ANNUAL REPORT 2003Annual2003.pdf · This strategy has enabled OT to fully focus on its core operations: Djezzy (Algeria), Mobilink (Pakistan), MobiNil (Egypt), Tunisiana (Tunisia)

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we choose toCOMMUNICATE

as long as we live

”“

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P A G E 0 4Message from the Chairman

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Internet

P A G E 5 1GSM Operations Support

GSM Operations

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P A G E 5 62003 Financial ReviewP A G E 9 9

Highlights from 2003

Messagefrom the Chairman

Our strategy is regional growth by investing in thedevelopment of telecommunications.

Dear Shareholders,

In 2003, Orascom Telecom (OT) successfully completed its restructuring program. OT has significantly deleveraged its

balance sheet and restructured its short-term liabilities into long-term arrangements. It has divested most of its non-core

sub-Saharan operations. This strategy has enabled OT to fully focus on its core operations: Djezzy (Algeria), Mobilink

(Pakistan), MobiNil (Egypt), Tunisiana (Tunisia) and Iraqna (Iraq), the new license signed in Iraq last December. By focusing

our resources on these operations, OT has aggressively rolled out networks in these countries and achieved substantial

subscriber growth. Equal focus on improving both profitability and growth led to enhanced margins as well as superior

revenue growth.

Our portfolio of assets is more balanced with roughly equal contributions from our three large operations in Algeria, Egypt

and Pakistan; I expect this trend to continue with our two newer operations in Tunisia and Iraq taking more relative

importance in the coming years.

To solidify relations with our shareholders, we increased our transparency by delivering our year end results in less than

75 days, improved the quality of our communication with investors, and enhanced our corporate governance standards

by including three non-executive Board members.

In 2004, our strategy will remain the same: continue to focus on maintaining our leadership in our key markets by delivering

high subscriber growth, exceeding 50% and high profitability. As new opportunities in the GSM world become scarce, we

will focus on highly populated regions with low penetration and high return targets. We also aim to capture more of the

value chain by developing all our GSM support operations.

In five years of existence, OT has become a leading regional GSM operator with true international scale: a subscriber base

expected to break the 10 million mark this year in markets with around 400 million inhabitants. Our increasing scale and

recognized operating expertise gives us the appropriate leverage with our key partners: government bodies, equipment

suppliers and financial institutions. I am convinced OT is strategically, operationally and financially well positioned to

deliver superior growth and profitability in the future.

Sincerely,

Naguib Sawiris

Chairman & CEO

MESSAGE FROM THE CHAIRMAN

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YEMEN

ZAMBIA

IRAQ

EGYPTCHADALGERIA

DEMOCRATIC REPUBLICOF CONGO

BURUNDI

UGANDA

CENTRAL AFRICAN

REPUBLIC

GABON

BENINTOGO

ZIMBABWE

BURKINA FASO

IVORY COAST

TUNISIA

JORDAN

SYRIA

CONGO BRAZZIVILLE

PAKISTAN

Countries where OT has divested operations

Current OT operations

A N N U A L R E P O R T 2 0 0 3

GSMOPERATIONS

G S M O P E R A T I O N S

• MobiNil

• Mobilink

• Djezzy

• Tunisiana

• Iraqna

• Sub-Saharan Operations

Orascom Telecom’s first investment in the Middle East started on May 21, 1998 with MobiNil.

MobiNil’s success is the story of a constantly reaffirmed commitment towards the Egyptian society. It has had more than five years

of market leadership, outstanding achievements, and an unwavering pledge to its mission to create value by providing the best quality

service for the maximum number of customers, the best working environment for its employees, and top value for shareholders.

MobiNil has the strongest network in Egypt; 1836 sites, 15 Switches, EFR Voice Clarity Enhancement and state-of-the-art

infrastructure to support the MobiNil network.

MobiNil was the first GSM operator and remains market leader in terms of subscribers and a national coverage of 95% of the

total populated area. It has roaming agreements with 247 operators in 109 countries and includes GSM, non-GSM and satellite

partners. The company also has a broad retail base, with more than 3000 Points of Sale across the nation.

MobiNil-EGYPT


Market SizeThe Egyptian GSM market is one of the largest markets in the region. With a total

population of 72 million and a penetration of only 8% (over 6 million subscribers),

Egypt still has strong growth potential.

MobiNil reported active subscribers on December 31, 2003 at 2.9 million compared to

2.282 million at year-end 2002, representing an increase of 31%. In 2003, MobiNil

added 709,214 new net active subscribers compared to 424,000 in 2002, and achieved

higher proportional growth in revenue represented by a 33% increase in MobiNil's top

line. With this it achieved a 52.7% of the GSM subscriber market share.

Customer SegmentationMobiNil's Postpaid base was 666,696 by the end of 2003, representing a 58% share in

the Postpaid market and a 44% increase over 2002. This has caused the Postpaid -

Prepaid mix to change to 22% - 78% from a 20% - 80% mix a year earlier. These results

demonstrate the success of MobiNil’s strategy to focus on high ARPU outcomes.

The Prepaid base was 2,324,518 by year end 2003, which represents a 28% increase

over 2002. The Prepaid segment represents the fuel for growth in the Egyptian GSM

market, targeting younger generations with growing needs for communication.

MobiNil continues its approach for providing the market with products and services

that address the different needs of the various segments. In its pursue to provide world-

class standard mobile experience to the market, MobiNil launched MobiNil Life (GPRS

Service) during the third quarter of 2003 to increase the non-voice revenues. This

service provides users with a friendly interface to easily access content including ring

tones and games. MobiNil Life also encompasses Multimedia Messaging Services (MMS).


Market IndicatorsIn 2003, MobiNil managed to improve its operational and financial figures and it

reported strong profit growth for the year. MobiNil also reported strong revenue and

EBITDA growth of 33% and 31% respectively. MobiNil managed to increase its blended

ARPU for 2003 to LE 104 million, from LE 100 million in 2002.

Mobile OperatorsCurrently, MobiNil competes with Vodafone Egypt. In late 2003, MobiNil and Vodafone

reached an agreement with Telecom Egypt in which the two operators are committed

to pay a total of EGP 1,240 million each, spread equally over four years to the National

Telecommunications Regulatory Authority (NTRA). In exchange, Telecom Egypt surrenders

its GSM license to the regulator, thus granting mobile operators access to the 1800

MHZ spectrum. As part of the agreement, the two mobile operators will also be granted

an extension of the duopoly market until 2007, as well as other benefits.

