiary (Oasis Telecom). Telecel now ref lects Telecel Zimbabwe subscribers only.

3. During the fourth quarter of 2005, OTH sold its operation in Congo Brazzaville (Libertis Telecom).

Table 2: Total Proportionate SubscribersSubsidiary 31 December

200430 September

200531 December

2005Inc/(dec)

Dec. 2005 vs.Dec. 2004

Djezzy (Algeria)Mobilink (Pakistan)Mobinil (Egypt)Iraqna (Iraq)Tunisiana (Tunisia)Banglalink (Bangladesh)Telecel (Africa)2

Libertis (Congo Brazzaville)3

Grand Total

1,994,6174,492,7981,255,385

361,585212,22725,709

140,606105,755

8,588,682

5,398,6507,982,6661,873,7751,418,762993,459601,61177,885

126,553

18,473,361

6,233,1799,861,6152,093,1671,849,6021,128,8311,221,761

77,635—

22,465,790

213%119%67%

412%432%

4652%(45%)

na

162%

Cairo, March 27th, 2006:Orascom Telecom Holding (OTH) (Ticker: ORTE.CA, ORTEq.L, ORAT EY,OTLD LI), announces its full year 2005 consolidated results.

Highlights• Total subscribers reached 30.4 million, an increase of 110% over

December 2004.• Proportionate subscribers reached 22.5 million an increase of 162%

over December 2004.• Revenues of US$ 3,226 million (LE 18,731 million1), an increase of

64% over December 2004.• EBITDA reached US$ 1,358 million (LE 7,953 million1), an increase

of 42% over December 2004.

• Group EBITDA margin stood at 42.1%, GSM EBITDA2 margin stoodat 48.8%. EBITDA margins of the major subsidiaries are: Djezzy53.7%, Mobilink 40.6%, Mobinil 50.3%, Iraqna 69.8% and Tunisiana 41.6%.

• Net income for the Year reached US$ 659 million (LE 3,900 million1)an increase of 123% over December 2004.

• Earnings per Share reached US$ 3.02 vs. US$ 1.36 in December 2004.• Net debt stood at US$ 2,958 million (LE 17,021 million1) on 31

December 2005.

1. US$ f inancial f igures in the Income statement & Balance Sheet are according to the

International Financial Reporting Standards (IFRS)

2. GSM EBITDA margin excludes: Telecel, Libertis and Tchad Mobile.

Operational Performance

OTH continued to rapidly grow its subscriber base across all its existing markets. The number of subscribers on its networks has grown from 14.5 millionas at 31 December 2004 to over 30 million subscribers as at 31 December 2005. During the fourth quarter alone, OTH added approximately five millionsubscribers, the highest growth it ever achieved in one quarter, and 16 million subscribers in one year, a 110% increase: Mobilink added over two millionsubscribers, Djezzy added approximately one million subscribers, Mobinil over 650,000.

76

Table 3: Blended Average Revenue Per User (ARPU)Subsidiary 31 December

2004 US$

(3 Months)

30 September

2005 US$

(3 Months)

31 December

2005 US$

(3 Months)

Inc/(dec)

Dec. 2005 vs.

Dec. 2004

Djezzy (Algeria)

Mobilink (Pakistan)

Mobinil (Egypt)1

Iraqna (Iraq)

Tunisiana (Tunisia)

Banglalink(Bangladesh)2

Libertis (Congo Brazzaville)

21.0

9.7

15.3

29.1

21.4

—

19.0

17.0

7.5

13.3

26.5

15.8

5.7

18.2

12.8

6.7

11.1

20.8

12.5

4.9

—

(39.0%)

(30.9%)

(27.5%)

(28.5%)

(41.6%)

na

na

1. ARPU expressed under OTH’s definition may differ from Mobinil’s disclosed ARPU. Please see Appendix for definition.

2. Banglalink prepaid platform was launched in February 2005, prior to that Banglalink had a small postpaid subscriber base.

OTH continued to successfully maintain a leading market share in its largest markets and even strengthened it in Algeria where it grew from 64% to 66.7%. OTHcontinued to grow its market share in Tunisia, where Tunisiana grew its market share from 29.4% in December 2004 to 42.8% in December 2005, a 10.6% increasein 12 months. Banglalink started its operations in February 2005 with a market share of 4% and ended 2005 with 12%.

Table 4: Market Share & Competition

Country Brand name 30 September2005

31 December2005

Names of additionalnetwork operations

64.0%58.4%52.8%40.8%40.1%8.3%

42.0%29.0%

61.5%56.2%52.2%40.5%42.8%12.0%

na31.0%

AMN, WataniyaU-Fone, Instaphone, Paktel, Telenor, Al Warid

VodafoneWataniya, MTCTunisie Telecom

Grameen, Aktel, Citycell, BTTB, Al WaridCeltel

Econet, Net One

1. Market share disclosed is based on disclosed information by Wataniya and MTC in which their definition of an active subscriber differs from OTH’s 3-month rule.

Table 5: Capital Expenditure of OTH Subsidiaries for December 31, 2005

Number ofadditionalnetwork

operations

Market Share (%)

AlgeriaPakistanEgyptIraq1

TunisiaBangladeshCongo BrazzavilleZimbabwe

DjezzyMobilinkMobinil

IraqnaTunisiana

BanglalinkLibertisTel Zim

25121512

Country Service name TotalUS$ million

2004

40834011089

12114132

16

1,113

457615

4271

125106113

31510

1,871

Inc/(dec)

AlgeriaPakistanEgyptIraqTunisiaBangladeshAfrica

Total

DjezzyMobilinkMobinil

IraqnaTunisiana

BanglalinkTelecel

M-Link & MedcableOther2

12%81%

288%40%

(12%)na

(77%)650%(38%)

68%

TotalUS$ million

2005

1. Capex in Mobinil includes a license fee of US$ 110 million, to be paid over three years.

2. Other Companies include OrasInvest, OT Holding and Ring.

ARPU’s declined in OTH’s GSM operations as (i) growth accelerated and OTH continued to penetrate lower income segments of the market and (ii) seasonalityeffect due to the traditional slow down during the holy month of Ramadan and the end of the high tourism season. In addition, ARPU declined in Algeria as theregulator decreased the termination rates from AD 6.5 to AD 4, a decision that Djezzy is now contesting legally.

Table 6: Consolidated Revenues

GSMDjezzy (Algeria) 748,887 1,073,960 43% 285,360 270,905 (5%)Mobilink (Pakistan) as Reported 379,484 732,594 93% 187,923 210,683 12%Mobilink (Pakistan) Proforma2 431,212 732,594 70% 187,923 210,683 12%Mobinil (Egypt) 330,835 418,894 27% 113,631 107,268 (6%)Iraqna (Iraq) 161,211 333,267 107% 91,074 83,805 (8%)Tunisiana (Tunisia)3 46,071 156,283 239% 46,081 38,770 (16%)Banglalink (Bangladesh) 10,952 39,036 256% 11,846 17,123 45%Telecel (Africa) 79,686 6,916 na 20 (20) naLibertis (Congo Brazzaville) 39,199 32,281 na 11,171 71 naTchad Mobile (Chad) 2,857 — na — — naTotal GSM 1,799,182 2,793,231 55% 747,106 728,605 (2%)Telecom Services

Ring 116,133 312,077 169% 93,777 77,011 (18%)M-Link & MedCable 10,597 63,560 500% 17,396 21,824 25%OrasInvest 10,551 22,417 112% 6,419 6,950 8%Other4 13,353 11,072 (17%) 1,911 2,570 34%

Total Telecom Services 150,634 409,126 172% 119,503 108,355 (9%)Internet Services 16,237 23,473 45% 6,058 6,960 15%OT Holding — — na — — na

Total Consolidated 1,966,053 3,225,830 64% 872,667 843,920 (3%)Total Proforma 2,017,763 3,225,830 60% 872,667 843,920 (3%)

Subsidiary 31 December2004

US$ (000)1

31 December2005

US$ (000)

Inc/(dec)

Q3 – 2005(3 months)US$ (000)

Q4 – 2005(3 months)US$ (000)

Inc/(dec)

1. To comply with IFRS, 2004 illustrative US$ consolidated financial statement was restated to reconsolidate “Pioneers Investment”. This adoption resulted in reducing Total Revenue by US$ 51 million, which was

reported as “Other Dividends” in OTH.

2. Due to local accounting rules, dealer commissions and Interconnect costs with the PTT were deducted from the revenues in 2004. In order to have comparable figures, these costs are not deducted in the Proforma Revenues.

3. OTH increased its ownership in Tunisiana from 20.26% in December 2004 to 50.0% in December 2005, increasing its proportionate consolidation in the revenues table.

4. Other Telecom Services Companies include ARPU+, C.A.T., Contra Egypt, Contra BVI, Cortex, Medcable, Moga Holding, Onward Technologies, Oratel, OT ESOP, OT Services Europe, OT Wireless Europe and Pharoah.

Main Financial Events

Buying of MinoritiesIn a series of transactions in January, March and April 2005, OTH acquiredsubstantial minority stakes in Djezzy (in Algeria), and Tunisiana (in Tunisia)to raise its ownership to 87.68% from 59.31%, and to 50% from 20.47%,respectively.In July 2005, OTH acquired all the minority stakes in its Iraqi subsidiary fora total consideration of US$ 60 million. Through this transaction, OTH raisedits ownership in Iraqna from 63% to 100%.

Award of Fixed line license in AlgeriaIn March 2005, through a joint venture with Telecom Egypt, OTH was awardeda fixed-line license in Algeria.In February 2006, the fixed line services launched under the brand name “Lacom”.

Sale of African OperationsIn September 2005, OTH completed the sale of its 100% indirect equity stakein Oasis, its GSM operation in the Democratic Republic of Congo.In December 2005, OTH sold its 65% controlling equity stake in its GSMoperation in Congo Brazzaville, Libertis Telecom.

Stock SplitIn November 2005, the Extraordinary General Assembly approved a two-for-one split of OTH’s common stock. The split was implemented only on theCairo and Alexandria Stock Exchange and changed the nominal value of thelocal shares from LE 10 to LE 5.

Strategic Stake in HTILIn December 2005, OTH acquired a 19.3% strategic interest in HutchisonTelecommunications International Limited “HTIL”.

Financial Review

RevenuesOTH continued its strong growth by reaching US$ 3,226 (LE 18,730 million) in the year ending on December 31, 2005 a 64% increase compared to 2004. Growthin revenues was positively affected by the rapid growth in subscribers. Djezzy continued to be the largest contributor with 33% of total revenues, followed byMobilink at 23%, Mobinil 13%, and Iraqna at 10%.

78

EBITDADuring this quarter there has been significant acceleration in the consolidated EBITDA, reaching US$ 1,358 million for the full year of 2005 an increase of 42%year-over-year compared to December 2004.

Table 7: Consolidated EBITDA1

GSM

Djezzy (Algeria) 459,046 576,392 26% 154,205 154,041 0%

Mobilink (Pakistan) 212,410 297,663 40% 77,163 78,169 1%

Mobinil (Egypt) 164,517 210,566 28% 54,107 51,503 (5%)

Iraqna (Iraq) 94,307 232,736 147% 70,163 58,306 (17%)

Tunisiana (Tunisia)3 18,191 65,086 258% 19,677 18,563 (6%)

Banglalink (Bangladesh) 1,669 (38,842) (2427%) (3,969) (14,225) (258%)

Telecel (Africa)4 10,839 (24,879) na (2,243) (20,731) na

Libertis (Congo Brazzaville) 16,657 13,271 na 4,967 29 na

Tchad Mobile (Chad) 1,186 — na — — na

Total GSM 978,822 1,331,993 36% 374,070 325,655 (13%)

Telecom Services

Ring 28,573 34,408 20% 7,304 3,479 (52%)

M-Link & MedCable 5,292 24,354 360% 7,076 7,924 12%

OrasInvest 2,518 6,670 165% 2,509 2,603 4%

Other5 (19,905) (26,712) (34%) (3,392) (11,801) (248%)

Total Telecom Services 16,478 38,720 135% 13,497 2,205 (84%)

Internet Services 3,379 4,791 42% 1,459 1,354 (7%)

OT Holding (40,254) (17,442) 57% (2,536) (8,480) (234%)

Total Consolidated 958,425 1,358,062 42% 386,490 320,734 (17%)

Subsidiary 31 December2

2004

US$ (000)

31 December

2005

US$ (000)

Inc/

(dec)

Q3 – 2005

(3 months)

US$ (000)

Q4 – 2005

(3 months)

US$ (000)

Inc/

(dec)

1. EBITDA excludes management fees which were previously treated as a cost in each subsidiary and as a revenue for the Holding.

2. To comply with IFRS, 2004 illustrative US$ consolidated financial statement was restated to reconsolidate “Pioneers Investment” and test the impairment in TIL Goodwill. This adoption resulted in reducing Total

EBITDA by US$ 40.8 million.

3. OTH increased its ownership in Tunisiana from 20.26% in December 2004 to 50.0% in December 2005, increasing its proportionate consolidation in the EBITDA table.

4. OTH divested Oasis Telecom in DRC in September 2005, and Libertis in December 2005. An impairment charge on Telecel was taken for US$ 9 million (LE 52 million) to account for the non convertibility of

the Zimbabwean dollar.

5. Other Telecom Services Companies include ARPU+, C.A.T., Contra Egypt, Contra BVI, Cortex, Medcable, Moga Holding, Onward Technologies, Oratel, OT ESOP, OT Services Europe, OT Wireless Europe and

Pharoah, in 2004 Telecom services also included Pioneers & Moga in 2004.

Algeria enhanced its EBITDA margin even after taking full account of thenegative impact of the new termination rates and other various revenueagreements with the fixed line operator (leased lines, co location charges…).EBITDA margins in Pakistan decreased because of the accelerated growth andassociated marketing and sales costs. Iraqna’s margin dropped as a result of

the 13% revenue share agreement negotiated with the Iraqi government togetherwith the six-month licence extension. Tunisia saw also its margin increase asit is gaining scale effect. Bangladesh increased its losses due to a very highgrowth of its net additions in a still start up phase of its operations.

80

Table 10: Income Statement in IFRS/US$

Revenues1 1,966,053 3,225,830 64% 872,667 843,920 (3%)Total Cost (517,539) (1,111,458) (253,031) (432,065)Gross Profit 1,448,514 2,114,372 619,636 411,855Total Expense (427,321) (728,253) (231,535) (71,338)Others (62,768) (28,057) (1,611) (19,783)EBITDA2 958,425 1,358,062 42% 386,490 320,734 (17%)

Depreciation & Amortization (271,831) (427,664) (104,952) (138,350)Net Financing Costs (132,667) (81,367) (36,600) (35,526)Capital Loss (3,964) (703) (64) (209)Other Income — 8,510 6,998 1,511Profit Before Tax 549,963 856,838 56% 251,872 148,160 (41%)

Income Tax (131,953) (142,866) (44,415) (15,779)

Profit after Tax but Before Discontinued Operations 418,010 713,972 71% 207,457 132,381 (36%)Gain from Sale of Subsidiaries 23,010 70,467 11,886 58,581Gain (Loss) from Deconsolidation of Subsidiaries (556) 110 (319) (10)Profit for the Period 440,464 784,549 78% 219,024 190,952 (13%)

Attributable to:Equity Holders of the Parent3 294,873 659,020 123% 195,668 168,059 (14%)

Purchased Minority Interest during the Period — 27,469 (192) 5

Minority Interest 145,591 98,060 23,548 22,888

Net Income 440,464 784,549 78% 219,024 190,952 (13%)Earnings Per Share (US$/GDR) 1.34 3.02 125% 0.89 0.78 (12%)

31 December2004

US$ (000)

31 December2005

US$ (000)

Inc/(dec)

Q3 – 2005(3 months)US$ (000)

Q4 – 2005(3 months)US$ (000)

Inc/(dec)

1. To comply with IFRS, 2004 illustrative US$ consolidated financial statement was restated to reconsolidate “Pioneers Investment”. This adoption resulted in reducing Total Revenue by US$51 million, which was

reported as “Other Dividends” in OTH.

2. Management Presentation developed from IFRS financials.

To comply with IFRS, 2004 illustrative US$ consolidated financial statement was restated to reconsolidate “Pioneers Investment” and report

an impairment in TIL Goodwill. This adoption resulted in reducing Total EBITDA by US$ 40.8 million.

3. Equates to Net Income after Minority Interest under the EAS.

Net IncomeNet Income reached US$ 659 million (LE 3,900 million), a 123% increase

compared to 2004. During the year the divestiture of Oasis in the Democratic

Republic of Congo, and Libertis in Congo Brazzaville resulted in a gain of

US$ 70 million (LE 409 million), while the impairment charge on Telecel was

US$ 9 million (LE 52 million). Earnings per share rose from US$ 1.34 in

December 31, 2004 to US$ 3.02 in December 31, 2005.

Table 8: Consolidated EBITDA Margin

GSMDjezzy (Algeria) 61.3% 53.7% (7.6%) 54.0% 56.9% 2.9%Mobilink (Pakistan) as Reported 56.0% 40.6% (15.4%) 41.1% 37.1% (4.0%)Mobilink (Pakistan) Proforma1 49.3% 40.6% (8.7%) 41.1% 37.1% (4.0%)Mobinil (Egypt) 49.7% 50.3% 0.6% 47.6% 48.0% 0.4%Iraqna (Iraq) 58.5% 69.8% 11.3% 77.0% 69.6% (7.4%)Tunisiana (Tunisia) 39.5% 41.6% 2.1% 42.7% 47.9% 5.2%Banglalink (Bangladesh) 15.2% (99.5%) (114.7%) (33.5%) (83.1%) (49.6%)

Total GSM2 56.6% 48.8% (7.8%) 50.5% 47.5% (3.0%)Telecom Services

Ring 24.6% 11.0% (13.6%) 7.8% 4.5% (3.3%)M-Link & MedCable 49.9% 38.3% (11.6%) 40.7% 36.3% (4.4%)OrasInvest 23.9% 29.8% 5.9% 39.1% 37.5% (1.6%)Other3 (149.1%) (241.3%) (92.2%) (177.5%) (460.0%) na

Total Telecom Services 10.9% 9.5% (1.4%) 11.3% 2.0% (9.3%)Internet Services 20.8% 20.4% (0.4%) 24.1% 19.5% (4.6%)

EBITDA Margin 52.0% 42.1% (9.9%) 44.3% 38.0% (6.3%)EBITDA Margin Proforma 50.6% 42.1% (8.5%) 44.3% 38.0% (6.3%)

Subsidiary 31 December

2004

31 December

2005

Change Q3 – 2005

(3 months)

Q4 – 2005

(3 months)

Change

1. Due to local accounting rules, dealer commissions and Interconnect costs with the PTT were deducted from the revenues. In order to have comparable figures, these costs are not deducted in the Proforma Revenues.

2. GSM EBITDA margin excludes: Telecel, Libertis and Tchad Mobile.

3. Other Telecom Services Companies include ARPU+, C.A.T., Contra Egypt, Contra BVI, Cortex, Medcable, Moga Holding, Onward Technologies, Oratel, OT ESOP, OT Services Europe, OT Wireless Europe and Pharoah.

Table 9: Foreign Exchange Rates used in the Income Statement & Balance Sheet

Egyptian Pound / US Dollar 0.1625 0.1719 0.1722 0.1614 0.1732 0.1738Algerian Dinar / US Dollar 0.0138 0.0136 0.0136 0.0139 0.0136 0.0136Tunisian Dinar / US Dollar 0.8338 0.7781 0.7671 0.8029 0.7469 0.7335FCFA / US Dollar 0.002 0.0019 0.0019 0.0018 0.0018 0.0018Pakistan Rupee / US Dollar 0.0168 0.0168 0.0168 0.017 0.0168 0.0167Bangladeshi Taka / US Dollar 0.0159 0.0154 0.0153 0.0165 0.0145 0.0147

Currency Dec. 2004 Sept. 2005 Dec. 2005 Dec. 2004 Sept. 2005 Dec. 2005

Income Statement Balance Sheet

Source: Egyptian banks

Balance Sheet

Table 11: Balance Sheet in IFRS/US$

IFRS/US$31 December 2004

US$ (000)

IFRS/US$31 December 2005

US$ (000)

AssetsProperty and Equipment (net) 1,389,386 2,362,165Property and Equipment under Construction 322,448 556,698Goodwill (net) 254,767 269,956Other Non-Current Assets 1,025,461 2,458,689Total Non-Current Assets 2,992,062 5,647,508

Cash 512,521 286,891Trade and Other Receivables (net) 160,492 361,269Other Current Assets 402,892 395,552Total Current Assets 1,075,905 1,043,712

Total Assets 4,067,967 6,691,220

Total Shareholder's Equity 1,126,138 1,513,819Minority Share 419,184 204,381Total Equity 1,545,322 1,718,200

LiabilitiesLong Term Debt 995,886 1,547,610Other Long term Liabilities 134,379 264,847Total Long Term Liabilities 1,130,265 1,812,457

Bank Facilities & Short Term Debt 384,699 1,696,788Trade and Other Payables 292,310 542,468Other Current Liabilities 715,371 921,307Total Current Liabilities 1,392,380 3,160,563

Total Liabilities 2,522,645 4,973,020

Total Liabilities & Shareholder's Equity 4,067,967 6,691,220Net Debt1 868,064 2,957,507

1. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash.

82

Cash Flow Statement

Table 12: Cash Flow Statement in US$

Cash Flows from Operating ActivitiesNet Profit for the Period before Tax 426,826 801,885Adjustment to Reconcile Net Profit to Cash Flows from Operating ActivitiesDepreciation & Amortization 271,831 427,664Unrealized Exchange Difference — (56,948)Gain from Sale of Investments (23,010) (70,467)Changes in Minority Interest 72,992 58,913Others 13,735 67,208

Net Profit before Changes in Current Assets and Current Liabilities 762,374 1,228,255

Changes in Current Assets (203,295) (300,568)Changes in Current Liabilities 170,962 285,406Net Cash Provided by Operating Activities 730,041 1,213,093

Cash Flows from Investing ActivitiesPayments for Property & Equipmentand Property under Construction (901,165) (1,400,920)Proceeds from Sale of Property & Equipment 3,077 6,486Payments for Licenses & Software 51,675 (78,601)Payments for Investments Available for Sale (63,000) (591,899)Proceeds from Sale of Investments 45,636 105,438

Net Cash Used in Investing Activities (863,777) (1,959,496)

Cash Flows from Financing ActivitiesProceeds from Loans & Banks’ Overdraft 291,087 634,123Proceeds on Account of Bond Issuance 184,610 —Change in Other Assets (111,282) 36,872Payments for Treasury Stock (11,664) (18,099)Proceeds from Creditors Long-Term — 1,656Dividends Paid — (141,130)Payments of Capital Lease Obligations — (316)

Net Cash Provided by Financing Activities 352,751 513,106

Net Cash Movement 219,015 (233,297)Cash & Cash Equivalents as at January 1st 179,214 512,521Change Cumulative Translation Adjustments 114,292 7,667Cash & Cash Equivalents as at December 31st 512,521 286,891

IFRS/US$

31 December 2004

US$ (000)

IFRS/US$

31 December 2005

US$ (000)

Table 13: Income Statement in EAS/Egyptian Pounds

Revenues 12,501,631 18,730,653 50% 5,053,049 4,869,911 (4%)Total Cost (3,007,480) (6,453,635) (1,464,670) (2,500,134)Gross Profit 9,494,151 12,277,018 3,588,379 2,369,777Total Expenses (2,859,398) (4,160,721) (1,276,697) (410,145)Provisions (290,308) (286,992) (52,913) (123,933)Negative Goodwill — 52,343 (598) (264)Others 4,972 71,734 21,287 32,098EBITDA 6,349,417 7,953,382 25% 2,279,458 1,867,533 (18%)

Depreciation & Amortization (1,873,330) (2,456,840) (619,369) (740,470)Earnings Before Interest & Tax 4,476,087 5,496,542 23% 1,660,089 1,127,063 (32%)

Interest Expense (449,760) (862,796) (227,464) (250,029)Interest Income & other Revenues 94,038 113,140 49,011 13,798Gain from Sale of Investments 142,597 409,164 68,474 339,998Foreign Exchange Gain (Loss) (221,644) 327,556 (805) 39,753Gain(Loss) from Deconsolidation (230,324) 641 (1,172) (57)Differences from loans valuation (2,027) — — —Capital losses (27,534) (4,080) (367) (1,209)

Earnings Before Taxes 3,781,433 5,480,167 45% 1,547,766 1,269,317 (18%)

Income Tax (801,061) (829,547) (250,496) (114,580)

Net Income before Minority Interest 2,980,372 4,650,620 56% 1,297,270 1,154,737 (11%)

Minority Share (959,023) (591,111) (149,102) (130,136)

Purchased Minority Interest within the Period — (159,498) 1,577 318

Net Income 2,021,348 3,900,011 93% 1,149,745 1,024,919 (11%)Earnings Per Share (in LE) 18.44 35.68 93% 10.52 9.38 (11%)

31 December

2004

LE (000)

31 December

2005

LE (000)

Inc/

(dec)

Q3 – 2005

(3 months)

LE (000)

Q4 – 2005

(3 months)

LE (000)

Inc/

(dec)

84

EAS/LE

31 December 2004

LE (000)

EAS/LE

31 December 2005

LE (000)

Table 14: Balance Sheet in EAS/Egyptian Pounds

AssetsCash 3,154,625 1,651,055Accounts Receivables 987,848 2,078,705Other Current Assets 3,298,126 2,277,065Total Current Assets 7,440,599 6,006,825

Net Fixed Assets 8,476,223 13,567,387Assets Under Construction 1,986,986 3,203,799Goodwill (Net) 776,979 1,353,020Other Long Term Assets 5,497,614 14,143,200

Total Long Term Assets 16,737,802 32,267,406

Total Assets 24,178,401 38,274,231

LiabilitiesBank over Draft & Short Term Debt 2,367,875 9,765,012Accounts Payable 1,805,226 3,127,075Other Current Liabilities 4,390,785 5,334,143Total Current Liabilities 8,563,886 18,226,230

Long Term Debt 6,129,988 8,906,761Other Long Term Liabilities 770,968 1,512,930Total Long Term Liabilities 6,900,956 10,419,691

Total Liabilities 15,464,842 28,645,921

Total Shareholder's Equity 6,133,080 8,456,395Minority Share 2,580,479 1,171,915

Total Liabilities & Shareholder's Equity 24,178,401 38,274,231Net Debt1 5,343,238 17,020,718

1. Net Debt is calculated as a sum of Short Term Debt, Long Term Debt, less Cash.

Ownership December 31 Consolidation Method December 31Subsidiaries 2004 2005 2004 2005

GSM OperationsMobinil (Egypt)1 28.75% 28.75% Proportionate Consolidation Proportionate ConsolidationEgyptian Co. for Mobile Services 16.60% 16.60% Proportionate Consolidation Proportionate ConsolidationIWCPL (Pakistan)2 100.00% 100.00% Full Consolidation Full ConsolidationOrascom Telecom Algeria3 58.35% 87.68% Full Consolidation Full ConsolidationTelecel (Africa) 100.00% 100.00% Full Consolidation Full ConsolidationOrascom Telecom Tunisia4 20.26% 50.00% Proportionate Consolidation Proportionate ConsolidationLibertis (Congo Brazzaville) 65.00% 65.00% Full Consolidation Full ConsolidationOIH (Iraq)5 100.00% 100.00 Full Consolidation Full ConsolidationOT Ventures6 100.00% 100.00% Full Consolidation Full ConsolidationTchad Mobile (Chad) 100.00% — Deconsolidated —

Internet Service

Intouch 68.62% 73.47% Full Consolidation Full Consolidation

Non GSM OperationsPioneers 100.00% — Deconsolidated —Ring 99.00% 99.00% Full Consolidation Full ConsolidationOrasInvest7 97.75% 97.50% Full Consolidation Full ConsolidationPharaoh 55.00% 55.00% Full Consolidation Full ConsolidationCortex 95.00% 95.00% Full Consolidation Full ConsolidationComtel 94.00% 94.00% Full Consolidation DeconsolidatedOT ESOP 100.00% 100.00% Full Consolidation Full ConsolidationArpu+8 84.62% 87.00% Full Consolidation Full ConsolidationM-Link 100.00% 100.00% Full Consolidation Full ConsolidationOT Services Europe 100.00% 100.00% Full Consolidation Full ConsolidationOnward Technologies 55.00% 55.00% Full Consolidation Full ConsolidationMedCable 100.00% 100.00% — Full ConsolidationOratel — 96.10% — Full ConsolidationC.A.T.9 — 50.00% — Proportionate ConsolidationOT Wireless Europe — 100.00% — Full ConsolidationMedia Terreana 71.00% — Full Consolidation —Intelligent Village 10.25% 10.25% Cost Method Cost Method

Table 15: Ownership Structure & Consolidation Methods

Outlook for 2006

The markets OTH operates in, are expected to continue to grow due to theirrapid economic growth, low mobile penetration rate, limited fixed-line coverage,and the relatively high cost of fixed-line infrastructure deployment.

OTH expects to continue delivering very high double digit growth rate interms of subscriber base and targets 50 million subscribers by year end 2006.Revenues are expected to follow the same trend although ARPU will continueto decrease as OTH penetrates lower income segments.

Overall EBITDA margins are expected to be more or less stable. On one hand,scale and certain actions such as substitution of leased lines by owned backbonesin Algeria and Pakistan should enhance overall margin. On the other hand,the continued high growth, competition and new revenue sharing regime inIraq should negatively affect margins.

Even though net additions is forecasted to exceed 2005 levels, capital expendituresare expected to remain stable as OTH has negotiated better pricing with itssuppliers and capital expenditures have become more capacity driven and lessroll out driven.

1. Mobinil is a holding company which controls 51% of ECMS, the Mobile operator. Mobinil is the brand used by ECMS.

2. IWCPL owns 88.69% of Mobilink.

3. Direct and Indirect stake through Moga Holding Ltd. and Oratel.

4. Orascom Telecom Tunisiana is proportionately consolidated through Orascom Tunisia Holding and Carthage Consortium.

5. OIH owns 100% of Orascom Telecom Iraq.

6. OT Ventures owns 100% of Sheba Telecom which operates under the trade name Banglalink

7. Includes Egyptian Satellite Company, Contra Egypt, & Contra BVI.

8. Direct and Indirect stake through Intouch.

9. Direct and Indirect stake through International Telecommunications Consortium Limited (ITCL)

OTH expects to continue its current strategy to:

1) Seek to capture the lion’s share of the high subscriber’s growth inits existing markets by capitalizing on its leadership position ineach of its markets by investing in its network coverage and quality,as well as innovating product and marketing strategies tailored tothe local market conditions.

2) Seek to deliver shareholder value by centralised:— network infrastructure procurement through frame agreements,— financial discipline and reporting at our subsidiaries, and— group-wide strategic initiatives, best practices, tariffs policy and

management expertise.

3) Seek to consolidate its ownership by buying out minorities in its varioussubsidiaries and selectively enter new markets with large population,low mobile penetration with adequate risk and return profile.

86

International Financial Reporting Standards vs. Egyptian AccountingStandards

OTH will continue to report its Consolidated Financial Statements in EgyptianPounds (LE) using the Egyptian Accounting Standards (EAS) simultaneouslypreparing, for reporting purposes, a reviewed/audited US$ ConsolidatedFinancial Statement in accordance with International Financial ReportingStandards “IFRS”. As part of this process, OTH is presenting today a US$reviewed/audited Consolidated Financial Information prepared in accordancewith International Accounting Standards, now called IFRS.

The primary changes in the Consolidated IFRS/US$ version from theConsolidated EAS/LE include, but are not limited to, the following:

• Recognition of Certain Capital Lease Agreement (IAS- 17)• Recognition of the Employee share in dividends (IFRS-2)• Requirements not to Amortize Goodwill (IAS-36)• Requirements not to capitalize certain Foreign exchange differences as

part of the Assets Costs (IAS-21)

Starting from 2005 the company used the translation approach as permittedby the IAS 21 “the effect of change in Foreign Exchange Rates”. Under thisapproach the Company’s Assets & Liabilities were translated at the US$/LEclosing rate on December 31, 2005. Income and Expenses were translated atthe average US$/LE exchange for the 12 months ending on December 31st, 2005.

AppendixGlossary

ARPU (Average Revenue per User): Average monthly recurrent revenue percustomer (excluding visitors roaming revenue & connection fee). This includesairtime revenue (national & international), as well as monthly subscription fee,SMS, GPRS & data revenue. Quarterly ARPU is calculated as an average ofthe last three months.

MOU (Minutes of Usage): Average airtime minutes per customer per month. This includes billable national & international outgoing traffic originated byour subscribers (on-net, to land line & to other operators). This also includesincoming traffic to our subscribers from land line or other operators.

Churn: Disconnection rate. This is calculated as the number of disconnectionsduring the period divided by the average customer base for the period.

Capex: Change in fixed assets, which includes work in progress, network, IT,other tangible and intangible fixed assets, during the reporting period.

Such forward looking statements are no guarantees of future performance andinvolve risks and uncertainties, and actual results may differ materially fromthose in the forward looking statements as a result of various factors.

You are cautioned not to place undue reliance on those forward lookingstatements, which speak only as of the date of this presentation, which is notintended to ref lect Orascom Telecom’s business or acquisition strategy or toref lect the occurrence of unanticipated events.

Disclaimer

The EAS/LE consolidated Financial Statements and the IFRS/US$ ConsolidatedFinancials are prepared using a different accounting and presentation basisand, therefore, the information and results are materially different from eachother and cannot be reasonably compared for analysis purposes

This presentation contains statements that would be constituted as forwardlooking. These statements appear in a number of places in this presentationand include statements regarding the intent, belief or current expectations ofthe subscriber base, estimates regarding future growth in the different businesslines and the global business, market share, financial results and other aspectsof the activity and situation relating to the company.

88Auditor’s Report

To The Shareholders of Orascom Telecom Holding (S.A.E)

We have audited the accompanying Consolidated Balance Sheet of Orascom Telecom Holding "Egyptian Joint Stock Company" as of December 31, 2005 and the

related Consolidated Statements of Income, Changes in Shareholders’ Equity and Cash Flows for the year then ended. These consolidated financial statements are

the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of provisions of applicable Egyptian laws and regulations. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An

audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We have obtained the information

and explanations, which we deemed necessary for our audit. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the Consolidated Financial Statements referred to above together with the notes attached thereto present fairly, in all material respect, the financial

position of the Company as of December 31, 2005 and the results of its operations and its cash flows for the financial year then ended, in accordance with Egyptian

Accounting Standards and relevant Egyptian laws and regulations.

Cairo, March 27 , 2006

KPMG Hazem Hassan

• Auditor’s Report

• Consolidated Balance Sheet

• Consolidated Income Statement

• Consolidated Statement ofChanges in Shareholders’ Equity

• Consolidated Cash Flows

• Notes to the ConsolidatedFinancial Statements

Financial StatementsEgyptian Accounting Standards (in LE)

Orascom Telecom Holding S.A.EConsolidated Balance Sheet As at December 31, 2005

Note 31/12/2005 31/12/2004No. L.E L.E

Current assetsCash at banks and on hand (3/9-13) 1 651 054 873 3 154 625 208Other assets (9) 42 021 112 —Investments held for trading (3/7/B-12) 49 825 411 —Derivative assets (3/4-21) 8 220 721 —Other debit balances (3/10-11) 1 208 878 971 1 805 017 842Accounts receivable (net) (3/10) 2 078 705 471 987 847 603Prepaid expenses 349 797 273 185 709 157Due from related parties 115 902 737 155 136 605Inventories (net) (3/11) 502 418 350 329 073 728Total current assets 6 006 824 919 6 617 410 143

Non-current assetsInvestments (3/7/A-6) 7 532 152 218 31 873 357Payments for investments (7) 25 495 441 —Assets under construction (4) 3 203 798 970 1 986 986 383Fixed assets (net) (3/5-5) 13 567 387 344 8 476 223 421Intangible assets (net) (3/6/B-8) 5 918 469 559 5 687 302 096Other assets (9) 667 082 563 857 264 644Goodwill (net) (3/6/A-10) 1 353 020 473 521 340 999Total non-current assets 32 267 406 568 17 560 990 900Total assets 38 274 231 487 24 178 401 043

Current liabilitiesBanks' credit accounts and overdraft 170 859 483 211 092 579Short-term loans (14) 2 849 116 909 2 156 782 603Accounts payable 3 127 075 144 1 805 225 912Investments payable (15) 7 150 742 764 61 850 000Due to related parties 92 140 322 415 986 325Accrued expenses 2 058 991 045 1 401 815 247Other credit balances (16) 2 777 304 460 2 511 133 662Total current liabilities 18 226 230 127 8 563 886 328

Non-current liabilitiesLong-term loans (14) 8 906 761 561 4 993 713 263Creditors (17) 1 512 929 806 770 968 139Payments on account of bonds issuance (14) — 1 136 275 033Total non-current liabilities 10 419 691 367 6 900 956 435

Minority interest 1 171 915 163 2 567 069 058

Shareholders' equityIssued and paid in share capital (18) 1 100 000 000 1 100 000 000Legal reserve (3/18) 463 577 726 428 353 043Other reserves (19) 17 090 121 16 689 239Net profit for the year 3 900 011 434 1 961 219 838Retained earnings 2 825 010 674 1 733 411 169Cumulative translation adjustments (3/3) 312 470 760 1 002 292 410Treasury stock (3/17-20) (161 765 885) (95 476 477)Total shareholders' equity 8 456 394 830 6 146 489 222Total liabilities, minority interest and shareholders' equity 38 274 231 487 24 178 401 043

The accompanying notes form an integral part of these financial statements.

Executive Officer Finance Chairman and Managing Director

Auditor's report "attached"

90

Orascom Telecom Holding S.A.EConsolidated Income Statement For the financial year ended December 31, 2005

Note 31/12/2005 31/12/2004No. L.E L.E

Cellular operations revenue (3/19/ i) 16 480 413 271 11 098 415 097Telecommunications service revenue (3/19/ ii) 2 109 718 263 984 201 373Internet service revenue (3/19/ iii) 140 521 941 100 626 652Dividends income — 318 388 276Total revenues 18 730 653 475 12 501 631 398

Cellular operations cost (4 532 964 428) (2 331 786 939)Telecommunications service cost (1 846 964 003) (612 442 358)Internet service cost ( 73 706 808) (63 708 676)Total operating cost (6 453 635 239) (3 007 937 973)Gross profit 12 277 018 236 9 493 693 425

Other operating revenues 138 273 968 6 205 923Other operating expenses (1 170 443 294) (556 357 889)Selling, general and administrative expenses (2 990 278 377) (2 274 236 960)Remunerations and allowances for board members (23) (14 612 418) (28 345 868)Provisions (3/14) (75 971 450) ( 195 346 004)Impairment of assets (3/8) (211 020 282) ( 101 430 872)Negative goodwill (3/6/A) 52 343 230 —Impairment of goodwill (3/8) (51 927 406) (1 234 085)Earnings before interest, tax, depreciation and amortization 7 953 382 207 6 342 947 670Depreciation and amortization (2 456 840 020) (1 873 329 726)Earnings before interest and income tax 5 496 542 187 4 469 617 944Other income (expenses)Interest expense ( 862 795 479) (449 759 659)Adjustment relating to loan balance — (2 027 471)Interest income and other revenues 113 140 044 94 038 482Gain from sale of investments 409 163 750 142 596 512Gain (loss) from deconsolidation of investments (3/1/C) 640 833 (230 324 196)Foreign exchange difference (3/2) 327 556 142 (341 204 059)Capital losses (4 080 317) (27 534 040)Earnings before income tax 5 480 167 160 3 655 403 513Income tax (3/12-22/d) (829 546 513) (801 061 487)Net profit before minority interest 4 650 620 647 2 854 342 026Minority interest (591 111 110) (893 122 188)Purchased minority interest within the year (159 498 103) —Net profit for the year 3 900 011 434 1 961 219 838

Earnings per share (24) 35.68 17.89


Orascom Telecom Holding S.A.EConsolidated Statement of Changes in Shareholders' Equity For the financial year ended December 31, 2005

Note No. Issued

and paid Legal Other Net profit for Retained Cumulative Treasury Total

in share reserve reserve the year earnings translation stock

capital adjustment

L.E L.E L.E L.E L.E L.E L.E L.E

Balance as at 1/1/2004 1 100 000 000 383 073 911 16 689 239 711 848 994 1 108 271 603 1 210 524 366 (14 523 677) 4 515 884 436

Transfer to retained earnings — — — (711 848 994) 711 848 994 — — —

Transfer to legal reserve — 45 279 132 — — (45 279 132) — — —

Cumulative translation adjustments — — — — — (208 231 956) (7 493 349) (215 725 305)

Purchase of treasury stock — — — — — — (73 459 451) (73 459 451)

Employees' profit distribution (subsidiaries) — — — — (40 499 888) — — (40 499 888)

Adjustments on retained earnings — — — — (930 408) — — (930 408)

*Net profit for the year ended 31/12/2004 — — — 1 961 219 838 — — — 1 961 219 838

Balance as at 31/12/2004 1 100 000 000 428 353 043 16 689 239 1 961 219 838 1 733 411 169 1 002 292 410 (95 476 477) 6 146 489 222

Transfer to retained earnings — — — (1 961 219 838) 1 961 219 838 — — —

Transfer to legal reserve — 35 224 683 — — (35 224 683) — — —

Cumulative translation adjustment — — — — — (689 821 650) 38 799 161 (651 022 489)

Cash flow hedges gains taken to equity (net) (21/1-22/c) — — 400 882 — — — — 400 882

Holding company distribution — — — — (819 466 662) — — (819 466 662)

Employees' profit distribution

(holding & subsidiaries) — — — — (77 290 797) — — (77 290 797)

Sale/Purchase of treasury stock — — — — — — (105 088 569) (105 088 569)

Adjustments on retained earnings — — — — — 62 361 809 — 62 361 809

Net profit for the year ended 31/12/2005 — — — 3 900 011 434 — — — 3 900 011 434

Balance as at 31/12/2005 1 100 000 000 463 577 726 17 090 121 3 900 011 434 2 825 010 674 312 470 760 (161 765 885) 8 456 394 830

* from January 1, 2005 Orascom Telecom Algeria applied the amended version of IAS 21 which do not allow the former alternative treatment ( capitalization of exchange differences resulted

from severe devaluation and related to recently acquired long-term assets ). Consequently , the capitalization of formally booked exchange difference in 2004 amounted to L.E 60 128 623

has been reversed in the retained earning beginning balance of 2005 and net profit for year 2004. As for 2004 financial statements have been restated .


92Orascom Telecom Holding S.A.EConsolidated Cash Flows For the financial year ended December 31, 2005

Note Financial year ended Financial year endedNo. 31/12/2005 31/12/2004

L.E. L.E.