Network Coverage & RoamingMobiNil expanded network coverage to 95% of populated areas. As for roaming, several

new operators were signed in 2003. Continuous expansion will occur as MobiNil builds

on its leadership position.

Social ResponsibilityMobiNil has been and continues to be one of the most active and leading corporate

citizens in Egypt, with a firm belief that success is not merely measured in numbers,

but it is also measured by fulfilling significant responsibilities towards society. MobiNil

seeks to manage the environmental, ethical and social aspects of its business responsibly,

striving towards externally recognized standards.

MobiNil is an active player in the Egyptian community, lending support to a variety

of cultural, social and sports events in an ongoing effort to express gratitude to the

community in which it functions. MobiNil is paving the way in a number of areas,

including goodwill to the Egyptian economy, education, heritage, culture, the arts,

technology, community service, the environment, and national sports.

MobiNil is an environment friendly organization, and is accredited the ISO 14001

Certificate for the environment.

MobiNil at a Glance (as of 31 December 2003)

Date of Launch 21 May, 1998

Ownership Structure The Egyptian Company for Mobile Services (MobiNil)- MobiNil Telecommunications: 51.0%

• Orange Group SA: 71.25%• Orascom Telecom Holding SAE: 28.75%

- Orascom Telecom Holding SAE: 16.6%- Free Float: 32.4%

Listing Cairo and Alexandria Stock ExchangesRIC: EMOB. CA

Total Number of Subscribers 2,991,214

Total Number of Prepaid Subscribers 2,324,518

Total Number of Postpaid Subscribers 666,696

Total Market Share 52.7% market share

Geographical Coverage 95% of populated area

Retail Base 3000+ Points of Sale nationwide

Products and Services MobiNil Monthly Postpaid SubscriptionMobiNil Prepaid ALOMobiNil BusinessMobiNil Life (GPRS)

VAS

[ ]

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- Fixed Dialing Number- CLIP, CLIP +- Call Barring, Call Forwarding, Call Waiting / Call Hold- SMS, IS-SMS, SMS 2TV- E-Mail- Multimedia Messaging Service (MMS), MobiNil Chat- News Pull Service Description with Info2cell- Flight Information Service- SMS Ads Commercial, SMS Winning Stars Game, Win the

Ring Game- Voice Mail, Conference Calling, Voice Information Service

(Short Numbers), IVR Bill Advice, Cinema012 IVR- Fax Mail, Data Services, Fax Services, WAP- International Access, Easy Go Scratch Cards, Roaming, FREE

3 Minutes Roaming- Home Cash Collection, E-Bill, Direct Debit, Budget Master, Bill

Payment at POS, ATM Bill Payment- Twin Line, Fax & Data Only SIM cards, 1Line2SIM, 32K SIM

Card- MobiNil Visa Card, Portabank, SMS Mobile Banking, IVR

Banking Services- GPRS, Multimedia Messaging Services (MMS), WAP, WEB

(Internet and Intranet Browsing)

Mobilink-PAKISTAN

Mobilink started its operation in 1994 and until early 2001, it had a market share of 40%. It was in April 2001 that Orascom

Telecom took over management control of the company when it acquired a stake of 89% and changed the overall market dynamics

through its aggressive marketing strategy and expertise. In less than three years, Mobilink grew by almost seven times, achieving

a market share of 61% by the end of 2003. Moreover, while both existing operators employed AMPS technology, Mobilink was

the first cellular service provider in Pakistan to operate a 100% GSM technology.

During 2003, Mobilink aggressively grew the market. It started the year with 952,174 subscribers and a market share of 53%.

With a successful mix of strong brand image and sound financial results, Mobilink ended 2003 with a cumulative subscriber base

of 2,015,647, representing a 61% market share.

Market SizePakistan had 3.3 million subscribers at the end of 2003 out of a total population of144 million. This 2.3% market penetration clearly demonstrates the tremendous growthpotential in Pakistan.

Mobilink is the market leader with both its Postpaid product, Indigo, and its Prepaidproduct, Jazz, dominating their respective segments. Indigo, with a cumulative subscriberbase of 142,499, enjoys over 70% of the total Postpaid market, while Jazz hasapproximately 60% share to its credit in the Prepaid domain with 1,873,148 subscribers.

Customer SegmentationLike most emerging mobile markets, the Pakistani mobile industry is primarily drivenby Prepaid with an industry wide sales mix of more than 92% Prepaid.

In 2003, Mobilink set new standards and achieved many landmarks between the Postpaidand Prepaid brands and offered innovative Value Added Services (VAS). VAS werebranded as ‘Power Tools’ and given extensive media support to enhance usage andrevenues. New and innovative SMS based products were introduced during the year.Mobilink now offers international roaming with more than 170 operators, includingthe Thuraya Satellite system.

Mobilink plans to introduce GPRS during 2004 and will be offering services like MMSon this platform in order to strengthen its technology leadership.

Market IndicatorsMobilink provides umbrella branding to both of its major brands, Indigo and Jazz.Mobilink has the highest Total Spontaneous Awareness in the industry, reaching 90%.

Mobilink reported strong operating profit growth as it continued to realize benefitsfrom the acquisition and retention of high value customers and the continuing focuson cost efficiencies. This is reflected in a 88% increase in revenues, and a 98% increasein EBITDA over 2002.

Blended ARPU for the twelve months ending 31 December 2003 reached US$ 13.9compared to US$ 16.5 for the twelve months ending 31 December 2002.

Blended churn for the twelve months ending 31 December 2003 reached 5.6% downfrom 7.4% compared to 2002. This was the result of the ever increasing effort of Mobilinkto increase its subscriber base and its increased effort in emphasizing the brand recognitionof Mobilink, while at the same time retaining its existing customer base.


Mobile OperatorsMobilink started its operation in 1994 as a third entrant in a market where Paktel and Instaphone were already operating since1991. Despite the re-launch of Ufone, the main GSM competitor, Mobilink has maintained its momentum of growth.

Network Coverage and RoamingIn 2003, more than US$ 200 million was invested in improving the network and services. Mobilink now has 7 switches, around820 cell sites and new IN platforms for better coverage and connectivity. In addition, Mobilink upgraded its existing call centersand introduced a new state-of-the-art call center in Karachi to better manage customer care.

Mobilink coverage stretches across 215 cities of the country through approximately 820 cell-sites. This wide network, that coversmore than 85% of the urban population, is supplemented by extensive international roaming with more than 170 operatorsworldwide.