Cash flows from operating activitiesNet profit for the year before income tax 5 480 167 160 3 655 403 513Adjustment to reconcile net profit to cash f lows from operating activitiesDepreciation and amortization 2 456 840 020 1 873 329 726Negative goodwill (52 343 230) —Amortization of arrangement fees cost 57 226 717 —Payments for employees' profit distribution (49 907 665) (40 499 888)Other dividends — (318 388 276)Unrealized exchange difference (330 664 922) (127 140 000)Impairment of goodwill 51 927 406 1 234 085Impairment of assets 211 020 282 101 430 872Provisions 75 971 450 195 346 004Gain from sale of investments (409 163 750) (142 596 512)Gain (losses) from deconsolidation of investments (640 833) 230 324 196Adjustments on retained earnings 3 618 991 (930 408)Capital losses 4 080 317 27 534 040Net profit before changes in current assets, liabilities and minority interest 7 498 131 943 5 455 047 352Changes in current assets (1 764 344 061) (716 986 432)Changes in current liabilities 1 681 301 811 1 271 824 323Changes in minority interest (394 833 303) (347 151 414)Net cash provided by operating activities 7 020 256 390 5 662 733 829

Cash flows from investing activitiesPayments for fixed assets and assets under construction (8 106 173 138) (6 195 867 496)Proceeds from sale of fixed assets 37 370 807 19 064 910Payments for Intangible assets (456 902 551) —Payments to purchase subsidiaries and long term investments (3 436 840 619) (327 115 000)Proceeds from sale of subsidiaries 612 221 871 280 890 436Net cash used in investing activities (11 350 323 630) (6 223 027 150)

Cash flows from financing activitiesProceeds from loans and banks' overdraft 3 683 077 637 2 004 359 871Changes in other assets 214 093 922 (685 050 976)Proceeds on account of bonds issuance — 1 136 275 033Payments for treasury stock (105 088 569) (73 459 451)Proceeds from Creditors long-term 9 613 914 —Dividends paid (819 466 662) —Net cash provided by financing activities 2 982 230 242 2 382 124 477Net cash movement (1 347 836 998) 1 821 831 156Cash and cash equivalents as at January 1st 3 154 625 208 1 102 173 756Change cumulative translation adjustment (155 733 337) 230 620 296Cash and cash equivalents as at December 31st (3/9-13) 1 651 054 873 3 154 625 208


1- GENERALA- Legal status

Orascom Telecom Holding S.A.E. “the Company” is an Egyptian

Joint Stock Company established in accordance with the provisions

of the Companies Law No. 159 of 1981 and its executive regulations

and in accordance with the Capital Market Law No. 95 of 1992

and its executive regulations. The Company was registered in the

commercial register on July 29, 1997 under No. 114812.

The Company extraordinary general assembly, in its meeting held

on February 9, 2000, approved the change of the governing law

from the Companies’ Law No. 159 of 1981 to the Capital Market

Law No. 95 of 1992. Also, by virtue of a resolution of the

extraordinary general assembly, in its meeting held on June 13,

2000, the Company’s name was changed from Orascom Telecom

to Orascom Telecom Holding.

The Capital Market Authority’s approval for these changes had

been obtained on July 12, 2000. These changes were registered in

the commercial register under no. 134934.

By virtue of a resolution of the extraordinary general assembly in

its meeting held on September 1, 2004, the Company’s Premises

was changed to Nile City Towers, Cairo, and was registered in the

commercial register under No. 365751.

B- Ultimate holding company

On May 29, 2005, (50% +1) share of Orascom Telecom

Holding capital shares were acquired by Weather Capital S.AR.L

registered on Luxembourg which is fully owned (100%) by Weather

Investment Company S.R.L registered in Italy.

C- Purpose of the company

The Company’s purpose is to participate in companies issuing

securities or to increase its share capital of these companies. The

Company may have interest or participate in, by any mean, in

companies and other enterprises that have activities similar to those

of the Company or those that may assist the Company to achieve

its objective in Egypt or abroad. It may also merge into those

companies and enterprises purchase them or affiliate them, pursuant

to the provisions of the law and its executive regulations.

2- BASIS OF PREPARATIONThese Consolidated financial statements have been prepared in accordance

with the Egyptian Accounting Standards and relevant Egyptian laws

and regulations. The financial statements are prepared using the historical

cost convention.

3- SIGNIFICANT ACCOUNTING POLICIES APPLIEDThe accounting policies set out below have been applied consistently

with those applied in the previous year presented in these consolidated

financial statements and applied consistently by Group entities.

3-1 Basis of consolidation:

The consolidated financial statements include all subsidiaries that

are controlled by the parent company and which the management

intends to continue to control (Note 3-1-A). The bases of the

consolidation are as follows:

— All material inter-group balances and transactions are eliminated.

— Minority interest, separated from the equity and results of the

entities that are controlled by the parent company, it’s shown

as a separate line item in the consolidated financial statements

and calculated as the minority’s proportion of the pre - acquisition

carrying amounts of the assets and liabilities of the subsidiary

and the results of the year.

The cost of acquisition is allocated as follows:

a- The fair value of the assets and liabilities acquired as of the date

of the acquisition to the extent of the parent’s interest obtained

in the acquisition.

b- The excess of the cost of acquisition over the parent’s interest in

the fair value of the identifiable assets and liabilities acquired as

of the date of acquisition is recognized as goodwill.

— Positive goodwill is stated at cost as an intangible asset and

evaluated every financial period.

— Negative goodwill is recognized directly in the income statement.

c- Deconsolidation:

A subsidiary excluded from the consolidated financial statements when:

— Parent control is intended to be temporary because the

subsidiary is acquired and held exclusively with a view to its

subsequent disposal in the near future.

— The subsidiary operated under severe long-term restrictions,

which significantly impair its ability to transfer funds to the

parent.

Such deconsolidated subsidiaries accounted for in accordance with

EAS No. 17 concerning investments.

Orascom Telecom Holding S.A.ENotes to the consolidated financial statements for the financial year ended December 31, 2005

94— Subsidiaries and Joint Ventures Companies

As at December 31, 2005 Orascom Telecom Holding, hereafter called the “Parent” owns subsidiary companies that have been consolidated in the

consolidated financial statements as follows:

A) Fully consolidated subsidiaries:% of share Country

InTouch for Telecommunication Company 73.47% EgyptOrascom Telecom C.S Company 95% MaltaTelecel International Ltd. Company 100% (B.V.I)International Wireless Communication Pakistan Ltd. (IWCPL) 100% MaltaPharaoh Telecommunication Company 55% EgyptOrasInvest Holding Inc. Company 97.5% MaltaRing Distribution Company 99% EgyptOrascom Telecom Algeria Company 87.68% AlgeriaOrascom Telecom ESOP Company 100% (B.V.I)Arpu for Communication services Company 87% EgyptMoga Holding Limited Company 100% MaltaOrascom Iraq Holding Company 100% MaltaOnward Technologies Ltd. Company 55% (B.V.I)Orascom Telecom Services Europe Company 100% FranceM-Link Company 100% MaltaOrascom Telecom Ventures Company 100% (B.V.I)Med Cable Company 100% United KingdomOratel International Ltd. Company 96.09% MaltaOrascom Telecom Wireless Europe 100% FranceOrascom Telecom Eurasia 100% (B.V.I)

* Includes direct and indirect ownership stake. ** Contra for Development Project Company and Contra Telecom & Construction Company are consolidated through OrasInvest Holding Inc. Company.

B) Joint Ventures Companies – proportionally consolidatedThe consolidated financial statements also include the Parent’s prorate interest in the assets, liabilities, revenues and expenses of joint ventures throughproportionate consolidation of these items in the Parent’s financial statements.Indicated hereunder are the joint ventures, the Parent’s prorate interest and the period for which the financial statements have been prepared as a basisfor proportionate consolidation in the Parent’s consolidated financial statements.

Prorate Interest The period for whichName of the Joint Venture as at financial statements Country

December 31, 2005 were prepared

* Egyptian Company for Mobile Services 31.26% 1/1/2005- 31/12/2005 Egypt ** Orascom Telecom Tunisie 50% 1/1/2005- 31/12/2005 Tunis *** Consortium Algerian Telecommunications 50% 23/6/2005- 31/12/2005 Algeria

*Proportionally consolidated for Egyptian Company for Mobile Services through direct share in:

Ownership % as atName of the Company December 31, 2005 CountryMobinil for Telecommunications 28.75% EgyptEgyptian Company for Mobile Services 16.6% Egypt

**Proportionally consolidated for Orascom Telecom Tunisie through direct share in:

Ownership % as atName of the Company December 31, 2005 CountryOrascom Tunisia Holding Co. 100% (B.V.I)Carthage Consortium Ltd. Co. 100% (B.V.I)

***Proportionally consolidated for Consortium Algerian Telecommunications through direct share in:

Ownership % as atName of the Company December 31, 2005 CountryConsortium Algerian Telecommunications 33% AlgeriaInternational Telecommunication Consortium 50% England

**

*

*

96nature that is not expected to recur, and the increase in recoverableamount related clearly to the reversal of the effect of that specific event.

In respect of other assets, an impairment loss is reversed if therehas been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’scarrying amount does not exceed the carrying amount that wouldhave been determined, net of depreciation or amortization, if noimpairment loss had been recognized.

3-9 Cash and cash equivalentsFor the purpose of preparing the Statement of Cash Flows, theCompany considers all cash on hands, bank current accounts andshort-term deposits with banks as cash and cash equivalents. TheStatement of Cash Flows is prepared according to the indirect method.

3-10Trade and other receivablesTrade and other receivables are stated at their cost less impairmentlosses (note 3-8).

3-11InventoriesInventories are stated at the lower of cost and net realizable value.Net realizable value is the estimated selling price in the ordinarycourse of business, less the estimated costs of completion andselling expenses.

3-12TaxationIncome tax on the profit or loss for the year comprises currentand deferred tax. Income tax is recognized in the income statementexcept to the extent that it relates to items recognized directly inequity, in which case it is recognized in equity.Current tax is the expected tax payable on the taxable income forthe year, using tax rates enacted or substantially enacted at thebalance sheet date, and any adjustment to tax payable in respectof previous years.Deferred tax is provided using the balance sheet liability method,providing for temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and theamounts used for taxation purposes. The amount of deferred taxprovided is based on the expected manner of realization orsettlement of the carrying amount of assets and liabilities, usingtax rates enacted or substantively enacted at the balance sheet date.A deferred tax asset is recognized only to the extent that it isprobable that future taxable profits will be available against whichthe asset can be utilized. Deferred tax assets are reduced to theextent that it is no longer probable that the related tax benefitwill be realized.

3-13Capitalization of borrowing costsBorrowing costs are recognized as expenses in the income statementwhen incurred, with the exception of borrowing cost directlyattributable to the construction and acquisition of new assetswhich is capitalized as part of the relevant assets cost and depreciatedover assets’ estimated useful lives. This capitalization ceases oncethe assets become in operational condition and ready for use.

3-14ProvisionsProvisions are recognized when the Company has a legal orconstructive obligation as a result of a past event and it’s probablethat a f low of economic benefits will be required to settle theobligation and the obligation can be reasonably estimated. Provisionsare reviewed at the balance sheet date and amended (when necessary)to represent the best current estimate.

3-15Accounting estimatesThe preparation of the financial statements in conformity with

Egyptian Accounting Standards requires management to makeestimates and assumption that affect the reported amounts ofassets and liabilities and the reported amounts of revenues andexpenses during the reporting period. Actual results could differfrom those estimates.

3-16DividendsDividends are recognized as a liability in the financial period inwhich they are declared.

3-17Treasury StockOrascom Telecom Holding shares held by Orascom Telecom ESOP Ltd.are recorded as treasury stock in the consolidated balance sheetat the acquisition cost less any write down to marketvalue.Transactions relating to the treasury stock are recorded inthe Shareholders’ Equity.

3-18Legal ReserveAs per the company’s statutes 5% of net profit for the year is setaside to form a legal reserve, the transfer to such reserve ceasesonce it reaches 50% of the Company’s paid in share capital. Thereserve can be utilized in covering losses or increasing the Company’sshare capital. If the reserve falls below the said 50%, the Companyshould resume setting aside 5% of its annual net profit until thereserve reaches 50% of the Company’s paid in share capital.

3-19Revenue recognition(i) Cellular operations revenue

GSM revenue is recognized when services rendered to thecustomers based on the actual usage airtime from the followingactivities:— Prepaid cards is recognized based on the actual used calls

minutes while the unused call minutes at the end of theperiod are deferred.

— Monthly and connection fees are recognized inthe income statement on a straight-line basis over the periodor the terms of the contract.

— Other GSM telecommunications services and facilities whenprovided.

(ii) Telecommunications services revenueRevenue from the provision of telecommunications servicesincludes the following:— Goods sold

Revenue is recognized when the significant risks and rewardsof ownership have been transferred to the buyer.

— Construction contractsRevenue is recognized in proportion to the stage ofcompletion of the contract.

— Satellite servicesRevenue is recognized once the services delivered to the client.

— VAS revenueValue added services (VAS) revenue is recognizedonce the services are delivered, or used by the customers.

— Space segment revenueSpace segment rental fees are recognized in the incomestatement on a straight-line basis over the terms of the lease.

(iii) Internet revenueRevenue is recognized once the service delivered to the client.

3-20Bonds payableBonds payable are recognized initially at cost less issuance costs.Issuance costs are amortized over the bonds re-payments periodstarting from the bonds issuance date. Bonds payable are statedat amortized cost with any difference between cost and redemptionvalue being recognized in the income statement over the periodof the borrowings.

3-2 Translation of the foreign currencies transactionsOrascom Telecom Holding and some of its subsidiaries maintaintheir books of accounts in Egyptian Pound. Transactions denominatedin foreign currencies are recorded at the prevailing exchange rateat the date of transactions. Monetary assets and liabilities denominatedin foreign currencies at the balance sheet date are translated at theprevailing exchange rates at that date. The foreign exchangedifferences arising on the settlement of transactions and thetranslation at the balance sheet date are recognized in the incomestatement.

3-3 Translation of the foreign subsidiaries’ financialsAs at the balance sheet date the assets and liabilities of theseconsolidated subsidiaries are translated to Egyptian Pound at theprevailing rate as at the year end, and the shareholders’ equityaccounts are translated at historical rates, where as the incomestatement items are translated at the average exchange rate prevailingduring the year of the consolidated financial statements. Currencytranslation differences are recorded in the shareholders’ equitysection of the balance sheet as cumulative translation adjustments.

3-4 Derivative financial instrumentsThe Group uses derivative f inancial instruments to hedge itsexposure to foreign exchange and interest rate risks arising fromoperational, financial and investment activities. In accordance withits treasury policy, the Group does not hold or issue derivativefinancial instruments for trading purposes. However, derivativesthat do not qualify for hedge accounting are accounted for astrading instruments.

3-5 Fixed assetsFixed assets are recorded at historical cost and presented in thebalance sheet net of accumulateddepreciation and impairment(Note 3-8). Depreciation is charged to income statement over theestimated useful-life of each asset using the straight-line method.The following are the estimated useful lives, for each class of assets,for depreciation calculation purposes:

Assets Depreciation periodBuildings 50 yearsCell sites 8 yearsTools 5-10 yearsComputers equipment 3-5 yearsFurniture and Fixtures 5-10 yearsVehicles 3-6 yearsLeasehold improvements and renovations 3-8 years

Expenditure incurred to replace a component of an item of fixedassets that is accounted for separately, including major inspectionand overhaul expenditure, is capitalized.Other subsequent expenditureis capitalized only when it increases the future economic benefitsembodied in the fixed assets. All other expenditure is recognizedin the income statement as an expense as incurred.

3-6 Intangible assetsA- Goodwill

Goodwill (positive and negative) represents amounts arisingon acquisition of subsidiaries, associates and joint ventures.Goodwill (positive and negative) represents the differencebetween the cost of the acquisition and the fair value of thenet identifiable assets acquired at acquisition date.Positive goodwill is stated at cost less impairment losses (note 3-8).Negative goodwill that arose before 1/1/2005 are adjusted toretained earning opening balances according to applyingInternational Financial Reporting Standards (IFRS 3).While negative goodwill arose from business combinationsafter applying International Financial Reporting Standards(IFRS3) will be recognized directly in the income statement.

B- Other intangible assetsOther intangible assets that are acquired by the Group are statedat cost less accumulated amortization and impairment losses (note 3-8).

C- Subsequent expenditureSubsequent expenditure on capitalized intangible assets is capitalizedonly when it increases the future economic benefits embodied inthe specif ic asset to which it relates. All other expenditure isexpensed as incurred.

D- AmortizationAmortization is recognized in the income statement on a straight–line basis over the estimated useful lives of intangible assets. Licensefees are amortized over the period of the licenses, concessions andcomputers software are amortized from the date they are availablefor use. The estimated useful lives are as follows:— Licenses Fees 15 years— Concessions and Computers software 3-15 years

3-7 Investmentsa- Long-term investments

Investments are classified as non-current assets and are statedat cost less impairment (note 3-8). The impairment loss isrecognized in the income statement.

b- Investments held for tradingInvestments held for trading are stated at cost. And at the endof each f inancial period investments held for trading aremeasured at the fair value. Changes in the fair value differencesare recognized in the income statement. Investments held fortrading include of mutual funds and reverse repurchaseagreements (treasury bills).

c- Investments in associatesInvestments in associates are stated at equity method. Underthe equity method the investment in associates is initiallyrecognized at cost and adjusted therafter for the part-acquisitionchange in the investor’s share of the profit and loss of theassociates after the date of acquisition. Distributions receivedfrom associates reduce the carrying amount of the investment.

3-8 ImpairmentThe carrying amounts of the Group’s assets other than inventoriesand deferred tax assets, are reviewed at each balance sheet date todetermine whether there is any indication of impairment. If anysuch indication exists, the asset’s recoverable amount is estimated.For intangible assets that are not yet available for use, the recoverableamount is estimated at each balance sheet date. An impairmentloss is recognized whenever the carrying amount of an asset or itscash-generating unit exceeds its recoverable amount. Impairmentlosses are recognized in the income statement.

The recoverable amount of the Group’s receivables is calculatedas the present value of expected future cash f lows, discounted atthe original effective interest rate inherent in the asset. Receivableswith a short duration are not discounted.

The recoverable amount of other assets is the greater of their netselling price and value in use. In assessing value in use, the estimatedfuture cash flows are discounted to their present value using a pre-tax discount rate that ref lects current market assessments of thetime value of money and the risks specific to the asset. For anasset that does not generate largely independent cash inflows, therecoverable amount is determined of the cash – generating unitto which the asset belongs.

An impairment loss in respect of goodwill is not reversed unlessthe loss was caused by a specific external event of an exceptional

4- ASSETS UNDER CONSTRUCTION31/12/2005 31/12/2004

L.E. L.E.

Orascom Telecom Holding Company 29 572 136 7 236 989* Egyptian Company for Mobile Services 371 406 990 204 706 513

Telecel International Ltd. Company — 4 618 694Libertis Telecom Company — 12 515 117Orascom Telecom Algeria Company 1 167 729 126 680 485 598InTouch for Telecommunication Company 1 358 992 209 500Ring for Distribution Company 8 306 222 7 305 035

** International Wireless Communication Pakistan Ltd. (IWCPL) 1 369 094 613 759 668 565Orascom Iraq Holding Company 109 102 227 100 164 156Orascom Telecom Tunisie Company 73 492 091 45 016 987Med Cable Company — 34 295 976

*** Orascom Telecom Ventures Company 44 653 823 81 438 793OrasInvest Holding Company 32 061 49 324 460Consortium Algerian Telecommunications 29 033 730 —Other companies 16 959 —

3 203 798 970 1 986 986 383

* The Egyptian Company for Mobile Services capitalizes the borrowing costs related to establishment of an asset, this is in accordance to paragraph 11of Egyptian Accounting Standard No.14. Accordingly, the Orascom Telecom Holding proportionate share from the capitalization during the financialyear ended December 31, 2005 is L.E 24 901 802 in assets under construction.

** International Wireless Communication Pakistan Ltd capitalized the borrowing costs related to establishment of an asset during the financial year endedDecember 31, 2005 amounted to PKR 113.5 million equivalents to L.E 10.9 million.

*** Orascom Telecom Ventures capitalized the borrowing costs related to establishment of an asset during the financial year ended December 31, 2005amounted to TAKA 15 million equivalents to L.E 1.27 million.

5- FIXED ASSETS

Land Buildings Cell Sites Tools Computers Furniture & Vehicles Leasehold Total

Equipment Fixtures improvements

& renovation

L.E L.E L.E L.E L.E L.E L.E L.E L.E

Cost

As at 1/1/2005 14 451 976 85 605 219 10 474 068 269 19 325 930 405 953 309 118 001 669 74 145 670 126 648 994 11 318 201 036

Additions during the year 7 937 834 144 801 636 7 057 725 169 16 410 453 157 455 737 52 564 380 28 870 595 73 083 437 7 538 849 241

Addition coming from changes

in proportionate companies — 8 366 372 396 001 818 3 359 584 18 487 976 1 934 245 3 694 460 — 431 844 455

Disposals during the year — (1 437 217) (52 658 943) (1 714 136) (3 850 076) (2 897 769) (2 427 411) (6 243 412) (71 228 964)

Deconsolidation of subsidiaries — — (407 444 120) (41 399) (7 215 268) (8 872 235) (9 995 029) (9 948 603) (443 516 654)

Cumulative translation adjustments (440 836) (9 190 969) (918 920 606) 2 857 218 (41 676 912) (5 627 795) (4 677 777) (7 759 986) (985 437 663)

Balance as at 31/12/2005 21 948 974 228 145 041 16 548 771 587 40 197 650 529 154 766 155 102 495 89 610 508 175 780 430 17 788 711 451

Accumulated Depreciation

As at 1/1/2005 — 9 737 938 2 476 774 958 8 944 505 194 362 541 52 300 939 32 351 599 67 505 135 2 841 977 615

Depreciation for the year — 6 261 380 1 601 789 230 4 670 504 94 636 588 26 281 758 16 432 176 25 380 322 1 775 451 958

Addition coming from changes

in proportionate companies — 1 438 106 50 189 723 505 634 6 179 768 297 242 1 138 080 — 59 748 553

Accumulated depreciation

of disposals — ( 1 391 208) (15 465 710) (467 267) (3 077 644) (1 874 751) (1 375 456) (2 759 930) (26 411 966)

Deconsolidation of subsidiaries — — (238 884 071) (26 933) (5 290 075) (5 427 679) (5 324 135) (4 045 429) (258 998 322)

Cumulative translation adjustments — (3 294 385) (154 250 913) 2 638 704 (8 978 543) (1 873 414) (1 714 029) ( 2 971 151) (170 443 731)

Balance as at 31/12/2005 — 12 751 831 3 720 153 217 16 265 147 277 832 635 69 704 095 41 508 235 83 108 947 4 221 324 107

Net book value as at 31/12/2005 21 948 974 215 393 210 12 828 618 370 23 932 503 251 322 131 85 398 400 48 102 273 92 671 483 13 567 387 344

Net book value as at 31/12/2004 14 451 976 75 867 281 7 997 293 311 10 381 425 211 590 768 65 700 730 41 794 071 59 143 859 8 476 223 421

Pledges On Fixed Assets

— Orascom Telecom Algeria net fixed assets amounted to LE 4.43 billion was pledged against loans and credit facilities obtained from group of banks and international financial organizations.