Sales StrategyMobilink is the first cellular operator to introduce the “franchise” concept in the cellular industry in Pakistan and it currentlyoperates the largest franchise network in the country with over 140 franchisee/national distributors (dealers operated servicecenters). In order to extend its reach even further, Mobilink worked with its franchisees to develop a network of over 300 sub-dealers which operate as Points of Sale (POS) only and are branded “Mobilink Connect”. Each franchisee is adequately equippedto process sales, collect bills and offer other customer services. All franchisees have trained sales and service staff, fully capableof tackling sales challenges. Additionally, Jazz scratch cards are easily available across urban Pakistan through more than 10,000retail outlets.

Mobilink has recently launched Electronic Voucher Distribution (EVD) process for the first time in Pakistan’s telecommunicationshistory. This launch has enabled Mobilink to once again prove to its customers that it is indeed the largest cellular company inthe country ready to pace ahead with new technology.

EVD is a brand new recharge option for Prepaid subscribers. It will enable Mobilink to take care of scratch cards out of stocksituations and provide customers more convenience so that they can enjoy the benefits that come from being part of the everflourishing Mobilink community.

Social ResponsibilityMobilink reinforced its commitment to being a good corporate citizen throughout 2003. In its continuous efforts towards thegrowth of the social sector, special people and towards health care, Mobilink made a number of contributions throughout theyear including charities like the Shaukat Khanum Memorial Trust, Umeed–e–Noor, and blind cricket for special people in Pakistan.

Such programs will help Mobilink in associating with the consumer and build a long-term emotional relationship as a goodcorporate citizen of Pakistan.


Mobilink at a Glance (as of 31 December 2003)

Date of Launch 1994

Ownership Structure OT 88.69%Rayshield Investment Ltd 11.31%




Total Market Share 61%

Geographical Coverage 215 cities – more than 85% of the urban population

Retail Base 10,000

Products and Services PostpaidPrepaid

Service Centers 11

Connects/Sub Dealers 1000+(branded + non branded)

Franchises/National Distributors 142

VAS SMSWeb2SMSSMS2EmailSMS2TVBill Payments through ATMInfo Services (Power Tools)Ring-tones, Logos, Picture Messaging, MobileGreeting Cards, etc.International RoamingG-MailE-mail NotificationDataFaxVoice MailCall WaitingCall ForwardingSong Dedication ServiceIVR Chat-lineMobile Banking


Djezzy-ALGERIA

The name Djezzy is inspired by the country name for Algeria, Djazair and from Djazâa, meaning a reward or gift. Djazâa is also

an adjective used to describe a beautiful woman. With this authentic name, OT entered the Algerian market after winning the

second GSM license in July 2001. The network was officially launched on the 15th of February 2002. Djezzy GSM commenced

its operation by launching Postpaid services for individual and business customers. The Prepaid Service known as “Djezzy Carte”

was introduced in August 2002.

Market SizeDjezzy has become the dominant market leader with 88.9 % market share in less than

a year. Djezzy ended the year 2003 with 1,267,561 subscribers, with 106,383 Postpaid

and 1,161,178 Prepaid subscribers.

Customer SegmentationSince the introduction of Prepaid in August 2002, new subscribers overwhelmingly favored

Prepaid connections. However, due to the lack of proper payment infrastructure in Algeria,

the company initiated an effort to improve its Postpaid subscriber base, aiming to reduce

costs associated with bill collection and credit control.

With deep understanding of the Algerian culture and market, Djezzy seized the market

through introducing unprecedented promotional campaigns in the Algerian mobile market

such as “Le Club Fondateur”, “Souk du Mobile”, “Happy Birthday Djezzy”, “One Millionth

Subscriber” and more.

Market IndicatorsRevenues and EBITDA grew by 251% and 411% respectively. Blended ARPU for 2003 reached

US$ 29.6.

Mobile OperatorsAlgeria has two main players in the GSM market: Algeria Mobile Network (AMN), since

February 1999, and Orascom Telecom Algerie spa (Djezzy), which started its operation

in February 2002.

Network Coverage and RoamingIn 2003, Djezzy deployed a network of 680 radio base stations on air, totaling 890 BTS

by year end and covering 48 administrative districts (Wilayas). By year-end, civil works

and preparation of 57 additional sites were completed. Djezzy has signed roaming contracts

with 137 roaming partners, allowing Djezzy users to roam in 116 world countries.

Sales StrategyThe distribution network entails several owned Point of Sale and a retail network

comprising 7 exclusive distributors and about 2,760 retail outlets. To support its sales,

Djezzy launched an unprecedented advertising campaign in Algeria. Djezzy, the commercial

name of OTA, now enjoys one of the highest brand recognitions in the country, and

conveys an image of freedom, youth and choice.


Djezzy at a Glance (as of 31 December 2003)

Date of Launch 15 February 2002

Ownership Structure Orascom Telecom Holding SAE 47.7%Oratel International Inc. 34.1 %Cevital 3.4%

MOGA Holding LTD (OTH) 9.0 % AIG African Infrastructure Fund 5.8 %




Total Market Share 88.9%

Geographical Coverage 48 Wilayas

Retail Base 2,760

Products and Services Djezzy (Postpaid), launched 15 February 2002Djezzy Carte (Prepaid), launched in August 2002

Service Centers 22

Exclusive Distributors 7

VAS SMSInfo ServicesInternational RoamingData & FaxCLIP, CW & CFVoice MailIVR

Tunisiana-TUNISIA

In March 2002, Orascom Telecom won the award for the second GSM license in Tunisia for US$ 454 million, and entered into a

joint agreement with Wataniya Telecom of Kuwait in October of the same year. Tunisiana launched its network in December 2002,

with coverage in greater Tunis and has quickly expanded to cover over 65% of the population by the end of 2003.

The 15 year license has favorable terms; it grants Tunisiana the right to operate its own international gateway, starting from the

launch of its operation, while at the same time providing very favorable interconnect conditions. It also provides OT with thirty

months exclusivity period in offering GSM services, along with Tunisie Telecom, the incumbent.

Market SizeTunisia provides good prospects for growth with a population of 10 million, relatively

high GDP per capita and over 5 million tourists annually.

Both Prepaid and Postpaid services were launched at the very first day of operation.

In the first year, Tunisiana had over half a million subscribers with a 27% market share

of this rapidly growing market.

Mobile OperatorsState-owned Tunisie Telecom started the first GSM network in 1996. Faced with a

limited capacity and a long list of people awaiting services, Tunisiana has been able

to become a strong competitor.