— Some of the fixed assets costs which belongs to International Wireless Communication Pakistan Ltd. amounted to PKR 23.6 billion equivalents to LE 2.27 billion are secured by first hypothecation charge.

— Orascom Telecom Tunisia net fixed assets are subjected to registered debentures to secure Orascom Telecom Tunisia loans, Orascom Telecom Holding proportionate rate in Orascom Telecom Tunisia fixed assets amounted

to L.E 362 million.

985-1 The Egyptian Company for Mobile Services (Joint Ventures

Company) capitalizes borrowing costs related to the acquisitionof an asset, this is in accordance with paragraph 11 of EgyptianAccounting Standard No. 14. Accordingly, the Orascom TelecomHolding proportionate share from the capitalization duringthe financial year ended December 31, 2005 is L.E 31 492 388 infixed assets.

5-2 International Wireless Communication Pakistan capitalized borrowingcosts related to establishment of an asset during the financial yearended December 31, 2005 amounted to PKR 1089 million equivalentsto L.E 104.8 million.

5-3 Orascom Telecom Ventures capitalized borrowing costs related toestablishment of an asset during the financial year ended December 31, 2005amounted to TAKA 45.2 million equivalents to L.E 3.8 million.

6- INVESTMENTS

Percentage of 31/12/2005 31/12/2004Ownership L.E. L.E.

Long term investmentsSmart village (ECDMIV) 10.25% 10 250 000 7 687 500

* Pioneers for Investments 100% 16 429 624 16 429 624Other investments(in subsidiaries) 10 987 881 7 756 233

37 667 505 31 873 357

Investments in associates** Hutchison

TelecommunicationsInternational 19.3% 7 494 484 713 —

7 532 152 218 31 873 357

* Orascom Telecom Holding deconsolidated Pioneers for investmentsfrom the consolidated financial statements as a result of the management’sintention to sell the investment.

** Hutchison Telecommunication Investments Holding granted OrascomTelecom Holding a conditional right to purchase a further 3.7% interestwithin 12 months from the purchase date.

7- PAYMENTS FOR INVESTMENTS

31/12/2005 31/12/2004L.E. L.E.

Trans World Associates Co. 19 546 538 —Top Level Domain Co. 5 948 903 —

25 495 441 —

8- INTANGIBLE ASSETS (NET)

31/12/2005 31/12/2004L.E. L.E.

* Licenses fees (net) 5 482 420 152 5 538 343 142** Concession&software computer(net) 436 049 407 148 958 954

5 918 469 559 5 687 302 096

* Orascom Telecom Algeria signed GSM License agreement, which entitlesthe company to operate a V-SAT network in Algeria for 10 years. Thetotal value of the license is US$ 2 million paid in June 2004.

** Concession & software computer include an amount of L.E 61 734 445,which represents InTouch for Telecommunication concession right touse the International cycles (ROU), which is amortized over 15 yearsusing the declining method.

9- OTHER ASSETS— Other assets (non-current)

31/12/2005 31/12/2004L.E. L.E.

* Blocked cash at banks 566 578 753 823 188 700Deposits with others 87 202 294 21 110 035Deferred tax assets (note 22/A) 13 301 516 12 965 909

667 082 563 857 264 644

* Blocked as collateral for loans, letter of guarantees and letters of credit.— Other assets (current)

31/12/2005 31/12/2004L.E. L.E.

Blocked cash at banks 42 021 112 —42 021 112 —

10- GOODWILLGoodwill represents the excess cost of acquisition of the investment over their fair value at the date of acquisition.

Goodwill at Impairment as at Net as atdate of acquisition 31/12/2005 31/12/2005

L.E. L.E. L.E.Goodwill at the parent company’s levelMobinil for Telecommunications 332 321 441 (101 747 821) 230 573 620Egyptian Company for Mobile Services 178 746 470 (71 032 549) 107 713 921Pakistan Mobile Ltd. 79 437 921 (36 653 752) 42 784 169Telecel International Ltd. 682 676 807 (595 654 300) 87 022 507InTouch for Telecommunication 15 632 566 (3 230 766) 12 401 800Pharaoh Telecommunication 28 934 (20 262) 8 672Orascom Tunisia Holding 80 906 281 — 80 906 281Carthage Consortium Ltd. 94 370 341 — 94 370 341Oratel International Ltd. 628 302 082 — 628 302 082Goodwill at the subsidiaries’ levelMobinil for Telecommunicationin the Egyptian Company for Mobile Services 1 686 121 (1 042 620) 643 501InTouch for Telecommunication in Link Dot Net 7 609 466 (2 536 488) 5 072 978Orascom Telecom Ventures in Sheba Telecom 61 439 511 — 61 439 511OrasInvest Holding in subsidiaries 2 025 960 (244 870) 1 781 090

2 165 183 901 (812 163 428) 1 353 020 473

11- OTHER DEBIT BALANCES31/12/2005 31/12/2004

L.E. L.E.Advance payments to suppliers 291 036 078 208 158 521Accrued revenues 426 961 874 820 699 689Deposits with others 30 620 023 46 837 566Taxes 361 921 037 233 658 466Other debit balances 98 339 959 495 663 600

1 208 878 971 1 805 017 842

12- INVESTMENTS HELD FOR TRADING31/12/2005 31/12/2004

L.E. L.E.Investments fund – Commercial International Bank 30 058 211 —Reverse repurchase agreements (treasury bills) –Calyon Bank 19 767 200 —

49 825 411 —

13- CASH AT BANKS AND ON HAND31/12/2005 31/12/2004

L.E. L.E.Cash on hand 52 919 585 19 495 066Cash in transit — 626 298 332Banks- current accounts and checks under collection 1 344 020 753 1 905 635 960Treasury Bills 10 269 690 94 169 093Banks- Letters of Guarantee margin 25 534 931 8 534 422Short -term deposits 218 309 914 500 492 335

1 651 054 873 3 154 625 208

10014- LOANS

Borrower Lending Interest Rate Outstanding Long term Short term Currency Debt Collateral GivenInstitution amount Portion Portion

31/12/2005 31/12/2005 31/12/2005LE LE LE

* The facility is secured by:

Orascom Telecom Holding Group of banks Libor +2% 3 683 808 412 3 620 454 099 63 354 313 US$ 320 000 000 * Pledge of 7 635 664 share of ECMS & a pledge of 4 374 share of Mobinil for Telecommunication.

Bonds (Tranche A) 2.5%+discount rate of LE 700 000 000 * Pledge of 3 592 046 share of ECMS & a pledge of Central bank of Egypt 2 021 share of Mobinil for Telecommunication.

Bonds (Tranche B ) Libor +2.25% US$ 150 000 000 * Pledge of 4 772 290 share of ECMS & a pledge of2 684 share of Mobinil for Telecommunication.

Libor +1.5% US$ 15 000 000 * Promissory note.Libor +1.5% US$ 17 500 000 * Promissory note.6.3% € 20 310 064 * Pledge of 207 167 share of ECMS.Libor +1.4% € 1 600 000 * Promissory note.

Moga Holding Company Group of suppliers & financial 5%+Euribor+EPC+5% 119 269 785 119 269 785 — € 17 500 000 * Pledge of 1 385 572 shares of & Orascom Telecom institutions & financial institutions Algeria owned by Orascom Telecom Holding.

* Pledge of 50 000 001 shares of Moga Holding Ltdowned by Orascom Telecom Holding.

* Pledge of 342 500 shares of Orascom Telecom Algeriaowned by Moga Holding Ltd.

* Pledge of 995 984 shares of Orascom Telecom Algeria owned by Oratel International.

Orascom Telecom Tunisie Group of banks 3.75%+ Euribor 1 112 730 168 837 284 457 275 445 711 € 107 800 000 * A pledge of Orascom Telecom Tunisia fixed assets, (Orascom Tunisia Holding 1.15%+ Euribor € 63 659 616 restrictions on the payment of dividends. & a pledgeCarthage Consortium Ltd.) 1.15%+ Euribor € 63 545 110 of Orascom Telecom Tunisie shares owned by Orascom

3.45%+ Euribor € 49 000 000 Tunisia Holding & Carthege Consortium.

The Egyptian Company for Mobile Services Group of banks 1.6% - 0.9% (over libor) 784 191 676 598 940 571 185 251 105 US$ 99 770 000(Mobinil for Telecommunication Co.) Average time deposit rates + LE 539 665 000

a margin of 0.5%50% of the loan 11.5% LE 544 200 000The other 50% 1.4% over the discount rateof Central Bank of Egypt

Bonds 12.25% LE 154 190 000

Orascom Telecom Algeria COFACE Euribor +1.6% 2 270 778 543 1 103 000 613 1167 777 930 € 189 676 322 * Pledge over Orascom Telecom Algeria business undertaking.HERMES Euribor +1.75% € 92 000 000 * Pledge over Orascom Telecom Algeria bank accounts.Libor + 2% US$ 130 000 000 * Financial commitments to meet certain financial

targets related to debt to equity ratio, annual revenues,EBITDA and debt service coverage.

* Other commitments covering new investments, capitalstructure changes, new borrowing and fixed assets disposals.

* Promissory notes to secure the principle amount ofthe loans and the corresponding interests due up tomaturity date to the lenders.

International Wireless Communication Pakistan Ltd Group of banks T-Bill rate +2.5% - 5.5% 3 690 359 447 2 668 700 588 1 021 658 859 PKR 1 075 000 000 * Secured by Motorola Inc. corporate guarantee.* Secured by the company's present and future assets.

Discount rate+1.25%min of 9.8% PKR 1 200 000 000 * A pledge on the fixed assets of PMCL amounting PKR 23.6 billion.Discount rate plus 95basis pts min of 8% PKR 1 200 000 000KIBOR +1 min of 3.5% PKR 1 500 000 000KIBOR + 2.25% PKR 1 740 000 000KIBOR + 2.625% PKR 1 000 000 000KIBOR + 2.625% PKR 6 040 000 000KIBOR + 2.625% PKR 2 500 000 000KIBOR + 2.625% PKR 1 000 000 000Libor +0.4% US$ 47 995 212Euribor +2.5% € 10 000 000Euribor +0.78% € 46 078 411Euribor +0.8% € 21 799 591Kibor +1% US$ 42 500 000Kibor+ 1.35% min 3.5% PKR 800 000 000Kibor+1.6% PKR 500 000 000

12% PKR 600 000 000Kibor+1.25% PKR 800 000 000Kibor+2.7% PKR 800 000 000Kibor+150 bps PKR 750 000 000Kibor+200 bps PKR 300 000 000Kibor+2.7% US$ 33 295 008

Bonds T-Bill rate + 2.5% - min 6% PKR 2 500 000 000Bonds T-Bill rate + 2% - min 4.95% PKR 2 000 000 000

Intouch company 29 864 748 19 864 748 10 000 000 * Part of Intouch Revenue.* Guarantee from Orascom Telecom Holding to not

to reduce their share in intouch capital than 51%.M-Link Company 6 040 022 4 941 837 1 098 185 * A pledge of M- Link Teleport buildings.

Med Cable 77 502 685 62 546 295 14 956 390 € 16 915 560 * Guaranteed by Orascom Telecom Holding.

Sheba telecom 109 574 416 109 574 416 US$ 25 000 000 * Guaranteed by Orascom Telecom Holding.€ 50 000 000 * Guaranteed by Orascom Telecom Holding.

11% TAKA 1 050 000 000 * Promissory note.11% TAKA 400 000 000

Total Loans & Bonds 11 884 119 902 9 035 002 993 2 849 116 909Arrangement Fees (128 241 432) (128 241 432) —

11 755 878 470 8 906 761 561 2 849 116 909

- Orascom Telecom Holding bonds are as follows:

Bonds payable Bonds issuance costs NetL.E. L.E. L.E.

Payment on account of bonds issuance as at 1/1/2005 1 136 275 033 (12 988 050) 1 123 286 983Proceeds from bonds issuance within the year 486 975 000 — 486 975 000Bonds issuance costs during the year — (23 730 000) (23 730 000)Amortization of bond issuance cost during the year — 5 260 006 5 260 006Foreign exchange difference (60 000 000) — (60 000 000)Balance as at 31/12/2005 1 563 250 033 (31 458 044) 1 531 791 989

On September 1st 2004 the Company extraordinary general assembly approved the issuance of bonds with the amounts of L.E 700 million (Tranche A)and US$ 150 million (Tranche B) of which 70% through a private placement for L.E 490 million and US$ 105 million and 30% through a public offeringfor L.E 210 million and US$ 45 million.

Bonds issued: Tranche (A): 7,000,000 bond with par value L.E 100 each.Tranche (B): 1,500,000 bonds with par value US$ 100 each.

Issuance price: 100% of the bond par value.

Purpose of issuance: Refinance banks debts, strengthen and finance the Company's financial structure.

Type of issuance: Par value bonds (first issuance) tradable, with variable interest rate, non-convertible into shares, equal priority with facilities and long term loans and are guaranteed by the following:

Tranche (A): 3,592,046 shares from ECMS shares.2,021 shares from Mobinil for Telecommunications shares.

Tranche (B): 4,772,290 shares from ECMS shares. 2,684 shares from Mobinil for Telecommunication shares.

Interest Rate: Tranche (A): 2.5% + discount rate of Central Bank of Egypt (Paid every six month).

Tranche (B): 2.25% + Libor for six months (Paid every six month).

Payments: The bonds will be amortized on five equal installments starting from November 2006 until November 2010.The Company has theright to repay the bonds before their maturity date starting from the third year (Note 31).

15- INVESTMENT PAYABLE

31/12/2005 31/12/2004LE LE

* Hutchison Telecommunications International 6 745 036 241 —** Sheba Telecom –Banglalink 57 550 000 61 550 000*** Minority interest in OTA & OTT 286 405 373 —**** Minority interest in OTI 60 427 500 —Others 1 323 650 300 000

7 150 742 764 61 850 000

* The amount represents the unpaid portion of HutchisonTelecommunications International investment .On February 28, 2006Orascom Telecom Holding paid the outstanding portion (see note 31).

** The amount represents the unpaid portion of Orascom Telecom Venturesinvestment in Sheba Telecom – Banglalink that it will be paid after theseller fulfillment of certain conditions.

*** This represents the amounts due to Oratel International shareholders(shareholder in OTA) , Carthage Consortium Ltd. and Orascom TunisiaHolding shareholders (shareholders in OTT) to purchase additionalstake in Orascom Telecom Algeria OTA and Orascom Telecom Tunisia OTT.

**** This represents the amounts due to minority interest of OrascomTelecom Iraq OTI- Iraqana (subsidiary of Orascom Iraq Holding). Byvirtue of an agreement signed on June 30, 2005 to become whollyowned subsidiary.

16- OTHER CREDIT BALANCE

31/12/2005 31/12/2004L.E L.E

Accrued taxes 1 121 759 285 1 060 248 001Deferred revenues 898 053 972 697 293 849Deposits to others 84 101 199 141 395 144Contingent liabilities 416 742 699 108 269 750SWAP payables - net — 5 713 851Other credit balances 256 647 305 498 213 067

2 777 304 460 2 511 133 662

17- CREDITORS31/12/2005 31/12/2004

L.E L.E*Due to shareholders 7 481 500 116 915 230Deferred tax liabilities (note 22/A) 828 842 636 572 796 610Sundry creditors 676 605 670 81 256 299

1 512 929 806 770 968 139

*Due to shareholders is as follows:31/12/2005 31/12/2004

L.E L.EMr. Onsi Sawiris — 38 895 168Mr. Naguib Sawiris 7 481 500 23 477 898Mr. Samieh Sawiris — 15 646 996Mr. Nassef Sawiris — 38 895 168

7 481 500 116 915 230

10218- SHARE CAPITAL

The Company’s authorized share capital is L.E 2.5 Billion representedin 250 million shares of a nominal value of L.E 10 each. The issued andpaid in share capital is L.E 1.1 Billion represented in 110 million sharesof a nominal value L.E 10 each (1 Share = 2 GDRs).

On January 22, 2006 the resolution of the extraordinary general assemblyin its meeting held on first November 2005 became effective , thatchanged the nominal value for the share from L.E 10 each to L.E 5therefore the issued and paid in share capital represented in 220 millionshares (1 Share=1GDR).

19- OTHER RESERVES

31/12/2005 31/12/2004L.E L.E

Surplus from selling treasury stock in 2003 16 689 239 16 689 239* Hedge gain (net) (see note 21/1) 400 882 —

17 090 121 16 689 239

* Hedging gain (net) was recorded after deducting the deferred tax expenseswith an amount of L.E 100 220. (note 22/C).

20- TREASURY STOCK

No of shares* Employees Stock Option Plan – Treasury Stock 1 451 780 GDR

* Stocks owned by Orascom Telecom ESOP as at 31/12/2005 cost amounted to L.E 161 765 885 and fair market value equivalent to L.E 446 992 174.

21- HEDGE AGREEMENTS

The group concluded Hedge agreements during the financial year endedDecember 31, 2005 in order to hedge interest rate and foreign currencyexposure. Outstanding agreements as at December 31, 2005 were as follows:

Orascom Telecom Holding1- Zero premium agreements – (cash f low hedge)

The Company has signed interest rate SWAP agreements to hedgethe Libor interest rate f luctuations in bonds payable-Tranche B(Cash f low hedge) with banks as follows:

Notional amount SWAP Interest rates End of

(at trade date) agreements

US$ Floor Cap

Citigroup 75 000 000 3% 5.945% November, 2008

Calyon Bank (previously credit

Agricole Indosuez - Egypt) 75 000 000 3% 5.945% November, 2008

150 000 000

The gain from the valuations of these contracts as of December 31, 2005 isUS$ 69 658 and represented in the Shareholders’ Equity (other reserves), afterdeducting deferred tax expenses by L.E 100 220 (note 22/C), and in currentassets (derivative assets).

2- Call spread agreement – (Fair value hedge)To hedge currency exposure between Euros and Dollars arisingfrom Orascom Telecom Algeria loans with banks as follows:

Notional Premium Rate End ofamount €€/$ agreements

(at trade date)€€ US$ Lower Upper

Citigroup 74 435 000 1 598 000 1.37 1.45 May, 2009

Calyon Bank (previously credit

Agricole Indosuez - Egypt) 74 435 000 1 858 000 1.37 1.45 May, 2009

148 870 000 3 456 000

On April 6, 2005 (trade date) the contracts premium value was reported asderivative assets. As of December 31, 2005 the fair value of the contractsamounted to US$ 1 341 376 equivalent to L.E 7 719 619 and the changes infair value recognized in foreign currency difference in the income statement.

Orascom Telecom TunisieOrascom Telecom Tunisie concluded forward rate agreements andinterest rate SWAP agreements with effective date starting in March 31, 2005in order to hedge the fluctuations of the floating rate Euribor and Eurodebt instruments.

International Wireless Communication PakistanInternational Wireless Communication Pakistan concluded forward rateagreements to hedge the changes in the foreign currency exchange ratearising from the US$ /Euro loan in order to fix the cash f lows in PKRat each debt principle repayment and debt interest payment dates.

22- DEFERRED TAX

Deferred taxes are calculated on the basis of the anticipated local tax rates in the various countries at the time of realization. These rates are normally basedon the rules in effect or adopted on the reporting date.

(A) Recognized deferred tax assets and liabilities

Assets Liabilities Net Movement31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005

L.E. L.E. L.E. L.E. L.E. L.E. L.E.

Fixed assets 28 413 — 860 568 839 584 272 275 (860 540 426) (584 272 275) (276 268 151)Licenses and software — — 5 161 767 — (5 161 767) — (5 161 767)Provisions 38 931 383 11 475 665 — — 38 931 383 11 475 665 27 455 718Other items 11 454 274 12 965 909 224 584 — 11 229 690 12 965 909 (1 736 219)Recognized DTAssets/Liabilities 50 414 070 24 441 574 865 955 190 584 272 275 (815 541 120) (559 830 701) (255 710 419)Set off tax (37 112 554) (11 475 665) (37 112 554) (11 475 665)Net DT assets/liabilities 13 301 516 12 965 909 828 842 636 572 796 610 (815 541 120) (559 830 701) (255 710 419)

Deferred tax assets is included in other assets caption (note 9) and deferred tax liabilities is included in Creditors caption (note 17).

10426- CONTINGENT LIABILITIES

The contingent liabilities as at December 31, 2005 are represented inthe followings:

26-1 Orascom Telecom Holding signed Put and Exchange Right Agreements with:

— CDC Fennec Ltd, one of the lending institutions of OrascomTelecom Algeria, has the option to convert into shares inOrascom Telecom Holding with all the amounts payable andliabilities due at any time within the 2 years subsequent toDecember 18, 2003.

— On June 8, 2005 AIG African Infrastructure Fund, Shareholder in Orascom Telecom Algeria (OTA), signed a Sale Purchase Agreement with Emirate International Investment Co. (EIIC) to sale its stake in OTA and convey all associated rights and obligations to EIIC. On October 11, 2005 OTH signed Put and Exchange Right and Call Option Agreement with EIIC. By virtue of this agreement EIIC has the option to exchange OTA shares for cash in a whole or in part during the period from October 1, 2006 to March 31, 2007. Also by virtue of this agreement starting from March 31, 2007 OTH has the option to exchange with EIIC OTA shares for cash in whole or in part.

26-2 Without any right to recourse on OTH, Orascom Telecom Holdingsigned Shareholder Support Agreement & pledged Orascom TunisiaHolding Ltd shares to secure Orascom Telecom Tunisia facilityagreement with an amount of € 290 million.

26-3 The company has initiated arbitration against the government ofrepublic of Chad in the International Chamber of Commerce, toindemnify approximately US$ 14.9 millions financial claims inChad Mobile (suspended company). The government of theRepublic of Chad counter alleged that OTH has no right for suchfinancial claims.

26-4 Subsidiaries’ contingent liabilities.— The Company’s proportionate share in the

Egyptian Company for Mobile Services (ECMS) contingentliabilities is L.E 4.9 million which represents the uncoveredamount of the letters of guarantee issued for the benefit of third parties.

ECMS is a party in a number of legal cases, which resulted fromcarrying out its activities. Based on the legal advice obtained,the company’s management believes that the outcome of thislaw suit–individually or in aggregate– would not be material toECMS results.

— Ring Egypt for distribution and subsidiaries contingent liabilitiesrepresented in Letters of guarantee equivalent to L.E 10.28 million.

— International Wireless Communications Pakistan Ltd (IWCPL)subsidiary has certain cases are pending in different courts oflaw. The management of the company is confident that thesecases will be decided in favour of the company.

— The Bangladeshi government requires Sheba Telecom Ltd-Banglalink and all mobile phone operators to pay a license feesand royalty of TK 1 100 per set per year. The government iscurrently in legal dispute with all mobile operators as to whetherthis should be borne by the operators or by the subscribers.The outcome of this dispute could have significant financialimplications for all such operators including Sheba TelecomLtd- Banglalink.

— Sheba Telecom contingent liabilities represented in letters ofguarantee from Standard Chartered amounted to € 600 K andUS$ 244 K equivalent to L.E. 4.8 million.

27- CAPITAL COMMITMENTS

— The Company’s proportionate share in the Egyptian Company forMobile Services capital expenditure commitments is L.E 307.9million which represents fixed assets contracts entered into andnot yet executed as of the consolidated balance sheet date.

— InTouch for Telecommunication Company capital expenditurescommitments amounted to L.E 203 000 which represents theunpaid capital for long-term investment.

— International Wireless Communication Pakistan Ltd (IWCPL) hascommitments in respect of capital and other expenditure amountedto US$ 13.46 million equivalent to L.E 77.46 million.

— Sheba Telecom capital commitments amounted to Euro 10.75million and US$ 9.45 million equivalent to L.E 128.28 million topurchase fixed assets.

28- EMPLOYEES STOCK OPTION PLAN

The Company has approved a plan to grant some of its employees’stock options in the Company’s shares through Orascom TelecomESOP Ltd, B.V.I (a wholly owned subsidiary). According to this planthe employees will have the right to receive the appreciation betweenthe stock option price and the exercise price of the shares when theoption vests.Orascom Telecom Holding shares held by Orascom Telecom ESOPLtd., are presented as treasury stock in the consolidated f inancialstatements.On June 10, 2003 the Board of Directors approved the allotment of825,000 shares to certain officers and key employees based on theperiod of service and level of performance at a price not less than 80%of the average share market price during 30 days prior to the allotmentdate. Under this stock option plan, the eligible employees will be entitledto exercise their option as follows:-

Exercise Year No. of Shares2005 207 2082006 272 2922007 227 2922008 64 0002009 20 000

790 792

29- TAX STATUS OF THE PARENT

29-1Corporate tax and movable capital taxYears from 1997 till 1999:The Company submitted its tax returns for these years, and receivedform No. 18 taxes, in the name of Orascom Technology (formallythe name of Orascom Telecom Holding) including the tax assessmentwith a total amount of L.E 7 million for these years. However, inJanuary 16, 2003 the Company’s management filed an appeal,against the assessment included in this form. On November 3,2004the appeal committee accepted the company’s conclusion anddecided to return the f ile back to the corporate income taxinspectorate for inspection. On December 20, 2005, the companyrejected what the corporate income tax inspectorate has ended upwith, and requested for returning the file to the internal committeein the corporate income tax inspectorate.

25- GRANTED GUARANTEES FROM OTH TO THE SUBSIDIARIES

Orascom Telecom Holding signed agreements as a guarantor for the following subsidiaries:-

Subsidiary name To guarantee Maximum Liability ExpiryPioneer Co. Pella Company tax position US$ 50 million 31/12/2007

Orascom Telecom Iraq Unpaid amount from the 5.5 % + unpaid amount for As long as thesupplier facility agreement with Alcatel US$ 300K & for agreement is validAlcatel & Motorola Motorola US$ 3.7 million

as of 31/12/2005

Sheba Telecom-Banglalink - Supplier facilities agreement with € 50 million and US$25 22/9/2006 &Siemens AG,Huawei Tech Investments million respectively + 23/11/2006

any interest or costs respectively

- Bank facilities from Standard Chartered US$30 million + any As long as theinterest or costs agreement is valid

Med Cable Facilities from West LB and Calyon Banks € 16 million + any As long as theinterest or costs agreement is valid

Carthage Consortium Ltd Letter of guarantee from Standard Bank Ltd € 17.5 million As long as the lettersof guarantees are valid

Orascom Telecom Eurasia Promissory note to Hutchison Telecommunication US$ 1 172 million 28/2/2006Investment Holding Ltd. +any interest

(B) Unrecognized deferred tax assets

31/12/2005 31/12/2004L.E L.E

Trade receivables 2 296 200 4 759 740Investments 409 152 409 152Provisions — 7 567 861Carry forwards loss — 236 052 751

2 705 352 248 789 504

Deferred tax assets resulted from the impact of temporary differences relatedto Trade receivables and investments were unrecognized due to insufficientcomfort that the company could utilize these assets.

(C) Reconciliation of deferred tax expense

31/12/2005L.E

Net deferred tax assets & liabilities movement (255 710 419)Add (less)Deferred tax reported directly in shareholders’ equity 100 220Effect of changes on proportionate companies (19 022 602)Deferred tax expense (274 632 801)

(D) Income tax expense

31/12/2005 31/12/2004L.E L.E

Income tax for the year (554 913 712) (801 061 487)Deferred tax expenses (274 632 801) —Total income tax (829 546 513) (801 061 487)

23- REMUNERATIONS AND ALLOWANCES FOR BOARD MEMBERSThe Board of Directors conclusively decided a monthly salary andbonus to the Chief Executive Officer and Managing Director of theCompany, to the maximum of US$ 150 K. Accordingly, the excess inaccrued expenses amounting to L.E 16.7 million was reversed in theincome statement in general and administrative expenses.

24- EARNINGS PER SHAREEarnings per share are calculated using the weighted average numberof shares outstanding through out the year.

Financial year Financial yearended ended

31/12/2005 31/12/2004Net profit for the year (L.E) 3 900 011 434 1 961 219 838Weighted average of shares through the year 109 295 045 109 637 141Earnings per share (L.E) 35.68 17.89

Years from 2000 till 2004:The Company submitted its Income Tax returns for these yearsin its legal dates, and the tax authority has not yet inspected theCompany’s records for these years.As per the tax return for these years, there is no corporate tax dueon the net income. Management has applied, when preparing thetax return, article No. (111) of the Income Tax Law No. 157 for1981. According to the aforementioned article net profit derivedfrom activities that are being undertaken abroad by independententity is not subject to tax in Egypt.

Year 2005:Starting from 1/1/2005, the company's profits are subject toEgyptian Income Tax Law No. 91 for 2005 which supersede thelaw No. 157 for 1981.

29-2Stamp duty and state resources development dutyStamp duty and state resources development duty were settled andpaid up to October 31, 2003. The company’s books were notexamined and no claims were received from that date.

29-3Salary taxYears from 1997 till 2001:The salary tax was settled up to the f inancial year endedDecember 31, 2001.

Years from 2002 till 2005:The company’s books were not examined and no claims were received.

30- SUBSIDIARIES GOING CONCERN

— Orascom Telecom Iraq -subsidiary of Orascom Iraq Holding- hadobtained from the Iraqi Ministry of Communications (MOC) alicense to operate and manage mobile cellular service for two years.This temporary license agreement expired on December 22, 2005.However, the company's management is planning to take thenecessary procedures to negotiate the elected Iraqi Authorities torenew the validity of that license. In case the management failedto renew the validity of the license and obtain a permanent license,Orascom Telecom Holding is committed to transfer all long termassets to another subsidiary outside Iraq at amounts not less thanits carrying amount. On October 25, 2005 the Iraqi Ministry ofNational Communication and Media Commission has extend thelicense period till the mid of year 2006. The consolidated assetsand revenue of Orascom Iraq Holding represent 4.36% and 10.24%respectively of consolidated assets and revenue of Orascom TelecomHolding. Accordingly, the management decided to apply goingconcernassumption.

— During the year ending December 31, 2005 Sheba Telecom (subsidiaryof Orascom TelecomVentures) incurred a net loss TK 2 805 millionequivalent to L.E 248 million. The management is however, confidentthat the company will continue in operational existence for theforeseeable future on the basis of improved profitability andcontinued support of Orascom Telecom Holding.

31- SUBSEQUENT EVENTS

1- On February 28, 2006 the Bondholders Group approved theearly redemption of the bonds as the company would compensatethe bondholders by paying additional 1.5% of the bonds value.Thus, the company has paid L.E 739.41 million (Tranch A) andUS$ 155.58 million (Tranch B) to fully repay the outstandingbonds, these amounts were paid out from the company’s newsyndication senior secured facilities of US$ 2 billion (as stated below).

2- On February 28, 2006 the company entered into a new syndicationsenior secured facilities of US$ 2 billion, to repay its outstandingloans, bank facilities and bonds with a total amount of approximatelyUS$ 625 million. In addition the loan was used to repay theremaining US$ 1.187 billion due as a result of the purchase of 19.3%of Hutchison Telecommunications International.To secure that loan, the Company pledged all its shares in HutchisonTelecommunications International, the Egyptian Company forMobile Services and Mobinil for Telecommunication.

32- FINANCIAL INSTRUMENTS & RELATED RISK MANAGEMENTThe financial instruments are represented in cash on hand & at banks,accounts receivables, debit balances, investments, due to/from subsidiaryand related parties, loans, bonds, bank overdrafts, suppliers and creditbalances. The carrying value of these financial instruments representa reasonable estimate to their fair values with exception of loans whosepresent value represent a reasonable estimate of their fair values. NoteNo. (3) of the notes to the financial statements includes the majoraccounting policies used in recording and measurement of the significantfinancial instruments and the related revenues and expenses.

33- MANAGEMENT OF FINANCIAL RISK

33-1Credit riskThis risk is represented in the debtors, and affiliated inability topay their debts. This risk is considered low as the companyperiodically assesses the recoverability of these balances and workon collecting it.

33-2Foreign currency riskAs some transactions are executed in foreign currencies, theCompany may be subject to risk of exchange rate f luctuations.Therefore the company concluded some agreements to hedgeforeign currency exposure.

33-3Interest Rate RiskThis risk represents interest rate changes, which may have an impacton the results of operations. This risk is considered high as theCompany has a significant number of loans, facilities and bondspayable bearing variable interest rate, however the Company utilizesany available funds to reduce any interest exposure in addition tothe Hedge agreements to hedge the interest rate risk related toloans and bonds.

34- COMPARATIVE FIGURESCertain comparative figures have been reclassified to conform with thecurrent presentation of the consolidated financial statements.

106Notes

108Auditor’s Report

To The Board of Directors of Orascom Telecom Holding (S.A.E)

We have audited the accompanying consolidated balance sheet of Orascom Telecom Holding (S.A.E) as of December 31, 2005 and the related consolidated statements

of income, changes in shareholders’ equity and cash f lows for the year then ended. These consolidated financial statements are the responsibility of the Company's

management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,

as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respect, the financial position of the Company as of December 31, 2005 and

the results of its operations and its cash f lows for the year then ended, in accordance with International Financial Reporting Standards.

Cairo, March 27 , 2006

KPMG Hazem Hassan

• Auditor’s Report

• Consolidated Balance Sheet

• Consolidated Income Statement

• Consolidated Statement ofChanges in Shareholders’ Equity

• Consolidated Cash Flows

• Significant Accounting Policiesand Notes to the ConsolidatedFinancial Statements

Financial StatementsInternational Financial Reporting

Standards (in US$)

Orascom Telecom Holding S.A.EConsolidated Balance Sheet As at December 31, 2005

Note No. 31/12/2005 31/12/2004US$ US$

AssetsNon-current assetsProperty and equipment (net) (2.6/4) 2 362 164 509 1 389 339 859Property and equipment under construction (5) 556 698 344 322 448 194Licenses and software (net) (2.7.ii/6) 1 028 404 789 919 292 483Goodwill (2.7.i/7) 269 659 803 213 233 679Investments (2.8.i/8) 1 309 940 276 4 499 999Payments for investments (9) 4 430 137 —Deferred tax assets (2.24/25) 2 311 297 13 941 913Other assets (10) 113 602 267 137 171 920Total non-current assets 5 647 211 422 2 999 928 047

Current assetsInventories (net) (2.10) 87 301 190 53 463 594Trade and other receivables (net) (2.9) 361 268 946 160 492 110Due from related parties 20 139 485 25 203 947Prepaid expenses 60 666 676 30 091 445Other current assets (11) 218 787 271 286 266 580Investments held for trading (2.8.ii) 8 657 760 —Cash and cash equivalents (2.11/12) 286 890 508 512 521 099Total current assets 1 043 711 836 1 068 038 775Total assets 6 690 923 258 4 067 966 822

Equity and liabilitiesEquityIssued capital (13) 318 923 826 318 923 826Legal reserve (2.14) 123 909 807 118 103 760Other reserves (14.B) 7 181 911 5 109 428Retained earnings 502 833 125 349 841 856Net profit for the year 659 018 985 294 872 589Cumulative translation adjustments (2.4) (70 236 879) 54 703 355

1 541 630 775 1 141 554 814Treasury stock (2.13.i/ 2.16.ii/13.A) (28 108 755) (15 416 801)Total equity attributable to equity holders of the parent 1 513 522 020 1 126 138 013Minority interest (16) 204 381 090 419 183 995Total equity 1 717 903 110 1 545 322 008

LiabilitiesNon-current liabilitiesLong-term loans and bonds (15) 1 547 610 007 811 275 491Payments on account of bonds issuance (15) — 184 610 078Creditors long-term (17) 120 825 917 41 316 990Deferred tax liabilities (2.24/25) 144 021 309 98 109 433Total non-current liabilities 1 812 457 233 1 135 311 992

Current liabilitiesBanks' facilities 29 688 876 34 294 010Short-term portion of loans and bonds (15) 495 068 099 350 405 250Trade and other payables (2.18) 542 468 372 292 309 916Due to related parties 13 421 960 67 583 209Debt due on purchase of investments (18) 1 242 526 979 10 048 741Accrued expenses 357 788 241 227 600 811Other current payables (19) 479 600 388 405 090 885Total current liabilities 3 160 562 915 1 387 332 822Total liabilities 4 973 020 148 2 522 644 814Total equity and liabilities 6 690 923 258 4 067 966 822


Executive Officer Finance Chairman and Managing Director

Auditor's report "attached"

110Orascom Telecom Holding S.A.EConsolidated Income Statement For the financial year ended December 31, 2005

Year ending Year endingNote 31/12/2005 31/12/2004No. US$ US$

Cellular operations revenue (2.19.i) 2 838 289 297 1 791 006 968Telecommunications service revenue (2.19.ii) 363 339 843 158 809 121Internet service revenue (2.19.iii) 24 200 966 16 237 117Total revenues 3 225 830 106 1 966 053 206

Cellular operations cost (1 348 100 355) (681 052 373)Telecommunications service cost (318 087 786) (130 970 734)Internet service cost (12 693 932) (10 280 032)Total operating cost (2.20) (1 678 882 073) (822 303 139)Gross profit 1 546 948 033 1 143 750 067

Other operating revenues 32 323 338 1 002 253Selling, general and administrative expenses (2.21/2.22) (526 904 904) (363 300 474)Remunerations and allowances for board members (22) (2 516 579) (4 574 068)Provisions (13 083 953) (32 346 657)Allowances (36 342 329) (16 366 886)Capital losses (702 720) (3 963 731)Negative goodwill 9 014 654 —Depreciation, amortization and impairment of assets (2.6/2.7/2.12) (70 531 216) (41 569 919)Net financing costs (23) (81 367 025) (132 667 456)Profit before tax 856 837 299 549 963 129Income tax (2.24/25.C) (142 866 138) (131 953 161)Profit after tax but before discontinued operations 713 971 161 418 009 968Gain from sale of subsidiaries (net of tax) (2.25/24) 70 466 988 23 010 287Gain (loss) from deconsolidation of subsidiaries (net of tax) 110 366 (556 111)Profit for the year 784 548 515 440 464 144Attributable to:Equity holders of the parent 659 018 985 294 872 589Purchased minority interest during the year 27 469 078 —Minority interest 98 060 452 145 591 555Profit for the year 784 548 515 440 464 144

Earnings per share (26) 6.03 2.69

The accompanying notes form an integral part of these financial statements

Orascom Telecom Holding S.A.EConsolidated Statement of Changes in Shareholders' Equity For the financial year ended December 31, 2005

Note Issued Legal Other Retained Net profit for Cumulative Treasury Total Minority Total

No. capital reserve reserves earnings the year translation stock interest equity

adjustments

US$ US$ US$ US$ US$ US$ US$ US$ US$ US$

Balance as at 1/1/2004 318 923 826 110 280 152 3 820 964 256 922 967 100 742 497 61 515 047 (3 752 888) 848 452 565 346 191 919 1 194 644 484

Transfer to retained

earnings — — — 100 742 497 (100 742 497) — — — — —

Transfer to legal reserve — 7 823 608 — (7 823 608) — — — — — —

Purchase of treasury stock — — — — — — (11 663 913) (11 663 913) — ( 11 663 913)

Fair value investments available for sale — — 1 288 464 — — — — 1 288 464 — 1 288 464

Adjustments on minority interest — — — — — — — — ( 87 751 503) (87 751 503)

Net profit for the financial year ended 31/12/2004 — — — — 294 872 589 — — 294 872 589 145 591 555 440 464 144

Cumulative translation adjustments — — — — — (6 811 692) — (6 811 692) 15 152 024 8 340 332

Balance as at 31/12/2004 318 923 826 118 103 760 5 109 428 349 841 856 294 872 589 54 703 355 (15 416 801) 1 126 138 013 419 183 995 1 545 322 008

Transfer to retained earnings — — — 294 872 589 (294 872 589) — — — — —

Transfer to legal reserve — 5 806 047 — (5 806 047) — — — — — —

Sale/purchase of treasury stock (2.13.i/14.A) — — — — — — (18 098 561) (18 098 561) — (18 098 561)

Cash flow hedges gain taken to equity (net) (20.1) — — 69 658 — — — — 69 658 — 69 658

Fair value investments available for sale — — 2 002 825 — — — — 2 002 825 — 2 002 825

Holding company distribution — — — (130 975 045) — — — (130 975 045) — (130 975 045)

Adjustments on retained earnings — — — (5 100 228) — — — (5 100 228) — (5 100 228)

Adjustments on minority interest — — — — — — — — (324 538 314) (324 538 314)

Net profit for the financial year ended 31/12/2005 — — — — 659 018 985 — — 659 018 985 98 060 452 757 079 437

Cumulative translation adjustments — — — — — (124 940 234) 5 406 607 (119 533 627) 11 674 957 (107 858 670)

Balance as at 31/12/2005 318 923 826 123 909 807 7 181 911 502 833 125 659 018 985 (70 236 879) (28 108 755) 1 513 522 020 204 381 090 1 717 903 110


112Orascom Telecom Holding S.A.EConsolidated Cash Flows For the financial year ended December 31, 2005

Note Financial year Financial yearNo. ended 31/12/2005 ended 31/12/2004

US$ US$Cash flows from operating activitiesNet profit for the year before tax 927 414 653 572 417 305Adjustment to reconcile net profit to cashflows from operating activitiesDepreciation, amortization and impairment of assets 436 607 349 282 313 905Negative goodwill (9 014 654) ( 49 980 711)Amortization of arrangement fees cost 9 855 698 —Unrealized exchange difference (56 947 765) —Provisions 13 083 953 32 346 657Allowances 36 342 329 16 366 886Gain from sale of subsidiaries (70 466 988) (23 010 287)(Gain) loss from deconsolidation of subsidiaries (110 366) 556 111Adjustments on retained earnings 7 405 111 —Capital losses 702 720 3 963 731Net profit before changes in current assets, liabilities and minority interests 1 294 872 040 834 973 597Changes in current assets (300 568 115) (203 295 212)Changes in current liabilities 285 405 599 176 676 448Changes in minority interest (66 616 883) (72 599 478)Net cash provided by operating activities 1 213 092 641 735 755 355

Cash flows from investing activitiesPayments for property and equipment and property under construction (1 400 919 817) (901 164 784)Proceeds from sale of property and equipment 6 486 355 3 076 314Change in licenses and software (78 600 741) 51 675 306Payments for investments (591 899 474) (68 713 873)Proceeds from sale of subsidiaries 105 438 059 45 636 139Net cash used in investing activities (1 959 495 618) (869 490 898)

Cash flows from financing activitiesProceeds from loans and banks' facilities 634 122 894 475 696 520Changes in other assets 36 871 678 (111 281 669)Payments for treasury stocks (18 098 561) (11 663 913)Proceeds from creditors long-term 1 655 727 —Dividends paid (141 130 166) —Payments for capital lease obligations (315 325) —Net cash provided by financing activities 513 106 247 352 750 938Net cash movement (233 296 730) 219 015 395Cash and cash equivalents as at January 1st 512 521 099 179 213 466Changes in cumulative translation adjustments 7 666 139 114 292 238Cash and cash equivalents as at December 31st (2.11/11) 286 890 508 512 521 099


1- GENERAL

1.1 Legal statusOrascom Telecom Holding S.A.E. "the Parent Company" is anEgyptian Joint Stock Company established in accordance with theprovisions of the Companies Law No. 159 of 1981 and its executiveregulations and in accordance with the Capital Market Law No.95 of 1992 and its executive regulations. The Parent Company wasregistered in the commercial register on July 29, 1997 under No.114812 and is domiciled in Egypt. The Parent Company and itsSubsidiaries are referred to hereinafter as "the Group".