Network Coverage and RoamingThe covered area represents more than 65% of the population, and more than 80% of

the economic power of the country. As for roaming, more than 65 agreements have

been signed covering nearly 50 countries.

Sales StrategyCommercial distribution is made through direct and indirect sales forces. The direct

sales forces are based on a team of large account sales representatives and two service

centers, located in Tunis and the north suburb. Another service center was opened later

in Sfax in June 2003. The indirect sales forces are based on 7 distribution networks,

representing a total of more than 554 POS at year end 2003.

Commercial activities include direct and indirect channels. Direct channels comprise

a dedicated corporate sales force as well as customer centers in key metropolitan areas.

The indirect sales forces are based on 10 distribution networks, representing a total of

more than 554 Points of Sale at year 2003. Further expansion is planned in 2004.

A N N U A L R E P O R T 2 0 0 3G S M O P E R A T I O N S

Tunisiana at a Glance (as of 31 December 2003)

Date of Launch 27 December 2002

Ownership Structure OTuH 35%Wataniya 50%Carthage Consortium 15%

Total Number of Subscribers 497,774

Geographical Coverage 65% of populated areas

Retail Base 554

Exclusive Distributors 9

VAS SMS International Roaming

Voice MailCall ForwardingCall WaitingCLIPData & FaxFax MailIVR

On the sixth of October 2003, the mobile network for Iraq’s Central Region was awarded to Orascom Telecom, affirming Orascom

Telecom’s position as the leading mobile network in the region. Such a position was attained due to Orascom Telecom’s ability to

provide technically sophisticated network and information, roaming and voice services at reasonable prices.

Orascom Telecom’s network in Iraq, under the commercial name Iraqna, operates under the same GSM operating systems of Orascom

Telecom’s operations in Egypt, Tunisia, Algeria, Pakistan and a large number of African countries.

Iraqna-IRAQ

Iraq’s Central Region includes Baghdad, the capital, and some of the neighboring

governorates, Diyala and Anbar. This area comprises 39.4% of Iraq’s roughly 26 million

population and contains some of Iraq’s wealthiest, most industrial, and most urbanized.

The terms of the License allow Orascom Telecom in Iraq to offer services to its customers

throughout Iraq through nationwide roaming. Orascom Telecom’s application for the

License was selected by the Coalition Provisional Authority (CPA) and the Iraqi government

based on OT’s high level of commitment to drive the proliferation of telecommunications

services in Iraq and its demonstrated strength in acquiring, developing and managing

fast growing GSM mobile services operations in the region.

It is expected that Orascom Telecom’s investment in the network will be over US$100

million for the basic equipment and services in order to provide mobile communication

services in Iraq during the two year license.


IRAQ

Baghdad

Saudi Arabia

Syria Iran

Kuwait

ZakhuAqrah

SinjarRayat

Qal’at Dizah

Ba’ijiTikritAl Qa’im

Al HadithahMandali

Ar Rutbah

Nukhayb Sinjar

As Salman

Makhfar alBusayyah

Umm Qasr

Turkey

Sub-Saharan Operations

In May 2000, Libertis Telecom started its operation in Congo Brazzaville as a third mobile operator. The company grew its marketshare and became the second largest operator in the country with a 37% market share by the end of 2003.

Libertis SubscribersSince inception, subscribers have grown by more than 13-fold with subscribers more than doubling in each of the first two years andthen growing steadily since. The subscriber base has increased by approximately 44%, from 76,544 subscribers in 2002, to reach 109,995subscribers at the end of 2003.

Market IndicatorsWhile ARPU has dropped since the start of operation, it has performed exceptionally well. Despite the aggressive growth, the blendedARPU of US$ 28.8 in 2002 rose to a blended ARPU of US$ 30 in 2003.

Product OfferingLibertis Telecom is the first operator in Congo Brazzaville to introduce both Prepaid and Postpaid offers. Prepaid is an easy and affordablesolution to provide telephony to the mass market. A multi-tariff plan is used consisting of flat rates, peak-off peak rates or rates forthe high users (ALO CLASSIQUE, OPTIMA, GOLD and PREMIER). On the other side, Postpaid offers are targeting mostly the corporatemarket segment and customized plans are proposed according to the customer needs.

Mobile OperatorsLibertis started its operation in May 2000. Cyrus, a D-AMPS operator was already present since 1997. Celtel Congo SA, the second GSMoperator, started its operation in December 1999.

Libertis Telecom-CONGO


NetworkWith a network expansion based on satellite transmission for international and national linksas well as for remote rural areas connections, 43 BTSs are installed in an environment with poorinfrastructure, and more than 8 cities are covered.

Libertis Telecom operates a dual band network GSM 900/1800, providing population coverageof about 64.8%, and the total investment reached US$ 27 million at the end of 2003.Libertis has its own international gateway connected to two hubs in Europe, providing cheaperinternational calling rates at a better quality of service.


Date of Launch May 2000

Ownership Structure Orascom Telecom 65%Baby Bell 35%


Total Number of Prepaid Subscribers 108,996

Total Number of Postpaid Subscribers 999

Total Market Share 37%

Population Coverage 64.8%

Products and Services Prepaid (Alo Classique, Optima, Gold and Premier)Postpaid (Libertis Premier, Libertis Premier Plus)

Retail Base (owned POS) 2 (Brazzaville, Pointe Noire)

VAS SMSInbound and Outbound International RoamingData and FaxCLI Presentation and RestrictionCall WaitingCall Hold and Conference CallCall Forwarding (all types)Voice MailClosed User GroupItemized BillingPBX ConnectionsCall Control

Libertis at a Glance (as of 31 December 2003)

Tchad Mobile-CHADTchad Mobile, a wholly owned subsidiary of OT, commenced its operation in September 2000.

Tchad MobileTchad Mobile offers one service, ALO, for Prepaid customers.

Tchad Mobile SubscribersThroughout 2003, Tchad Mobile has expanded its network in 3 cities outside the capital of N`djamena, reaching approximately

25,000 subscribers by the end of the year.

Market IndicatorsThe ARPU for the twelve months to 31 December 2003 reached US$ 25.2.

Mobile OperatorsTchad Mobile started its operation in September 2000 and came as the first entrant into the Chad GSM market, followed 15 days

later by CelTel Tchad SA.


Other ServicesIn order to get seamless coverage of the whole territory, Tchad Mobile has become the

authorized distributor of Thuraya satellite in Chad and will offer a combined Postpaid

service, allowing its subscribers to communicate outside its GSM coverage with the same

phone and number. Also, Tchad Mobile has the governmental approval to provide ISP

services in Chad.

Tchad Mobile at a Glance (as of 31 December 2003)

Date of Launch September 2000

Ownership Structure OT 100%


Total Market Share 38.4%

Geographical Coverage N’Djamena, Moundou, Kome, Abeche

Retail Base 1

Products and Services Prepaid

Service Centers 1

VAS Barring All CallsBarring Incoming CallsCLIPCLIRCall Forward - On BusyCall Forward - On No ReplyCall Forward - On Not ReachableCall Forward - UnconditionalCall Forward - UnrestrictedCall HoldCall WaitingClosed User Group (CUG)DTMF SignalingMulti Party CallingOperator Controlled BarringOperator Determined BarringVoice Mail with Call-back

Telecel InternationalAmidst extremely difficult conditions in the telecommunications and financial markets globally, Telecel International (TIL) emerged

in 2002 from a severe crisis and is now stable and well positioned to deliver future growth and value creation for OT. In January

of 2002, OT made the decision to exercise its right over full management of TIL and, consistent with OT’s overall strategy, to divest

small and medium sized operations in sub-Saharan Africa and financially restructure the company to become self-sufficient in

the immediate term.

Telecel International (TIL) continued its restructuring efforts throughout 2003. Throughout the year, consistent with OT’s overall

strategy, TIL executed the planned divestiture of several small and medium sized operations in sub-Saharan Africa. This included

completion of the sales of ten GSM assets (Telecel Gabon, Telecel Benin, Telecel Burkina Faso, Telecel Niger, Telecel Togo, Telecel

Zambia, Telecel Burundi, Telecel Uganda, Telecel Central African Republic and more recently Telecel Loteny). TIL also entered into

agreements with major lenders in order to financially restructure the company and is now well positioned to deliver future growth

and value creation for OT.

OT now has 100% ownership over TIL and at the end of 2003 assets included 51.7% of Loteny Telecom in Ivory Coast (which was

divested in April 2004) 100% of SAIT in the Democratic Republic of Congo (DRC), 60% of Telecel Zimbabwe and 100% of M-Link,

an international carrier based in Belgium.

SAIT Telecom (Oasis) & Telecel ZimbabweTIL’s two remaining GSM operations are the Democratic Republic of Congo (SAIT Telecom

under the brand name Oasis) and Telecel Zimbabwe. While these two operations

admittedly are operating in very difficult political and economic circumstances, they

represent a real source of future growth for OT with nearly 70 million in total population.

TIL is restructuring all aspects of these assets and is implementing a focused investment

plan to capture the maximum potential value of these operations.

Market IndicatorsTaking into account the sale of the companies mentioned above in the 2003 accounts,

TIL had at the end of 2003 753,000 subscribers, an EBITDA Margin of 27.0%, and

US$ 82 million net debt (compared to US$ 198 million in debt at the end of 2002 and

US$ 290 million prior to the sale of assets). These figures reflect the deconsolidation

of Telecel Zimbabwe from OT’s results as a result of provisions under IAS due to foreign

currency restrictions. TIL will continue its restructuring and divestiture program

throughout 2004 while continuing to invest in its remaining assets to maximize

shareholder value.


• LINKdotNET


INTERNET

I N T E R N E T

LINKdotNET

Since its formation, LINKdotNET’s services have grown to offer a full range of Internet-related services and technologies.

LINKdotNET’s core competencies lie in data communications, hosting, e-solutions, online advertising and online content.

LINKdotNET’s experience in these areas allows it to provide fully integrated technology solutions.

Full Range of Internet ServicesLINKdotNET offers a wide range of turnkey services ranging from Internet access, hosting

and e-solutions, to online advertising and content. The company offers innovative

packages and services to the Internet community: businesses, governmental organizations,

mobile service providers, and the general public.

LINKdotNET is, in brief, the Arab World’s Internet powerhouse that provides, maintains,

develops and promotes Internet solutions and services.

LINKdotNET Quick Facts• 1992: First ISP in Egypt (Infonet and other online services).

• 1995: Provides Internet dial-up access to the Egyptian market.

• 1996: Link Development emerged as a subsidiary.

• 1998: Launch of Dubai operations.

• 2000: Merger of Link Egypt and InTouch Communications to form LINKdotNET.

• 2000: First online advertising agency in Egypt.

• 2002: Acquisition of 8 Internet companies.

What’s New at LINKdotNET?• 2003 saw the launch of a new high-speed network with DSL service capabilities. The

company’s investment, started at over EGP 60 million, took place in collaboration

with some of the leading companies worldwide in the field of network communications,

namely Juniper, Zhone and Siemens.

• LINKdotNET was the major player behind the development of Egypt’s E-Government

project. It designed and developed the Bawaba Gateway in cooperation with Microsoft,

under the auspices of the Ministry of Communications and Information Technology.

• LINKdotNET was acknowledged as an Infonet Certified Help Desk by Infonet Inc.

LINKdotNET 2003 Top Notches2003 proved to be an extremely successful year for LINKdotNET, as the following

accomplishments illustrate:

P A G E 3 5A N N U A L R E P O R T 2 0 0 3P A G E 3 4 I N T E R N E T

Products• Over 150 million page views/month.

• 2.5 million unique visitors/month.

• Top ranking for sites (locally and regionally).

• MSN Arabia – Number One Arab Portal.

• Masrawy – Number One Egyptian Portal.

• CareerMidEast – The pioneer online recruitment and career development portal

in the region catering to job seekers, employers, recruiters and training centers

in the Middle East and North Africa.

∑• Yallakora – The first Arabic football enthusiast's website housing fantasy football

and prediction games.

∑• Otlob – Egypt’s leading online delivery service provider.

∑• Yallabina – The region’s premier online entertainment guide.

∑• ArabFinance – The leading financial portal in Egypt.

∑• E-Dar – A leading residential and commercial real-estate destination on the

Internet. It provides a total solution to home/office buyers and sellers in Egypt.

• Ongoing process of product integration, including the revamping and launch of

Link 07770777’s free portal – www.link0777.com.

Sales and Marketing – Consumer Business• LINKdotNET’s free dial-up service (Link 07770777) doubled the numbers of users

since 2002.

• Leading market share of free dial up market.

Sales – Corporate Business• Enterprise sales: Breakthrough in the Governmental Sector with the National Post

Authority (NPO) and MCIT Technology Clubs projects.

• SME’s sales division achieved highest CAGR in LINKdotNET.

• Connect Ads (online ads) sales expansion in Lebanon, Jordan, and Saudi Arabia.