The Company extraordinary general assembly, in its meeting heldon February 9, 2000, approved the change of the governing lawfrom the Companies' Law No. 159 of 1981 to the Capital MarketLaw No. 95 of 1992. Also, by virtue of a resolution of theextraordinary general assembly, in its meeting held on June 13,2000, the Company's name was changed from Orascom Telecomto Orascom Telecom Holding. The Capital Market Authority'sapproval for these changes had been obtained on July 12, 2000.These changes were registered in the commercial registerunder No. 134934.

By virtue of a resolution of the extraordinary general assembly inits meeting held on September 1, 2004, the Company’s Premiseswas changed to Nile City Towers, Cairo, and was registered in thecommercial register under No. 365751.

1.2 Ultimate holding companyOn May 29, 2005, (50% + 1) share of Orascom Telecom Holdingcapital shares were acquired by Weather Capital S.AR.L registeredin Luxembourg which is fully owned (100%) by Weather InvestmentCompany S.R.L registered in Italy.

1.3 Purpose of the companyThe Parent Company's purpose is to participate in companiesissuing securities or to increase its participation in the capital ofthese companies. The Company may have interest or participate,by any mean, in companies and other enterprises that have activitiessimilar to those of the Company or those that may assist theCompany to achieve its objective in Egypt or abroad. It may alsomerge into those companies and enterprises purchase them oraff iliate them, pursuant to the provisions of the law and itsexecutive regulations.

1.4 These statements were authorized by the directors for issue onMarch 26, 2006.

2- SIGNIFICANT ACCOUNTING POLICIESThe significant accounting policies adopted in preparing these consolidatedfinancial statements are set out below.

2.1 Statement of ComplianceThese consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards (IFRSs)and its interpretations adopted by the International AccountingStandards Boards (IASB) with due acknowledgement of theinterpretation of the International Financial Reporting InterpretationCommittee (IFRIC).

In compliance with the Egyptian Companies laws and regulations,the Parent Company prepares its statutory consolidated financialstatements in accordance with Egyptian Accounting Standards(EASs); these financial statements are presented in Egyptian Pound.The primary differences between the consolidated financial statements

prepared in accordance with IFRSs and presented in US$ (IFRS/US$)include, but are not limited to the following:

- Recognition of certain capital lease agreements (IAS-17).- Recognition of employees' share in dividends (IAS-19).- Requirement to subject goodwill to impairment test (IAS-36).- Requirement not capitalizes certain foreign exchange differences

as part of the asset cost(IAS-21).

2.2 Basis of PreparationThe consolidated financial statements are presented in US Dollar.They are prepared using the historical cost basis, except for certainfinancial instruments that are measured at fair value in accordancewith IAS 39.

The preparation of financial statements in conformity with IFRSsrequires management to make judgments, estimates and assumptionsthat affect the application of policies and reported amounts ofassets and liabilities, income and expenses. The estimates andassociated assumptions are based on historical experience andvarious other factors that are believed to be reasonable under thecircumstances, the results of which form the basis of making thejudgments about carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differfrom these estimates.

The estimates and underlying assumptions are reviewed on anongoing basis. Revisions to accounting estimates are recognizedin the period in which the estimate is revised if the revision affectsonly that period or in the period of the revision and futureperiods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistentlyto all years presented in these consolidated financial statements.

2.3 Basis of ConsolidationThe consolidated financial statements of the Group comprise theParent Company and its principal subsidiaries and the Group'sinterest in jointly controlled entities. The principal subsidiariesand related consolidation method are set forth below:

Fully consolidated subsidiariesSubsidiaries are entities controlled by the Parent Company. Controlexists when the Parent Company has the power, directly or indirectly,to govern the financial and operating policies of an entity so asto obtain benefits from its activities. In assessing control, potentialvoting rights that presently are exercisable or convertible are takeninto account. The financial statements of subsidiaries are includedin the consolidated f inancial statements from the date thatcontrol commences until the date that control ceases. A listing ofthe principal subsidiaries is given in note (35.1)

Joint VenturesJoint ventures are those entities over whose activities the Grouphas joint control, established by contractual agreement. Theconsolidated financial statements include the Group’s proportionateshare of the entities’ assets, liabilities, revenue and expenses withitems of a similar nature on a line by line basis, from the date thatjoint control commences until the date that joint control ceases.A listing of the joint venture is given in note (35.2).

Transactions eliminated on consolidationAll intragroup balances and transactions, and any unrealized gainsarising from intragroup transactions are eliminated when preparingthe consolidated financial statements.

Orascom Telecom Holding S.A.ESignificant Accounting Policies and Notes To the Consolidated Financial Statements As at December 31, 2005

114Unrealized losses are eliminated in the same way as unrealizedgains, but only to the extent that there is no evidence of impairment.

2.4 Foreign CurrencyIn line with IAS 21 (The effects of Changes in Foreign (ExchangeRates) foreign currency transactions and financial statements offoreign operations are translated as follows:

Foreign currency transactionsThe Parent Company and its subsidiaries maintain their books ofaccount in local currencies of the economies in which they operate.Transactions in foreign currencies are translated to local currencyat the foreign exchange rate ruling at the date of the transaction.Monetary assets and liabilities denominated in foreign currenciesat the balance sheet date are translated to local currency at theforeign exchange rate ruling at that date. Foreign exchange differencesarising on translation are recognized in the income statement.

Financial statements translationThe assets and liabilities of the Parent Company and its subsidiaries,and its proportionate share’s in the assets and liabilities of jointventures including goodwill are translated to US Dollar at foreignexchange rates ruling at the balance sheet date. The revenues andexpenses are translated to US Dollar at the average foreign exchangerate for the year. Shareholders’equity accounts are translated athistorical exchange rates. Foreign exchange differences arising onretranslation are recognized directly in a separate component of equity.On disposition of a subsidiary, the related cumulative translationadjustments are recognized in the income statement as a componentof the gain and loss on disposal.

2.5 Derivative financial instrumentsThe Group uses derivative f inancial instruments to hedge itsexposure to foreign exchange and interest rate risks arising fromoperational, financial and investment activities and to manage cashin various currencies. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments fortrading purposes. However, derivatives that do not qualify forhedge accounting are accounted for as trading instruments.

In line with IAS 32 (Financial Instruments: Disclosure andPresentation), derivatives are reported within the current assets andthe current liabilities items in the consolidated balance sheet andbased on IAS 39 (Financial Instruments: Recognition andMeasurement), the gain or loss from the ineffective portion of thehedge contracts is recognized immediately in the consolidatedincome statement.

2.6 Property and equipment

Owned assetsIn line with IAS 16 (Property, Plant and Equipment), items ofproperty and equipment are stated at historical cost less accumulateddepreciation and impairment losses (see accounting policy 2.12).The cost of self-constructed assets includes the cost of materials,direct labour and an appropriate proportion of productionoverheads.Where parts of an item of property and equipmenthave different useful lives. They are accounted for as separate itemsof property and equipment.

Leased assetsLeases in terms of which the Group assumes substantially all therisks and rewards of ownership are classif ied as f inance leases.Assets acquired by way of finance lease are stated at an amountequal to the lower of its fair value and the present value of theminimum lease payments at the inception of the lease, lessaccumulated depreciation and impairment losses (see accountingpolicy 2.12). The interest expense component of f inance lease

payment is recognized in the income statement using the effectiveinterest rate method. All other leases are classified as operatingleases, rentals payable under operating leases are charged to theincome statement on straight-line basis over the terms of therelevant lease contract.

Subsequent costsThe Group recognizes in the carrying amount of an item ofproperty and equipment the cost of replacing part of such an itemwhen that cost is incurred if it is probable that the future economicbenefits embodied with the item will f low to the Group and thecost of the item can be measured reliably. All other costs arerecognized in the income statement as an expense as incurred.

DepreciationDepreciation is charged to the income statement ona straight-line basis over the estimated useful lives of each part ofan item of property and equipment. The estimated useful lives areas follows:

Buildings 50 yearsCell sites 6-8 yearsEquipment and Tools 5-10 yearsComputers equipment 3-5 yearsFurniture 5-10 yearsVehicles 3-6 yearsRenovations 3-8 years

The residual value, if not insignificant, is reassessed annually.

2.7 Intangible assets

(i) GoodwillIn line with IFRS 3 (Business Combinations), all businesscombinations are accounted for by applying the purchasemethod. Goodwill represents amounts arising on acquisitionof subsidiaries,associates and joint ventures. Goodwill representsthe difference between the cost of the acquisition and thegroup's share in the fair value of the underlying assets andliabilities of the acquired business.Goodwill is stated at cost less any accumulated impairment losses.Negative goodwill is recognized immediately in the income statement.

(ii) Other intangible assetsIn line with IAS 38 (Intangible Assets), other intangible assetssuch as of the licenses, concession and computer softwareacquired by the Group are stated at their acquisition cost lessaccumulated amortization and impairment losses (see accountingpolicy 2.12).Expenditure on internally generated goodwill and brands isrecognized in the income statement as an expense as incurred.

(iii) Subsequent expenditureSubsequent expenditure on capitalized intangible assets iscapitalized only when it increases the future economic benefitsembodied in the specific asset to which it relates. All otherexpenditure is expensed as incurred.

(iv) AmortizationAmortization is charged to the income statement on a straight-line method over the estimated useful lives of intangible assetsunless such lives are indefinite. Goodwill and intangible assetswith an indefinite useful life are systematically tested forimpairment at each balance sheet date. Other intangibles areamortized from the date they are available for use. The estimateduseful lives are as follows:

— Licenses Over the remaining period of the license term— Concession &

computer software 3-15 years

2.8 Investments

(i) Investments available for saleInvestments available-for-sale are valued at fair value, with anyresultant gain or loss being recognized in equity, except forimpairment losses which is recognized in the income statement.When these investments are derecognized, the cumulative gainor loss previously recognized directly in equity is recognizedin the income statement.The fair value of investments available for sale, is the quotedbid price at the balance sheet date, investments that are notquoted, and whose fair value can not be measured reliably,are stated at cost less impairment loss.Investments available-for-sale is recognized /derecognized bythe Group on the date it commits to purchase/sell theinvestments.

(ii) Investments held for tradingInvestments held for trading are stated at cost. And at the endof each f inancial period investments held for trading aremeasured at the fair value. Changes in the fair value differencesare recognized in the income statement. Investments held fortrading include of mutual funds and reverse repurchaseagreements (treasury bills).

(iii) Investments in associatesInvestments in associates are stated at equity method. Underthe equity method the investment in associates is initiallyrecognized at cost and adjusted therafter for the part-acquisitionchange in the investor’s share of the profit and loss of theassociates after the date of acquisition. Distributions receivedfrom associates reduce the carrying amount of the investment.

2.9 Trade and other receivablesTrade and other receivables are stated at their cost less impairmentlosses (see accounting policy 2.12). An impairment loss for trade receivables is recognized when thereis objective evidence that the Group will not be able to collect allthe amounts due according to the original terms of the receivable.The amount of the impairment losses are the difference betweenthe carrying amount and the recoverable amount determined ona discounted cash f low basis.

2.10 InventoriesIn line with IAS 2 (Inventories), inventories are stated at the lowerof cost and net realizable value. Cost is based on "weighted average"method. Net realizable value is the estimated selling price in theordinary course of business, less the estimated costs of completionand selling expenses.

2.11 Cash and cash equivalentsIn lines with IAS 7 (Cash Flow Statements), cash and cash equivalentscomprise cash balances and call deposits. Bank overdrafts that arerepayable on demand and form an integral part of the Group’scash management are included as a component of cash and cashequivalents for the purpose of the statement of cash f lows.

2.12 ImpairmentThe carrying value of the Group’s assets other than inventory (seeaccounting policy 2.10) and deferred tax assets (see accountingpolicy 2.24) are reviewed at each balance sheet date to determinewhether there is any indication of impairment. If any such indicatioexists, the asset’s recoverable amount is estimated.

For goodwill, assets that have indefinite useful life and intangibleassets that are not yet available for use, the recoverable amountis estimated at each balance sheet date.An impairment loss is recognized whenever the carrying amount

of an asset or its cash-generating unit exceeds its recoverable amount.Impairment losses are recognized in the income statement.

Reversal of impairmentAn impairment loss in respect of an investment in an equityinstrument classified as available for sale is not reversed throughthe income statement.An impairment loss in respect of goodwill is not reversed.In respect of other assets, an impairment loss is reserved if therehas been a change in the estimates used to determine the recoverableamount.An impairment loss is reversed only to the extent that the asset’scarrying value does not exceed the carrying value that would havebeen determined, net of depreciation or amortization, if noimpairment loss had been recognized.

2.13 Issued capital

(i) Repurchase of share capitalWhen share capital recognized as equity is repurchased, theamount of the consideration paid, including directly attributablecosts, is recognized as a change in equity.

Repurchased shares are classified as treasury stock and presentedas a deduction from total equity.

(ii) DividendsDividends are recognized as a liability in the year in whichthey are declared.

2.14 Legal reserveAs per the Egyptian Companies Law and the Parent Company'sstatutes 5% of net profit for the year is set aside to form a legalreserve, the legal reserve can be used to increase the Parent Companyshare capital or to offset sustained losses . It is permissible to ceasethe transfer to the reserve if the reserve amount reaches 50% ofthe paid-up capital. If the reserve falls below that level, the ParentCompany is required to resume setting aside the 5% of net profitinto the legal reserve.

2.15 Interest-bearing borrowingsInterest-bearing borrowings are recognized initially at fair value lessattributable transaction costs. Subsequent to initial recognition,interest-bearing borrowings are stated at amortized cost with anydifference between cost and redemption value being recognizedin the income statement over the period of the borrowings on aneffective interest basis.

2.16 Employee benefits

(i) Defined contribution plansIn line with IAS 19 (Employee Benefits), contributions todefined contribution pension plans are recognized as anexpense in the consolidated income statement when incurred.

(ii) Employees Stock Option Plan (ESOP)The Group has established an ESOP that provides for thegranting of stock options to key employees. The stock optionsare exercisable over a period of three years. As options aregranted, the Group generally purchases in the market thenumber of shares that would fall due to be issued on exercisof the option. Based on IFRS 2 (Share-based Payment) andIAS 19 (Employee Benefits), expenses resulting from the stockoptions granted are reported in the income statements andinitially measured at the grant date based on the differencebetween the option price and the market value of the stock,with periodical adjustments is subsequently made for marketprice f luctuations.

1162.17 Provisions

In line with IAS 37 (Provisions, Contingent Liabilities and ContingentAssets), a provision is recognized in the balance sheet when theGroup has a present legal or constructive obligation as a result ofa past event, and it is probable that an outf low of economicbenefits will be required to settle the obligation. Provisions arereviewed on each balance sheet date and amended (when necessary)to represent the best current estimate.

2.18 Trade and other payablesTrade and other payables are stated at cost.

2.19 RevenueThe Group main business is to operate the GSM mobile networks,provide internet services and retail sales of handsets to its customers.The group revenue recognition policies are as follows:

(i) GSM revenueAirtime usage, interconnection, and roaming revenues arerecognized when the service is rendered to the customer basedon the actual airtime usage. While the unused call minutesat the end of the year/period are deferred. Monthly fees arerecurring monthly subscription fees, and connection fees areone-time fees paid for the line or connection. Monthly andconnection fees are recognized in the income statementimmediately when the line is activated.

(ii) Telecommunications services revenueSales revenues, primarily from handset sales, are recognizedin the income statement when the significant risks and rewardsof ownership have been transferred to the buyer. No revenuesare recognized if there are significant uncertainties regardingrecovery of the consideration due, the associated costs or thepossible return of goods sold.— Construction contracts: revenues from construction

contracts are recognized as soon as the outcome of aconstruction contract can be estimated reliably. Constructioncontract revenue is recognized in the income statement inproportion to the stage of completion of the contract. Thestage of completion is assessed by reference to surveys ofwork performed. Any expected loss on a contract is recognizedimmediately in the income statement.

— International carrier services: international carrier servicesrevenue, including international traffic revenue, leased linesrevenue, international roaming revenue, and other revenueis recognized in the income statement once the service isdelivered to the client.

— Value-added services ("VAS") revenue: VAS revenue isrecognized in the income statement once the service isrendered to or used by the customer.

(iii) Internet services revenueInternet services revenue is recognized in the income statementonce the service is rendered to the client

(iv) Other revenuesInterest income is recognized in the income statement as itaccrues, using the effective interest method. Dividend incomeis recognized in the income statement on the date the entity’sright to receive payments is established.

2.20 Operating CostsThe primary operating costs, often referred to as cost of sales,incurred by the Group in connection with the provision oftelecommunications services including the dealer commissions,interconnection costs, roaming costs, SIM card cost, scratch cardcost, cost of handsets, recurring license and regulatory fees, leasedlines, IT maintenance and repair, network rental expenses and other

direct costs. It also includes related activities that are incidentalto the regular operations.Operating costs are recognized under the accrual basis of accountingwhen they occur and there is a direct association between the costsincurred and the earning of specific items of income.

2.21General and administrative expensesThese items include, but are not limited to, wages and salaries,travel expenses and office expenses. These expenses are recognizedon an accrual basis.

2.22Selling expensesThese items include, but not limited to, advertising, marketing andsales promotion expenses. These expenses are recognized on anaccrual basis.

2.23Interest expenseIn line with IAS 23 (Borrowing Costs), borrowing costs are recognizedas expenses in the income statement when incurred, with theexception of borrowing costs that are directly attributable to theconstruction, and acquisition of new assets which are capitalizedas part of the relevant assets cost and depreciated over the assets'estimated useful lives. This capitalization ceases once the assets arein operating condition and ready for use.

2.24Income TaxIncome tax on the profit or loss for the year comprises currentand deferred tax. Income tax is recognized in the income statementexcept to the extent that it relates to items recognized directly inequity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income forthe year, using tax rates enacted or substantially enacted at thebalance sheet date, and any adjustment to tax payable in respectof previous years.

Deferred tax is provided using the balance sheet liability method,providing for temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and theamounts used for taxation purposes. The amount of deferred taxprovided is based on the expected manner of realization orsettlement of the carrying amount of assets and liabilities, usingtax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognized only to the extent that it isprobable that future taxable profits will be available against whichthe asset can be utilized. Deferred tax assets are reduced to theextent that it is no longer probable that the related tax benefit will be realized.

2.25Gain (loss) from sale of subsidiariesIn line with IAS 27 (Consolidated and Separate Financial Statements),gain (loss) from sale of subsidiaries is the difference between theproceeds from the disposal of the subsidiary and the aggregatecarrying amount of the subsidiary assets less liabilities and thecumulative translation adjustments as of the date of disposal.

2.26Segment reportingIn line with IAS 14 (Segment Reporting), a segment is a distinguishablecomponent of the Group that is engaged either in providingproducts or services (business segment) or in providing productsor services within a particular economic environment (geographicalsegment), which is subject to risks and rewards that are differentfrom those of other segments

3- SEGMENT REPORTINGSegment information is presented in respect of the Group’s businessand geographical segments. The primary format, business segments, isbased on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocateditems include the assets and liabilities of some subsidiaries whose revenue comprises GSM revenues, telecommunication service revenues, internet servicerevenues and others.

3.1 Primary Reporting Format – Business SegmentsThe revenue analyses in the tables below are based on the type of business activities and services that are distinguishable component.

Year ended December 31, 2005Business segments

Telecom InternetGSM service service Total

Expressed in thousand US$Total revenue from external customers 2,966,643 443,735 24,201 3,434,579Inter-segment revenue (128,354) (80,395) — (208,749)Total revenue 2,838,289 363,340 24,201 3,225,830Gross profit 1,490,189 45,252 11,507 1,546,948Other operating revenues 32,324Selling, general and admin. expenses (526,905)Remunerations and allowances for board members (2,517)Provisions (13,084)Allowances (36,343)Capital losses (703)Negative goodwill 9,015Depreciation, amortization and impairment of assets (70,531)Net financing costs (81,367)Income tax provision (142,866)Gain from sale of subsidiaries (net of tax) 70,467Gain from deconsolidation of subsidiaries (net of tax) 110Net profit for the year 784,548

UnallocatedTelecom. Internet assets/

GSM service Service liabilities Total(Expressed in thousand US$)

Segment assets 3,838,927 154,628 37,816 — 4,031,371Unallocated assets — — — 2,659,552 2,659,552Total assets 3,838,927 154,628 37,816 2,659,552 6,690,923

Segment liabilities 2,843,424 92,093 31,070 — 2,966,587Unallocated liabilities — — — 2,006,433 2,006,433Total liabilities 2,843,424 92,093 31,070 2,006,433 4,973,020

3.2 Secondary Reporting Format—Geographical segmentsGSM telecommunication services revenues and internet services revenuesare managed on world wide basis, but operate in three principalgeographical areas, North Africa, Middle East and South Asia. Inpresenting information on the basis of geographical segments, segmentrevenue is based on the geographical location of operation. Segmentassets are based on the geographical location of the assets. The group'soperations are reported under geographical segments, ref lecting theirrespective size of operation, they are as follows:

North Africa: Comprising Algeria and Tunisia,Middle East: Comprising Egypt, Iraq,South Asia: Comprising Pakistan and Bangladesh; andOthers: Comprising British Virgin Islands (BVI), Malta and other

countries not included above.

The revenue analysis in the tables below are based on the location ofthe operating company, which is the same as the location of the majorcustomers and the location of the operating companies:

Year ended December 31, 2005Geographical segments

North Africa Middle East South Asia Others Total(Expressed in thousand US$)

Total revenues 1,230,243 1,097,917 771,631 126,039 3,225,830Segment assets 1,601,564 2,332,876 1,573,663 1,182,820 6,690,923

1184- PROPERTY AND EQUIPMENT

Property and equipment comprise:

Land Buildings Cell Sites Tools Computers Furniture & Vehicles Leasehold Leased Total

Equipment Fixtures improvements assets

& renovation

US$ US$ US$ US$ US$ US$ US$ US$ US$ US$

Cost

As at 1/1/2005 2 348 006 13 908 240 1 700 312 828 3 139 875 65 955 046 19 171 677 12 046 413 20 576 603 14 932 697 1 852 391 385

Additions during the year 1 367 069 24 938 024 1 215 495 357 2 826 241 27 117 338 9 052 741 4 972 151 12 586 574 6 307 405 1 304 662 900

Additions coming from changes

in proportionate companies — 1 440 873 68 200 215 578 594 3 184 036 333 119 636 267 — — 74 373 104

Disposals during the year — (247 520) (9 069 027) (295 212) (663 068) (499 059) (418 054) (1 075 253) (14 575 615) (26 842 808)

Deconsolidation of subsidiaries — — (70 170 830) (7 130) (1 242 628) (1 527 994) (1 721 364) (1 713 368) — (76 383 314)

Cumulative translation adjustments 98 821 (396 690) (29 221 784) 742 454 (2 403 762) 420 427 55 483 169 393 881 775 (29 653 883)

Balance as at 31/12/2005 3 813 896 39 642 927 2 875 546 759 6 984 822 91 946 962 26 950 911 15 570 896 30 543 949 7 546 262 3 098 547 384

Accumulated Depreciation

As at 1/1/2005 — 1 582 118 402 400 481 1 453 210 31 577 992 8 497 309 5 256 149 10 967 528 1 316 739 463 051 526

Depreciation for the year — 1 078 347 275 863 302 804 363 16 298 500 4 526 296 2 829 982 4 371 049 1 820 626 307 592 465

Additions coming from changes

in proportionate companies — 247 673 8 643 773 87 081 1 064 292 51 192 196 002 — — 10 290 013

Accumulated depreciation of disposals — (239 597) (2 663 535) (80 474) (530 038) (322 873) (236 884) (475 321) (291 512) (4 840 234 )

Deconsolidation of subsidiaries — — (41 141 086) ( 4 638) (911 067) (934 766) (916 933) (696 712) — (44 605 202)

Cumulative translation adjustments — (452 759) 3 318 131 566 721 777 061 294 761 84 235 274 628 31 529 4 894 307

Balance as at 31/12/2005 — 2 215 782 646 421 066 2 826 263 48 276 740 12 111 919 7 212 551 14 441 172 2 877 382 736 382 875

Net book value as at 31/12/2005 3 813 896 37 427 145 2 229 125 693 4 158 559 43 670 222 14 838 992 8 358 345 16 102 777 4 668 880 2 362 164 509

Net book value as at 31/12/2004 2 348 006 12 326 122 1 297 912 347 1 686 665 34 377 054 10 674 368 6 790 264 9 609 075 13 615 958 1 389 339 859

4.1 Pledges on Property and Equipment4.1.1 Orascom Telecom Algeria net property and equipment

amounting to US$ 770 million was pledged against loansand credit facilities obtained from group of banks andinternational financial organizations.

4.1.2 The cost of some property and equipment which belongsto International Wireless Communication Pakistan Ltdamounting to PKR 23.6 billion equivalents to US$ 394.4million are secured by first hypothecation charge.

4.1.3 Orascom Telecom Tunisia net property and equipment aresubjected to registered debentures to secure OrascomTelecom Tunisia loans, Orascom Telecom Holdingproportionate rate in Orascom Telecom Tunisia propertyand equipment amounting to US$ 63 million.

4.2 Based on IAS 23 (Borrowing Costs) the following subsidiariescapitalized part of their borrowing costs as follows:

4.2.1 The Egyptian Company for Mobile Services (jointventures Company) capitalizes borrowing costs relatedto the acquisition of property and equipment.The Group'sproportionate share from the capitalization during thef inancial year ended December 31, 2005 isUS$ 5 472 179 included in property and equipment.

4.2.2 International Wireless Communication Pakistan Ltd capitalized borrowing costs relating to the acquisition ofan asset during the financial year ended December 31, 2005amounted to PKR 1089 million equivalents to US$ 18.2 million.

4.2.3 Orascom Telecom Ventures capitalized borrowing costsrelated to establishment of an asset during the financialyear ended December 31, 2005 amounted to TAKA 45.2million equivalents to US$ 660K.

5- PROPERTY AND EQUIPMENT UNDER CONSTRUCTIONProperty and equipment under construction comprise:

December December31, 31,

2005 2004(US$)

Orascom Telecom Holding Company 5,138,512 1,175,790Egyptian Company for Mobile Services(*) 64,536,401 33,258,573Telecel International Company — 750,397Libertis Telecom Company — 2,030,297Orascom Telecom Algeria Company 202,906,885 110,550,810Consortium Algerian Telecommunication 5,044,958 —InTouch for Telecommunication Company 236,141 34,037Ring for Distribution Company 1,443,305 1,186,849International Wireless CommunicationPakistan limited(**) 237,896,544 123,423,000Orascom Iraq Holding Company 18,957,815 16,273,624Orascom Telecom Tunisie Company 12,770,129 7,313,102Med Cable Company — 5,536,719Orascom Telecom Ventures Company(***) 7,759,135 13,231,323OrasInvest Company 5,571 7,683,673Other companies 2,948 —

556,698,344 322,448,194

Based on IAS 23 (Borrowing Costs), the following subsidiaries capitalizedpart of their borrowing cost as follows:

(*) The Egyptian Company for Mobile Services capitalized borrowing costsrelating to the construction of an asset, the Group's proportionate shareof the capitalization during the financial year ended December 31, 2005is US$ 4,326,986 in assets under construction.

(**) International Wireless Communication Pakistan capitalized borrowingcosts related to establishment of an asset during the financial year endedDecember 31, 2005 amounted to PKR 113.5 million equivalents to US$1.9 million, in assets under construction.

(***) Orascom Telecom Ventures Company capitalized borrowing costs relatedto establishment of an asset during the f inancial year endedDecember 31, 2005 amounted to TAKA 15 million equivalents to US$221 K, in assets under construction.

6- LICENSES AND SOFTWARELicenses and software comprise:

December December31, 31,

2005 2004(US$)

Licenses fees (net) 952,635,995 899,759,019Concession and computer software (net) 75,768,794 19,533,464

1,028,404,789 919,292,483

7- GOODWILLGoodwill represents amounts arising on acquisition of subsidiaries,associates and joint ventures. Goodwill represents the difference betweenthe cost of the acquisition and the group’s share in the fair value ofthe underlying assets and liabilities of the acquired business.

Goodwill comprises the goodwill (assets) recognized at the ParentCompany and the subsidiary levels, at the year end are as follows:

Goodwill at Impairment as at Net as atdate of December 31, December 31,

acquisition 2005 2005(US$)

Goodwill at the Parent Company’s levelMobinil for Telecommunications 57,744,820 4,324,926 53,419,894Egyptian Company forMobile Services 31,059,334 6,202,898 24,856,436Pakistan Mobile Ltd. 19,319,383 1,290,794 18,028,589Telecel International Limited 118,623,251 103,502,050 15,121,201InTouch for Telecommunication 2,716,345 561,384 2,154,961Pharaoh Telecommunication 341,981 3,521 338,460Orascom Tunisia Holding Ltd. 17,840,247 — 17,840,247Carthage Consortium 16,397,974 — 16,397,974Oratel International Ltd. 109,174,993 — 109,174,993

Goodwill at the subsidiaries’ levelMobinil for Telecommunicationsin ECMS 292,984 135,939 157,045InTouch in Link Dot Net 1,322,236 137,568 1,184,668OTV in Sheba Telecom(Banglalink) 10,675,849 — 10,675,849OrasInvest Holding insubsidiaries 352,035 42,549 309,486

385,861,432 116,201,629 269,659,803

8- INVESTMENTSInvestments comprise:

Percentage December Decemberof Ownership 31,2005 31,2004

(US$)

Investments available for saleSmart village (ECDMIV) 10.25% 1,781,060 1,248,985Other investments (in subsidiaries) 5,902,967 3,251,014

7,684,027 4,499,999

Investment in associatesHutchison TelecommunicationsInternational(**) 19.3% 1,302,256,249 —

1,309,940,276 4,499,999

(**) Hutchison Telecommunication Investments Holding granted OrascomTelecom Holding a conditional right to purchase a further 3.7% interestwithin 12 months from the purchase date.

1209- PAYMENTS FOR INVESTMENTS

Payments for investments comprise:

December 31, December 31,2005 2004

(US$)Trans World Associates 3,396,444 —Top Level Domain 1,033,693 —

4,430,137 —

10- OTHER ASSETSOther assets comprise:


(US$)Blocked cash at bank (*) 98,449,827 133,743,087Deposits with others-long term 15,152,440 3,428,833

113,602,267 137,171,920

(*) Blocked as collateral for loans, letters of guarantee and letters of credit.

11- OTHER CURRENT ASSETSOther current assets comprise:

Note December 31, December 31,No. 2005 2004

(US$)Advance payments to suppliers 50,570,995 31,879,731Accrued revenues 74,189,726 133,332,184Deposit with others 5,320,595 7,609,519Withholding taxes 62,888,104 31,521,321Derivative financialinstrument-assets (*) (2.5) 1,428,448 —Blocked cash at banks 7,301,670 —Other debit balances (net) 17,087,733 81,923,825

218,787,271 286,266,580

(*) Based on IAS 32 (Financial Instruments: Disclosure and Presentation)and as explained in note (20) unsettled transactions (Premium valuation)as at December 31, 2005 were reported as part of current assets.

12- CASH AND CASH EQUIVALENTSBased on IAS 7 (Cash flow statements), cash and cash equivalents comprise:


(US$)Cash on hand 9,195,410 3,168,637Cash in transit — 101,754,400Current accounts at banks andchecks under collection 233,539,662 309,600,112Treasury Bills under REPO agreement 1,784,481 15,299,609Cash margin—Letters of Guarantee 4,436,999 1,386,588Short-term deposits 37,933,956 81,311,753

286,890,508 512,521,099

13- AUTHORIZED AND ISSUED CAPITALThe Parent Company’s authorized share capital is LE 2.5 billionrepresented in 250 million shares of a nominal value of LE 10 each.The issued and paid in share capital is LE 1.1 billion (equivalent to US$318,923,826) represented in 110 million shares of a nominal value LE10 each (1 Share = 2 GDRs). On January 22, 2006 the resolution of the extraordinary general assemblyin its meeting held on first November 2005 became effective, thatchanged the nominal value for the share from LE 10 each to LE 5,therefore the issued and paid in share capital represented in 220 millionshares (1 Share=1GDR).

14- TREASURY STOCK AND OTHER RESERVES

A.Treasury stockNote Number of shares

Employees Stock OptionPlan—Treasury Stock (*) (27) 1,451,780 GDR

(*) Stocks owned by Orascom Telecom ESOP cost amounted to US$28,108,755 and equivalent to fair market value US$ 77,670,230.

B.Other reservesOther reserves comprise:

Note December 31, December 31,No. 2005 2004

(US$) (US$)Surplus from selling treasurystock in 2003 3,118,561 3,118,561Fair value investment gain(available for sale) 3,993,692 1,990,867Fair value hedge gain (net)(**) 20-1 69,658 —

7,181,911 5,109,428

(**) Fair value hedge gain was recorded net of tax, (the deferred tax expenseamounted US$ 17,414).

15- LOANS AND BONDSLoans and bonds comprise:

Borrower Lending Interest Rate Outstanding Long term Short term Currency Debt Collateral GivenInstitution amount Portion Portion

31/12/2005 31/12/2005 31/12/2005US$ US$ US$

Orascom Telecom Holding Group of banks Libor +2% 640,105,719 629,097,150 11,008,569 US$ 320 000 000 * Pledge of 7 635 664 share of ECMS & a pledge of4 374 share of Mobinil for Telecommunication.

Bonds (Tranche A) 2.5% + discount rate of Central LE 700 000 000 * Pledge of 3 592 046 share of ECMS & a pledge ofbank of Egypt 2 021 share of Mobinil for Telecommunication.

Bonds (Tranche B ) Libor +2.25% US$ 150 000 000 * Pledge of 4 772 290 share of ECMS & a pledge of2 684 share of Mobinil for Telecommunication.

Libor +1.5% US$ 15 000 000 * Promissory noteLibor +1.5% US$ 17 500 000 * Promissory note6.3% € 20 310 064 * Pledge of 207 167 share of ECMSLibor +1.4% € 1 600 000 * Promissory note

Moga Holding Company Group of suppliers & 5%+ Euribor + EPC + 5% 20,724,550 20,724,550 — € 17 500 000 * Pledge of 1 385 572 shares of Orascom Telecomfinancial institutions Algeria owned by Orascom Telecom Holding.

* Pledge of 50 000 001 shares of Moga Holding Ltd owned by Orascom Telecom Holding.

* Pledge of 342 500 shares of Orascom Telecom Algeriaowned by Moga Holding Ltd.

* Pledge of 995 984 shares of Orascom Telecom Algeriaowned by Oratel International.

Orascom Telecom Tunisie Group of banks 3.75%+ Euribor 193,350,160 145,488,177 47,861,983 € 107 800 000 * A pledge of Orascom Telecom Tunisia fixed assets, restrictions on the payment of dividends.& a pledge of

(Orascom Tunisia Holding Carthage Consortium Ltd.) 1.15%+ Euribor € 63 659 616 Orascom Telecom Tunisie shares owned by Orascom 1.15%+ Euribor € 63 545 110 Tunisia Holding & Carthege Consortium.3.45%+ Euribor € 49 000 000

The Egyptian Company for Mobile Services Group of banks 1.6% - 0.9% (over libor) 1 36,262,672 104,073,079 32,189,593 US$ 99 770 000(Mobinil for Telecommunication Co.) Average time deposit rates+a LE 539 665 000

margin of 0.5%50% of the loan 11.5% LE 544 200 000The order 50% 1.4% over thediscount rate of Central Bank of Egypt

Bonds 12.25% LE 154 190 000

Orascom Telecom Algeria COFACE Euribor +1.6% 394,574,899 191,659,533 202,915,366 € 189 676 322 * Pledge over Orascom Telecom Algeria business undertakingHERMES Euribor +1.75% € 92 000 000 * Pledge over Orascom Telecom Algeria bank accounts.

Libor + 2% US$ 130 000 000 * Financial commitments to meet certain financial targetsrelated to debt to equity ratio, annual revenues, EBITDAand debt service coverage.

* Other commitments covering new investments, capitalstructure changes, new borrowing and fixed assets disposals.

* Promissory notes to secure the principle amount ofthe loans and the corresponding interests due up tomaturity date to the lenders.

International Wireless Communication Group of banks T-Bill rate +2.5% - 5.5% 641,244,040 463,718,608 177,525,432 PKR 1 075 000 000 * Secured by Motorola Inc. corporate guarantee.Pakistan Ltd Discount rate +1.25% min of 9.8% PKR 1 200 000 000 * Secured by the company's present and future assets.

Discount rate plus 95 basis pts min of 8% PKR 1 200 000 000 * A pledge on the fixed assets of PMCL amounting to PKR 23.6 billion.

KIBOR +1 min of 3.5% PKR 1 500 000 000KIBOR + 2.25% PKR 1 740 000 000KIBOR + 2.625% PKR 1 000 000 000KIBOR + 2.625% PKR 6 040 000 000KIBOR + 2.625% PKR 2 500 000 000KIBOR + 2.625% PKR 1 000 000 000Libor +0.4% US$ 47 995 212Euribor +2.5% € 10 000 000Euribor +0.78% € 46 078 411Euribor +0.8% € 21 799 591Kibor +1% US$ 42 500 000Kibor+ 1.35% min 3.5% PKR 800 000 000Kibor+1.6% PKR 500 000 000

12% PKR 600 000 000Kibor+1.25% PKR 800 000 000Kibor+2.7% PKR 800 000 000Kibor+150 bps PKR 750 000 000Kibor+200 bps PKR 300 000 000Kibor+2.7% US$ 33 295 008

Bonds T-Bill rate + 2.5% -min 6% PKR 2 500 000 000Bonds T-Bill rate + 2% -min 4.95% PKR 2 000 000 000

Intouch company 5,189,356 3,451,737 1,737,619 * Part of Intouch Revenue* Guarantee from Orascom Telecom Holding to not to

reduce their share in Intouch capital than 51%

M-Link Company 1,049,526 858,703 190,823 * A pledge of M- Link Teleport buildings.

Med Cable 13,467,017 10,868,166 2,598,851 € 16 915 560 * Guaranteed by Orascom Telecom Holding.

Sheba telecom 19,039,863 — 19,039,863 US$ 25 000 000 * Guaranteed by Orascom Telecom Holding.€ 50 000 000 * Guaranteed by Orascom Telecom Holding.

11% TAKA 1 050 000 000 * Promissory note11% TAKA 400 000 000

Total Loans & Bonds 2,065,007,802 1,569,939,703 495,068,099Arrangement Fees (22,329,696) (22,329,696) —

2,042,678,106 1,547,610,007 495,068,099

122- Orascom Telecom Holding bonds are as follows:

Bonds payable Bonds issuance costs NetUS$

Payment on account of bonds issuance as at 1/1/2005 184,610,078 (2,110,162) 182,499,916Proceeds from bond issuance within the year 83,867,796 — 83,867,796Bonds issuance costs — (4,086,827) (4,086,827)Amortization of bond issuance cost during the year — 905,889 905,889Foreign exchange 3,155,494 (175,111) 2,980,383Balance as at December 31, 2005 271,633,368 (5,466,211) 266,167,157

On September 1st 2004 the Company extraordinary general assembly approved the issuance of bonds with the amounts of LE 700 million (Tranche A) andUS$ 150 million (Tranche B) of which 70% through a private placement for LE 490 million and US$ 105 million and 30% through a public offering forLE 210 million and US$ 45 million.

Bonds issued: Tranche (A): 7,000,000 bond with par value LE 100 each.Tranche (B): 1,500,000 bond with par value US$ 100 each.

Issuance price: 100% of the bond par value.

Purpose of issuance: Refinance banks debts, strengthen and finance the Company's financial structure.

Type of issuance: Par value bonds (first issuance) tradable, with variable interest rate, non-convertible into shares, equal priority with facilitiesand long term loans and are guaranteed by the following:Tranche (A): 3,592,046 shares from ECMS shares.

2,021 shares from Mobinil for Telecommunications shares.Tranche (B): 4,772,290 shares from ECMS shares.

2,684 shares from Mobinil for Telecommunication shares.

Interest Rate: Tranche (A): 2.5% + discount rate of Central Bank of Egypt (Paid every six month).Tranche (B): 2.25% + Libor for six months (Paid every six month).

Payments: The bonds will be amortized on five equal installments starting from November 2006 until November 2010.The Companyhas the right to repay the bonds before their maturity date starting from the third year (see note 33).

16- MINORITY INTERESTSBased on IAS 1 (Presentation of Financial Statements), changes inminority interests are presented in the statements of the change in theshareholders' equity.

17- CREDITORS LONG-TERMCreditors long-term comprise:

December 31, December 31,2005 2004(US$) (US$)

Due to shareholders (*) 1,300,000 18,995,120Sundry creditors 119,525,917 22,321,870

120,825,917 41,316,990

(*) Due to shareholders are as follows:

(US$) (US$)Mr. Onsi Sawiris — 6,319,280Mr. Naguib Sawiris 1,300,000 3,814,400Mr. Samieh Sawiris — 2,542,160Mr. Nassef Sawiris — 6,319,280

1,300,000 18,995,120

18- DEBT DUE ON PURCHASE OF INVESTMENTSDebt due on purchase of investments comprise:

December 31, December 31,2005 2004(US$) (US$)

Hutchison Telecommunications Internationalshareholders’ (*) 1,172,030,624 —Sheba Telecom –Banglalink (**) 10,000,000 10,000,000Minority interest in OTA & OTT (***) 49,766,355 —Minority interest in OTI (****) 10,500,000 —Others 230,000 48,741

1,242,526,979 10,048,741

* This represents the amount due to Hutchison TelecommunicationsInternational shareholders’. On February 28, 2006, Orascom TelecomHolding paid these outstanding amounts (see note 33).

** The amount represents the unpaid portion of Orascom Telecom Venturesinvestment in Sheba Telecom – Banglalink that it will be paid after theseller fulfillment of certain conditions.

*** This represents the amounts due to Oratel International shareholders(shareholder in OTA), Carthage Consortium Ltd. and Orascom Tunisia Holding shareholders (shareholders in OTT) topurchase additional stake in Orascom Telecom Algeria OTA and OrascomTelecom Tunisia OTT.

****This represents the amounts due to minority interest of OrascomTelecom Iraq OTI- Iraqana (subsidiary of Orascom Iraq Holding). By virtueof an agreement signed on June 30, 2005 to become wholly owned subsidiary.

19- OTHER CURRENT PAYABLESOther current payables comprise:

Note December December 31, 2005 31, 2004

(US$)Deferred revenues 156,047,606 113,285,970Deposit to others 14,613,588 22,971,814Income tax & contingentprovisions (2.17) 267,333,099 164,177,324Derivative financialinstrument-liabilities (2.5) — 928,327Other credit balancesand accruals 41,606,095 103,727,450

479,600,388 405,090,885

20- DERIVATIVE FINANCIAL INSTRUMENT PAYABLEThe group concluded Hedge agreements during the financial year endedDecember 31, 2005 in order to hedge interest rate and foreign currencyexposure. Outstanding agreements as at December 31, 2005 were as follows:

Orascom Telecom Holding1- Zero premium agreements – (cash f low hedge)

The Company has signed interest rate SWAP agreements to hedgethe Libor interest rate f luctuations in bonds payable- Tranche B(Cash f low hedge) with banks as follows:

Notional End ofamount SWAP Interest rates agreements

(at trade date)US$ Floor Cap

Citigroup 75 000 000 3% 5.945% November, 2008Calyon Bank (previouslycredit AgricoleIndosuez - Egypt) 75 000 000 3% 5.945% November, 2008

150 000 000

The gain from the valuations of these contracts as at December 31, 2005 isUS$ 87,072 and represented in the Shareholders’ Equity (other reserves), afterdeducting deferred tax expenses by US$ 17,414 and reported directly inshareholders’ equity, (see note 14-B) and in other current assets — derivativefinancial instrument—assets (see note 11).