• New Channel Program targeting resellers.

• Best sales year for LINKdotNET UAE in LINKdotNET history. Major deals: renewal of

Microsoft ME website for the 5th consecutive year, in addition to Dubai Municipality

project, as well as expansion from UAE office to cover LINKdotNET presence throughout

the Gulf, including Kuwait, Bahrain and Qatar markets.

• Established a LINKdotNET sales presence in Saudi Arabia.

Link Development• LINKdotNET provided ‘MyTejari’ with a secure end-to-end solution based on Microsoft

technology. Tejari is the Middle East’s premier online business-to-business marketplace.

• Launched two exciting e-business products under its new ‘WebWize’ product family.

WebWizeShoP and WebWizeCataloG hit the regional business market with innovative,

flexible and customizable end-to-end solutions for companies.

• Approximately 50% of team certified on microsoft.net platform.

Infrastructure• Migrated all new online properties to the LDN Data Center.

• Introduction of security platforms, specialist engineers and project managers.

• Highest Data Center traffic in Egypt.

• Operated one of the largest existing Public Data Networks in Egypt.

• Implemented and operated “Whole Port selling” allowing LDN to sell connectivity to

other ISPs.

Achievements• In 2003, LINKdotNET was selected as the top provider of EAI in the ‘Eastern Europe,

Middle East, and Africa’ region in Microsoft’s Global 2003 Certified Partner Awards,

for ‘Integration Solution of the Year’. This was in recognition of LINKdotNET’s work

on Egypt’s E-government Bawaba Gateway.

• LINKdotNET won the E-Commerce Solution of the Year (2002/2003) award by Microsoft

Egypt for its work on www.speedsend.com. Chief Solutions Officer at LINKdotNET

was also awarded for Technical Excellence for her technical experience and foresight

on Microsoft technologies.

• Microsoft Certified Gold Partnership in 2002 and 2003: This certification is awarded

to companies “that focus on and have proven their commitment and expertise in

building or delivering e-Business solutions based on Microsoft technologies.”

LINKdotNET OfficesLINKdotNET is headquartered in Cairo, Egypt. The company has nine Points of Presence

in Cairo and Alexandria. In addition, LINKdotNET has a regional office in Dubai, UAE.

The company employs more than 400 consultants, web developers and support staff

in Egypt and UAE to deliver world class Internet and e-solutions to its users and clients.

P A G E 3 7A N N U A L R E P O R T 2 0 0 3P A G E 3 6 I N T E R N E T

• International GatewayM-Link

• Handsets and DistributionRing

• Value Added ServicesArpu+

• Infrastructure and ServicesOrasInvestContraPharaoh


GSM OPERATIONS SUPPORT

G S M O P E R A T I O N S S U P P O R T

M-LINKM-Link, a 100%-owned subsidiary of Orascom Telecom, operates an international and national satellite network for voice and

data communications services, as well as other related support services.

M-Link provides a unique satellite network covering Africa and the Middle East. It collects international traffic from several

countries and delivers it to international carriers through its teleport in Belgium. Located in the heart of Europe, M-Link is ideally

situated to provide interconnection to worldwide networks. Likewise, M-Link collects traffic from those international carriers and

directs it through satellites to its African correspondents. M-Link thus provides an optimum platform for supporting multiple

operators from this "hard to reach" region in an efficient manner that accommodates the diverse and rapidly changing requirements

of the international long distance business.

International Gateway

In 2003, M-link widened its coverage to include mobile networks in Algeria, Tunisia

and Iraq in addition to previous connections to and from several sub-Saharan African

countries including Zimbabwe, Gabon, Nigeria, Tanzania, Rwanda, Uganda, DRC, Togo,

Benin, Burundi, Central African Republic and Congo, connecting operators within the

OT group as well as other operators. 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 use, as well as C7 signaling

used in many GSM applications for roaming or conveyance of SMS messages.

In 2003, M-Link improved its networking capabilities by major investments in switching

and transmission capabilities. A Point of Presence has been opened in Paris to provide

better access to the operators.

By connecting this large and growing community of fixed and mobile users to world

class wholesale and retail operators, M-Link is in the position to offer a wide range of

the highest quality services in a fast moving environment.

Historically, M-Link has served the international voice and data needs of several sub-

Saharan mobile and fixed network operators, consistent with OT's focus and evolving

opportunities throughout the Middle East and Africa. Resulting from the impending

introduction of competition in international long distance services, M-Link is being

positioned to capitalize on its core competence and strengths to serve these markets.

Continuous investments are made to cope with the increasing needs for traffic and

quality of traffic for M-Link's customers, not only from the Middle East and African

regions, but from the whole world through world class international operators.

P A G E 4 1A N N U A L R E P O R T 2 0 0 3P A G E 4 0 G S M O P E R A T I O N S S U P P O R T

Handsets and Distribution

Since 1986, Orascom has always been a market leader in hi-tech consumer product distribution. With the increased focus within

Orascom Telecom on the GSM retail and distribution business, Ring was established as a fully owned Orascom Telecom affiliate that

focuses on GSM products distribution and related services. Now Ring is the leading NOKIA wholesaler in Egypt and North Africa.

Ring has established five major logistics centers in Jordan, Tunis, Algeria, Iraq and Dubai in order to provide network operators

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

Ring is also developing franchise retail business with OT Operators to increase its market penetration across the region. In Egypt,

it plans to open eight shops with MobiNil to provide the end user with MobiNil services and a wide mix of handset bundles.

Distribution and Logistics ServicesRing 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 logistics centers also undertake several

services on behalf of network operators or handset manufacturers such as SIM locking, handset software upgrades, custom

branding and special bundle packaging. E-commerce and B2B applications developed in cooperation with ISP’s are also offered

to further ease the business with the dealer’s channel of the network operator.

Ring

Number One in Quality ServiceRing 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 categorized as the most advanced in the Middle East. Introducing the concept

of visible service centers for the first time in Egypt, Ring provides its clients with the comfort

and confidence which places Ring at number one in quality service and customer satisfaction.

Modern Lifestyle OutletsRing shops are not merely places to sell or repair mobile phones, yet are also modern lifestyle

outlets providing customers with the delights of today’s hi-tech world.

Services Ring Provides• Supply Chain Management • Logistics Services

• In-Country Distribution • Wireless Products Procurement

• Product Customization • Prepaid Total Solutions

• Business2Business • Customer Care and Service Centers

• Retail Franchise

Ring 2003 Performance Indicators• Setup of Ring Iraq (100% owned affiliate) that provides its partners with in-country Prepaid

solutions, distribution and data management.