2- Call spread agreement – (Fair value hedge)To hedge currency exposure between Euros and Dollars arisingfrom Orascom Telecom Algeria loans with banks as follows:

Notinal Rate End ofamount Premium €€/$ agreements

(at trade date)€€ US$ Lower Upper

Citigroup 74 435 000 1 598 000 1.37 1.45 May, 2009

Calyon Bank(Previously Credit

Agricole Indosuez -Egypt) 74 435 000 1 858 000 1.37 1.45 May, 2009

148 870 000 3 456 000

On April 6, 2005 (trade date) the contracts premium value was reported asderivative financial instrument-assets (see note 11). As of December 31, 2005the fair value of the contracts amounted to US$ 1,329,488. The changes infair value recognized in the income statement within the foreign exchange gain (see note 23).

Orascom Telecom TunisieOrascom Telecom Tunisie concluded forward rate agreements and interestrate SWAP agreements with effective date starting in March 31, 2005in order to hedge the fluctuations of the floating rate Euribor and Eurodebt instruments.

International Wireless Communication PakistanInternational Wireless Communication Pakistan concluded forward rateagreements to hedge the changes in the foreign currency exchange ratearising from the US$/Euro loan in order to fix the cash f lows in PKRat each debt principle repayment and debt interest payment dates.

21- RELATED PARTIES TRANSACTIONSBased on IAS 24 (Related Party Disclosure), the following are the significantrelated parties' transactions in the major subsidiaries of the Group andnature of the relevant transactions:

Nature of Decembertransactions 31, 2005

(US$)a- Orascom Telecom Holding TransactionsWeather Finance 562 807Orascom Telecom System Supplies 133 696Tchad Mobile Finance 123 476Trans World Association Finance 6 129 957Orascom Construction & Industries Supplies 187 980Media Terrania Services 120 366Mr. Naguib Sawiris Settlement 4 602 309Wind Services 6 370 500CFC Finance 144 607Med Link Finance 1 950 437

b- International Wireless Communication Pakistan TransactionsOrascom Construction Industries Supplies 10,073,557Saif Telecom Limited Management fees 9,734,692Javed Saif Ullah Khan andUsman Saif Ullah Khan Finance 501,098Employees’ Provident Fund Trust Finance 1,548,786Business and CommunicationSystem (private) Limited Orbit Supplies 179,189Media terrania Advertising 248,813

c- Egyptian Company for Mobile Services TransactionsOrange Management fees 3,453,961Orascom Technology Maintenance 1,713,611Orascom Construction Industries Construction & Maintenance 6,551,858Orascom Trading Construction 6,761,542Multi Media Mega Stores (MMMS) Computer supplies 1,199,463International Integrated Systems (IIS) Computer supplies 305,647Promoters Advertising 607,103Top Quality For Management & Service Security 197,128Sofrcom Consulting 109,407

d- Consortium Algerian Telecommunications TransactionsOrascom Technologies System Supplies 110,740Huawei Supplies 1,046,179

22- REMUNERATIONS AND ALLOWANCES FOR BOARDMEMBERSThe Board of Directors conclusively decided a monthly salary andbonus to the Chief Executive Officer and Managing Director of theCompany, to the maximum of US$ 150 000.

Accordingly, the excess in accrued expenses amounting to US$ 2.9 millionwas reversed in the income statement in general and administrative expenses.

12423- NET FINANCING COSTS

Net financing costs comprise:

December DecemberNote No. 31,2005 31,2004

(US$)Interest income (2.19.iv) 10,975,680 15,114,964Interest expenses (2.23) (148,761,433) (93,499,554)Foreign exchange gain (loss) (2.4) 56,418,728 (54,282,866)

(81,367,025) (132,667,456)

24- SALE OF SUBSIDIARIES— During the third quarter of 2005 Telecel International Limited (100%

owned subsidiaries) sold X-COM Company for US$35 million. Thesale resulted a net gain of US$ 11.6 million that was reported as gainfrom sale of investments in the consolidated income statement forthe year ended December 31, 2005.

— On November 2005, Orascom Telecom Holding sold its stake (65%)in Liberties Telecom Company to M.T.N Company (Mauritius) witha total amount of US$ 66.6, The sale resulted a net gain ofUS$ 54.2 million that was reported as gain from sale of investmentsin the consolidated income statement for the year endedDecember 31, 2005.

25- DEFERRED TAXBased on IAS 12 (Income Taxes), deferred taxes are calculated on the basis of the anticipated local tax rates in the various countries at the time of realization.These rates are normally based on the rules in effect or adopted on the reporting date.

A) Recognized deferred tax assets and liabilities

Assets Liabilities Net Movement31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005 31/12/2004 31/12/2005

US$ US$ US$ US$ US$ US$ US$Property, plant andequipment 4,937 1,862,611 (149,534,116) (95,536,822) (149,529,179) (93,674,211) (55,854,968)Licenses and software — — (896,919) (1,318,405) (896,919) (1,318,405) 421,486Provisions 6,764,793 6,765,080 — — 6,764,793 6,765,080 (287)Other items 1,990,317 5,314,222 (39,024) (1,254,206) 1,951,293 4,060,016 (2,108,723)Recognized DTAssets/Liabilities 8,760,047 13,941,913 (150,470,059) (98,109,433) (141 710 012) (84,167,520) (57,542,492)Set off tax (6,448,750) — 6,448,750 — — — —Net DT assets/liabilities 2,311,297 13,941,913 (144,021,309) (98 109 433) (141,710,012) (84,167,520) (57,542,492)

B) Unrecognized deferred tax assets

December December31, 2005 31, 2004

US$Trade receivables 398,992 773,313Investments 71,095 66,475Provisions — 1,229,547Carry forward losses — 38,351,381

470,087 40,420,716

Deferred tax assets resulted from the impact of temporary differences relatedto Trade receivables and investments were unrecognized due to insufficientcomfort that the company could utilize these assets.

C) Income tax expenseDecember December31, 2005 31, 2004

US$Income tax for the year 85,323,646 75,313,953Deferred tax expenses 57,542,492 56,639,208Total income tax 142,866,138 131,953,161

26- EARNINGS PER SHAREBased on IAS 33 (Earnings per Share), earnings per share are calculatedusing the weighted average number of shares outstanding through outthe year.

Financial year endedDecember 31,

2005 2004Net profit for the year (US$) 659,018,985 294,872,589Weighted average of shares through the year 109 295 045 109 637 141Earnings per share (US$) 6.03 2.69

Weighted average shares are calculated based on the number of ordinary sharesoutstanding during the year excluding the treasury stock.

27- EMPLOYEE STOCK OPTION PLANThe Company has approved a plan to grant some of its employees'stock options in the Company's shares through Orascom TelecomESOP Ltd., B.V.I (a wholly owned subsidiary). According to this planthe employees will have the right to receive the difference between thestock option price and the exercise price of the shares when the optionvests. The Company shares held by Orascom Telecom ESOP Ltd. arepresented as treasury stock in the consolidated financial statements.

On June 10, 2003 the Board of Directors approved the allotment of825,000 shares to certain officers and key employees based on theirperiod of service and level of performance at a price not less than 80%of the average share market price during the 30 days period prior tothe allotment date. Under this stock option plan, the eligible employeeswill be entitled to exercise their options as follows:

Exercise Year No. of Shares2005 207,2082006 272,2922007 227,2922008 64,0002009 20,000

790,792

12630- CAPITAL COMMITMENTS

— The Company’s proportionate share in the Egyptian Company forMobile Services capital expenditure commitments is LE 307.9million equivalents toUS$ 53.5 million which represents fixed assetscontracts entered into and not yet executed as of the consolidatedbalance sheet date.

— InTouch for Telecommunication Company capital expenditurescommitments amounted to LE 203 K equivalents to US$ 35 Kwhich represents the unpaid capital for long-term investment.

— International Wireless Communication Pakistan Ltd (IWCPL) hascommitments in respect of capital and other expenditure amountedto US$ 13.46 million.

— Sheba Telecom capital commitments amounted to Euro 10.75million and US$ 9.45 million to purchase fixed assets.

31- TAX STATUS OF THE PARENT COMPANY

31.1 Corporate tax and movable capital taxYears from 1997 till 1999:The Company submitted its tax returns for these years, and receivedform No. 18 taxes, in the name of Orascom Technology (formallythe name of Orascom Telecom Holding) including the tax assessmentwith a total amount of L.E 7 million for these years. However, inJanuary 16, 2003 the Company’s management f iledan appeal,against the assessment included in this form. On November 3,2004 the appeal committee accepted the company’s conclusionand decided to return the file back to the corporate income taxinspectorate for inspection. On December 20, 2005,the companyrejected what the corporate income tax inspectorate has ended upwith, and requested for returning the file to the internal committeein the corporate income tax inspectorate.

Years from 2000 till 2004:The Company submitted its Income Tax returns for these yearsin its legal dates, and the tax authority has not yet inspected theCompany’s records for these years.— As per the tax return for these years, there is no corporate tax

due on the net income. Management has applied, whenpreparing the tax return, article No. (111) of the Income TaxLaw No. 157 for 1981. According to the aforementioned articlenet profit derived from activities that are being undertakenabroad by independent entity is not subject to tax in Egypt.

Year 2005Starting from 1/1/2005, the company's profits are subject toEgyptian Income Tax Law No. 91 for 2005 which supersede thelaw No. 157 for 1981.

31.2 Stamp duty & state resources development dutyStamp duty and state resources development duty were settled andpaid up to October 31, 2003. The company’s books were notexamined and no claims were received from that date.

31.3 Salary taxYears from 1997 till 2001:The salary tax was settled up to the f inancial year endedDecember 31, 2001.

Years from 2002 till 2005The company’s books were not examined and no claims were received.

32- SUBSIDIARIES GOING CONCERN— Orascom Telecom Iraq -subsidiary of Orascom Iraq Holding- had

obtained from the Iraqi Ministry of Communications (MOC) a

license to operate and manage mobile cellular service for two years.This temporary license agreement will be expired on December 22,2005 which may affect the company's going concern. However,the company's management is planning to take the necessaryprocedures to negotiate the elected Iraqi Authorities to renew thevalidity of that license. In case the management failed to renewthe validity of the license and obtain a permanent license, theParent Company is committed to transfer all the long- term assetsof Orascom Telecom Iraq to another subsidiary outside Iraq atamounts not less than their carrying values. On October 25, 2005,the Iraqi Ministry of National Communications and MediaCommission has extended the license period till the mid of year 2006.The consolidated assets and revenues of Orascom Iraq Holdingrepresent 4.36% and 10.24% respectively of the Group's consolidatedassets and revenues.Accordingly, the management decided to apply going concernassumption.— During the year ending December 31, 2005 Sheba Telecom

(subsidiary of Orascom Telecom Ventures) incurred a net lossTK 2 805 million equivalent to US$ 43.1 million. Themanagement is however, confident that the company willcontinue in operational existence for the foreseeable futureon the basis of improved profitability and continued supportof Orascom Telecom Holding.

33- SUBSEQUENT EVENTS

1- On February 28, 2006 the Bond Holders Group approved theearly redemption of the bonds as the company would compensatethe bond holders by paying additional 1.5% of the bonds value.Thus, the company has paid LE 739.41 million (Tranch A) andUS$ 155.58 million (Tranch B) to fully repay the outstandingbonds, these amounts were paid out from the company’s newsyndication senior secured facilities of US$ 2 billion (as stated below).

2- On February 28, 2006 the company entered into new syndicationsenior secured facilities of US$ 2 billion, to repay its outstandingloans, bank facilities and bonds with a total amount of approximatelyUS$ 625 million. In addition the loan was used to repay theremaining US$ 1.187 billion due as a result of the purchase of19.3% of Hutchison Telecommunications International. To securethat loan, the Company pledged all its shares in HutchisonTelecommunications International, the Egyptian Company forMobile Services and Mobinil for Telecommunication.

34- FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENTBased on IAS 32 (Financial Instruments: Disclosure and Presentation),a financial instrument is any contract that gives rise to a financial assetof one entity and a financial liability or equity instrument of anothercompany. The carrying value of these financial instruments representsa reasonable estimate to their fair values with the exception of loanswhose present values represent a reasonable estimate of their fair values.

The Group's activities expose it to a variety of financial risks, includingthe effects of changes in foreign currency exchange rates and interestrates. The overall risk management program seeks to minimize potentialadverse effects on the financial performance of the Group. The Groupdoes not undertake any speculative treasury activities.

34.1Credit riskManagement has a credit policy in place and the exposure to creditrisk is monitored on an ongoing basis.Credit evaluations areperformed on all customers requiring credit over a certain amount.In certain subsidiaries, the Group retains deposits from customersand may suspend services for delinquent customers. As of thebalance sheet date there were no significant concentrations ofcredit risk. The maximum exposure to credit risk is represented bythe carrying amount of each financial asset.

29- CONTINGENT LIABILITIESThe contingent liabilities as at December 31, 2005 are represented in the following:

29-1Orascom Telecom Holding signed Put and Exchange RightAgreements with:

— CDC Fennec Ltd, one of the lending institutions of OrascomTelecom Algeria, has the option to convert into shares inOrascom Telecom Holding with all the amounts payable andliabilities due at any time within the 2 years subsequent toDecember 18, 2003. The principle outstanding amounted to€ 17.5 million as of December 31, 2005.

— On June 8, 2005 AIG African Infrastructure Fund, Shareholderin Orascom Telecom Algeria (OTA), signed a Sale PurchaseAgreement with Emirate International Investment Co. (EIIC)to sale its stake in OTA and convey all associated rights andobligations to EIIC. EIIC now owns 7.91% of OTA capital SharesOn October 11, 2005 OTH signed Put and Exchange Rightand Call Option Agreement with EIIC. By virtue of thisagreement EIIC has the option to exchange OTA shares forcash in a whole or in part during the period fromOctober 1, 2006 to March 31, 2007.Also by virtue of this agreement starting from March 31, 2007OTH has the option to exchange with EIIC OTA shares forcash in whole or in part.

29-2Without any right to recourse on OTH, Orascom Telecom Holdingsigned Shareholder Support Agreement & pledged Orascom TunisiaHolding Ltd shares to secure Orascom Telecom Tunisia facilityagreement with an amount of € 290 million.

29-3The company has initiated arbitration against the government ofrepublic of Chad in the International Chamber of Commerce, toindemnify approximately US$ 14.9 million financial claims in Chad

Mobile (suspended company). The government of the Republicof Chad counter alleged that OTH has no right for such financial claims.

29-4Subsidiaries’ contingent liabilities.

— The Company’s proportionate share in the Egyptian Companyfor Mobile Services (ECMS) contingent liabilities is LE 4.9million equivalents to US$ 851K which represents the uncoveredamount of the letters of guarantee issued for the benefit of thirdparties.ECMS is a party in a number of legal cases, whichresulted from carrying out its activities. Based on the legaladvice obtained, the company’s management believes that theoutcome of this law suit–individually or in aggregate – would notbe material to ECMS results.

— Ring Egypt for distribution and subsidiaries contingent liabilitiesrepresented in Letters of guarantee amounted to LE 10.28million equivalents to US$ 1.8 million.

— International Wireless Communications Pakistan Ltd (IWCPL)subsidiary has certain cases are pending in different courts oflaw. The management of the company is confident that thesecases will be decided in favour of the company.

— The Bangladeshi government requires Sheba Telecom Ltd-Banglalink and all mobile phone operators to pay license feesand royalty of TK 1100 per set per year. The government iscurrently in legal dispute with all mobile operators as towhether this should be borne by the operators or by thesubscribers. The outcome of this dispute could have significantfinancial implications for all such operators including ShebaTelecom Ltd- Banglalink.

— Sheba Telecom contingent liabilities represented in letter ofguarantee from Standard Chartered amounted to € 600 Kand US$ 244 K.

28- GRANTED GUARANTEES FROM OTH TO THE SUBSIDIARIESThe Parent Company signed agreements as a guarantor for the following subsidiaries:

Subsidiary name To guarantee Maximum Liability ExpiryPioneers Co. Pella Company tax position US$ 50 million 31/12/2007

Orascom Telecom Iraq Unpaid amount from the 5.5 % + unpaid amount for As long as thesupplier facility agreement Alcatel US$ 300K & for Motorola agreement is validwith Alcatel & Motorola US$ 3.7 million as of 31/12/2005

Sheba Telecom-Banglalink — Supplier facilities agreement — € 50 million and US$25 22/9/2006 &with Siemens AG, Huawei million respectively + 23/11/2006Tech Investments any interest or costs respectively

— Bank facilities from — US$30 million + any — As long as theStandard Chartered interest or costs agreement is valid

Med Cable Facilities from West LB € 16 million + any interest As long as theand Calyon Banks. or costs agreement is valid

Carthage Consortium Ltd Letter of guarantee from € 17.5 million As long as the lettersStandard Bank Ltd of guarantees are valid

Orascom Telecom Eurasia Promissory note to Hutchison US$ 1 172 million + 28/2/2006Telecommunication Investment any interestHolding Ltd.

34.2Interest rate riskAs at December 31, 2005 the Parent Company holds a number ofloans. The interest rates on these loans are variable (see note 15).However the Company utilizes any available funds to reduce anyinterest exposure in addition to the Hedge agreements to hedgethe interest rate risk related to loans and bonds.

The overdraft is temporary and may be settled without notice forfinancing purposes, and the related interest rate is variable. However,the effect of the interest rate risk is low due to its short-term maturity.

34.3Foreign currency riskThe Group operates across several countries and is exposed toforeign exchange risk on translations, arising principally with respectto the USD dollar value against the Euros, Algerian Dinar, TunisianDinar, Pakistani Rubes and Bangladesh Tikka. The Group is exposedto foreign currency risk on the borrowing denominated in USD

dollar and Euros, particularly those borrowings related to capital expenditures.The Parent company and some of its subsidiaries have entered intoUSD dollar and Euros SWAP agreements during the year in orderto obtain USD dollar and Euros when needed.The Group also, has investments in foreign subsidiaries whose netassets are exposed to currency translation risk when revalued inUS dollars for inclusion in the consolidated accounts. This translationrisk is unhedged.

34.4Liquidity and FundingThe Group is financed through a mix of equity share capital andbank borrowings. Full details are given in notes 12 and 15 to theconsolidated f inancial statements. The Group's liquidity riskmanagement policy requires that sufficient cash is maintained tomeet short-term funding requirements through the availability ofan adequate amount of committed and uncommitted credit facilities.

35- Principal subsidiary undertakings and joint venture undertakings35.1 As of December 31, 2005 the group owns the following subsidiaries, which have been fully consolidated in the consolidated balance sheets:

Fully consolidated subsidiaries:

Ownership Ownership Country of% % incorporation

31/12/2005 31/12/2004

In Touch for Telecommunications Company 73.47% 68.62% EgyptOrascom Telecom C.S Company 95% 95% MaltaTelecel International Ltd. Company 100% 100% British Virgin IslandsInternational Wireless Communication Pakistan Ltd (IWCPL) 100% 100% MaltaLibertis Telecom Company — 65% Congo–BrazzavillePharaoh Telecommunication Company 55% 55% EgyptOrasInvest Holding Inc. Company (**) 97.5% 97.5% MaltaRing Distribution Company 99% 99% EgyptOrascom Telecom Algeria Company (*) 87.68% 58.35% AlgeriaOrascom Telecom ESOP Company 100% 100% British Virgin IslandsArpu for Communication Services Company (*) 87% 84.62% EgyptMoga Holding Limited Company 100% 100% MaltaOrascom Iraq Holding Company 100% 100% MaltaOnward Technologies Ltd. Company 55% 55% British Virgin IslandsOrascom Telecom Services Europe Company 100% 100% FranceM-Link company 100% 100% MaltaOrascom Telecom Ventures Company 100% 100% British Virgin IslandsMed Cable Company 100% 100% United KingdomOratel International Ltd. Company 96.09% — MaltaPioneers Investment Company 100% 100% JordanComtel Network Solution Company — 94% EgyptContra for Development Project Company (**) — 90% EgyptContra Telecom & Construction Company (**) — 80% British Virgin IslandsOrascom Telecom Eurasia 100% — British Virgin IslandsOrascom Telecom Wireless Europe 100% — France

* Ownership percentage presented above ref lects effective ownership after taking into consideration both direct and indirect ownership stakes.

** Contra for Development Project Company and Contra Telecom & Consortium Company are consolidated through OrasInvest Holding Inc. Company.

12835.2As of December 31, 2005 the Company has joint control over the following subsidiaries, which have been proportionally consolidated in the consolidated

balance sheets:

Prorate Interest as at The year for which financialstatements were prepared

Name of the Joint Venture 31/12/2005 31/12/2004 31/12/2005 31/12/2004 Country1/1/2005- 1/1/2004-* Egyptian Company for Mobile Services 31.26% 31.26%

31/12/2005 31/12/2004Egypt

1/1/2005- 1/1/2004-** Orascom Telecom Tunisie 50% 20.27%31/12/2005 31/12/2004

Tunis

23/6/2005- —*** Consortium Algerian Telecommunications 50% —31/12/2005

Algeria

*Proportionally consolidated for Egyptian Company for Mobile Services through direct share in:

Name of the Company Ownership % as at Ownership % as atDecember 31, 2005 December 31, 2004 Country

Mobinil for Telecommunications 28.75% 28.75% EgyptEgyptian Company for Mobile Services 16.6% 16.6% Egypt

**Proportionally consolidated for Orascom Telecom Tunisie through direct share in:


Orascom Tunisia Holding Ltd. 100% 55.95% British Virgin IslandsCarthage Consortium Co. 100% 4.56% British Virgin Islands

***Proportionally consolidated for Consortium Algerian Telecommunications through direct share in:


Consortium Algerian Telecommunications 33% — AlgeriaInternational Telecommunication Consortium 50% — England

Notes Notes

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