• Ongoing Contract of Ring – MobiNil Shop in Shop Agreement and the setup of shops across

Egypt.

Ring OfficesRing’s headquarters are located in Cairo. The company also covers North African and Middle

Eastern markets through its subsidiaries in Algeria, Tunisia, Jordan, Dubai and Iraq.


Value Added Services

ARPU+ is a joint venture between Orascom Telecom Holding and LINKdotNET to combine GSM market knowledge and application

development capabilities. It is positioned as a regional service provider with affiliates in both Dubai and France. ARPU+ offers

unified VAS solutions focusing on product development, content aggregation and management as well as platform solutions.

ARPU+ is the regional pioneer introducing Multi Media Services, being the first SP to implement the Multi Media solutions on

2.5G for "The Egyptian company for Mobile Services" known as MobiNil Life.

To offer these unified VAS Solutions, ARPU+ works with an extensive array of the region’s best strategic partners that

include:

Application ProvidersOffering a wide range of ready-made mobile applications, as well as tailoring operator specific content and providing on demand support.

Arpu+

Technology ProvidersContributing full-fledged Multi Access Portal solutions, Gateways, Messaging Service Centers

and support for regional operators. Technology providers include Microsoft and Logica CMG.

Content ProvidersIncluding various areas such as music, sports, entertainment and many others. ARPU+

aggregates a huge number of content providers in order to provide its clients with an integrated

portfolio.

ARPU+ aims to empower the consumer to have a better user experience through extending

different applications into the mobile channel. These applications must be innovative and

creative to entice usage behaviours and reliance on the service. They must also be built on a

solid and reliable service layer and coupled with premium content that is of interest to the

consumer and hence well adapted and repurposed for the mobile channel. Having the heritage

of both GSM & Internet worlds, ARPU+ is well positioned to be a leading regional Data Service

Provider due to the huge synergies between web & mobile, especially with the introduction

of 2.5G and Multi Media enablement.

Services have been packaged to avail on as many mobile access channels as possible. Hence

APRU+ aims to give a unified personalized access to services for the user, whereby the user

can use IVR, SMS, MMS or Web. The services are well adapted to each channel to meet the

user's preferences.


Infrastructure and Services

OrasInvest Holding was totally acquired by Orascom Telecom in 2003. Consequently, major developments took place in different segmentsi.e. expansion in operating regions, workforce fortification & increase, service quality enhancement and business portfolios enrichments.OrasInvest Holding subsidiaries are MobiServe, First Service, Collect, ESC, OrasInvest Management Services and OrasInvet Trading, whichare operating in the Middle East, North Africa and Asia. OrasInvest Management Service is the management company for all the subsidiariesof OrasInvest Holding. It provides management consultancy services especially in the legal, financial, auditing, human resources, strategicconsultancy, and research & development fields. OrasInvest Trading provides its sister companies in the region with importing andexporting services, especially GSM equipments and site materials.

MobiServeServices:MobiServe provides telecom installation, construction services and network operations. The general scope of work covers the site survey,preparation, installation, commissioning and maintenance of various telecommunication systems. MobiServe operates in Egypt, Algeria,Pakistan and Iraq.

Operational Highlights:• As MobiServe is persistently growing and expanding its services and markets, two new companies were established to serve the GSM

sister-operators in Iraq and Pakistan.• MobiServe Egypt acquired Comtel and consequently this will strengthen MobiServe’s position in the Microwave installation, commissioning

and maintenance market.• MobiServe Algeria achieved a great increase in the production and revenue through 2003.

OrasInvest


First ServiceServices:First Service offers a unique business portfolio. It provides full solutions for its integratedservices; printing (Highlight Color printing & Digital Full-Color printing), enveloping, delivery& cash collection. It also offers a high quality scratch cards production and has a well-equippedfactory that was prepared with regulations meeting international security standards andcomplying with the GSM norms. First Service uses state-of-the-art technologies in its printingand scratch cards production, using Xerox printing machines, and in the enveloping activities,by using Pitney Bowes equipments. It operates in Egypt, Algeria and Tunis.

Operational Highlights:• First Service was relocated to 6th of October City and the new building infrastructure was

developed using the highest technologies and the latest security systems. In addition, a well-equipped factory was prepared for the scratch cards production, meeting top securitystandards and complying with the GSM norms.

• In 2003 First Service succeeded to contract with several government banks such as BanqueMisr & Banque du Caire, for the first time since obtaining the post delivery license.

• First Service managed to widen its customer base of the delivery service and include newclients in the private banking sector such as NSGB.

• A successful launch of First Service scratch card production in year 2003, expected tofruitfully continue.

• Servitec Algeria managed to increase its business portfolio and offer a new customizeddelivery service to Djezzy in 2003.

CollectServices:Collect provides state-of-the-art solutions for bad debts collection with a wide geographicalcoverage for the collection activity. It operates in Egypt and Algeria.

Operational Highlights:• Collect broke the record of collection figures in September, October and December 2003,

showing a consistent increase in collection.• The collectors force was increased to expand the collection volume.• In 2003, the monthly collections were doubled in the governorates outside Cairo and

Alexandria, which was always a request from clients.• In addition to the banking sector Collect strengthened its position by winning the contract

of SADKO.

ESCServices:ESC, the Egyptian Space Communications company, provides design, installation, maintenanceand management of the satellite based communication services. It is a VSAT licensee and a hubstation owner. Its scope of work also covers the Inmarsat (R-BGAN) and the Internet via satelliteservices.

Operational Highlights:• The most important breakthrough in 2003 is the Distribution Partnership with Inmarsat.

Consequently, ESC can sell directly and indirectly the R-BGAN IP satellite modem inside andoutside Egypt.

G S M O P E R A T I O N S S U P P O R T

ContraContra is a general contracting company, 80% owned by OT, offering specialized

construction services combining various disciplines of engineering, namely; civil,

architecture, communications, electrical & mechanical. Their activities are covered under

two main divisions: the first division specializes in the fast rollout of GSM infrastructures,

telecommunication support, broadcasting and electronic industries. The second division

specializes in turn-key construction and quality finishing projects. In both fields, products

and services conform with the highest international standards.

Contra has expanded its operations and is now working in five countries, namely; Egypt,

Algeria, Tunisia, Pakistan and Iraq. Short-term plans include the addition of new activities

to the present GSM operations, such as the installation and commissioning of radio

equipment, turnkey - construction of switches as well as preventive & corrective

maintenance.


PharaohPharaoh Communication Network (PCN) is an Orascom Telecom company specialized in the

design, implementation, installation, and support of multi-services communication networks.

Founded late 1998, PCN was initiated to serve OT and its subsidiaries in their wide communication

needs and to help in the evolution of the technology in the markets where PCN exists. PCN

provides telecom & data network systems integration solutions as required for commercial

and civil works. The company also offers technical consulting for local, wide area, and

underground communication and control networking projects. End-user training and

maintenance services for all communications networks are provided. PCN’s strategy is to build

a direct business relationship with original manufacturers in order to get the most of their

support, then use PCN’s own staff to design, integrate and install the equipment.

Progress Outside EgyptPharaoh Algeria (PCA) was founded in 2002 and it specializes in GSM site construction,

fiber optics equipment supply and general telecom & data networks implementation

in Algeria. Targeting OTA and local government authorities, PCA’s goal is to be one of

the most reliable network integrator in Algeria and surrounding countries.

Activities• GSM Site Construction

• Data LAN/WAN/MAN system integrator


Highlights from 2003

ORASCOM TELECOM REACHED 7.6 MILLIONSUBSCRIBERS:At the end of 2003, Orascom Telecom reached 7.6 million

subscribers. In September 2003, Djezzy reached one million

subscribers. Mobilink reached two million by the end of

the year. MobiNil almost reached its three million mark

towards the end of the year.

ORASCOM TELECOM AWARDED IRAQNALICENSE:In October 2003, Orascom Telecom was awarded the mobile

network for Iraq’s Central Region, including, Baghdad

under the name Iraqna.

FINANCING OF DJEZZY:OTH finalized the financing of the second payment of the

license fee and fully funded the network rollout.

DIVESTITURE OF NON-CORE SUBSIDIARIES:OTH continued the divestiture of Telecel's subsidiaries,

Telecel Niger and Burkina Faso, which resulted in a net

gain of LE 12 million during the first quarter of 2003.

In July 2003, the settlement of dispute and disposal of Syriatel

was completed, generating a capital gain of LE 53 million.

During the fourth quarter of the year, Telecel finalized the

divestiture of Telcel Togo with a net gain of LE 63.7 million.

H I G H L I G H T S F R O M 2 0 0 3


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2003Financial Review

F I N A N C I A L R E V I E WP A G E 5 7A N N U A L R E P O R T 2 0 0 3

P A G E 5 6

Management Report

Auditor’s Report

Consolidated Balance Sheet

Consolidated Income Statement

Consolidated Statement of Changes in Shareholders’ Equity

Consolidated Cash Flows

Notes to the Consolidated Financial Statement

Precision is our Priority

Cairo, March 14th 2004: Orascom Telecom Holding (OTH) (Ticker: ORTE.CA, ORTEq.L), announces its consolidated results for 2003.

HighlightsHighlights

Total subscribers exceeded 7.6 million, an increase of 76% over 2002, and an 18% increase over the previous quarter.

Proportionate subscribers exceeded 4 million an increase of 87% over 2002, and 23% over the last quarter.

Revenues grew to LE 6,476 million (US$ 1,119 million1), an increase of 59% and 88% over 2002, on actual and

proforma basis2 respectively and 10% over the last quarter.

EBITDA reached LE 2,864 million (US$ 495 million1), an increase of 89% and 108% over 2002, on actual and proforma

basis2 respectively and 5% over the last quarter.

Group EBITDA margin rose to 44.2% a 6.8 % increase over 2002. EBITDA margins of the major subsidiaries are:

Djezzy 50.9%, MobiNil 53.6%, Mobilink 58.4%, Tunisiana 33.3% and Telecel 27%.

Net income for the period has reached LE 712 million (US$ 123 million1) in comparison to LE 1,047 million in 2002.

Proforma Net income3 reached LE 672 million for 2003 a 75% increase over proforma 2002. Earnings per Share

reached LE 6.51 vs. LE 9.55 in 2002. On a proforma basis EPS is LE 6.11 in 2003 vs. LE 3.49 in 2002.

Net debt was LE 4.6 billion as of 31st December 2003 reducing OTH leverage from Net Debt/EBITDA of 2.8 in 2002

to 1.6 in 2003.

Orascom Telecom Holding

Full Year 2003 Results

1. Egyptian pound figures translated into US$ using the exchange rate 5.7875, being the average rate used over the year 2003.

2. Proforma figures include the four Telecel Subsidiaries that were deconsolidated: Niger, Burkina Faso, Zimbabwe and Togo.

3. Excluding exceptional items (capital gains, provisions and goodwill impairment).


P A G E 5 8

In 2003 OTH delivered strong operational growth across most of its subsidiaries, the total number of subscribers exceeded

7.6 million subscribers with net additions of over 3.3 million, a record number for OTH.

During 2003, OTH passed many major operational milestones:

Mobilink broke the one million subscriber mark in February, followed by the two million subscriber mark in December,

adding a total of 1,063,473 subscribers in one year.

Djezzy exceeded one million subscribers in September and added 952,521 subscribers in 2003.

MobiNil virtually reached the three million subscriber mark with 2,991,214 subscribers.

Tunisiana approached half a million subscribers in its first year of operations, adding 497,774 subscribers.

Table 1: Total Subscribers

Operational PerformanceOperational Performance

Subsidiary

Djezzy (Algeria)

MobiNil (Egypt)1

Mobilink (Pakistan)

Telecel (Africa)2

Tunisiana (Tunisia)

Libertis (Congo Brazzaville)

Tchad Mobile (Chad)

Grand Total

31 Dec2002

315,040

2,282,000

952,174

693,890

-

76,544

23,621

4,343,269

30 Sept2003

1,027,567

2,784,000

1,468,628

730,574

380,746

103,467

23,204

6,518,186

31 Dec31 Dec20032003

1,267,561,267,5611

2,992,991,21,21414

2,02,015,64715,647

753,452753,452

497,774497,774

1109,99509,995

24,58024,580

7,660,2237,660,223

Inc/(dec)YE 2003 vs.

YE 2002

302%

31%

112%

9%

na

44%

4%

76%

1. MobiNil uses the three month rule to calculate its subscriber base.

2. Subscribers of the Telecel operations are as follows: Loteny Telecom at 599,244, Zimbabwe at 116,941, and Oasis Telecom 37,267.

OTH added 1,893,391 proportionate subscribers in 2003, an 87% increase. This increase was slightly higher than total

subscribers because OTH increased its stake in OTA from 53.6% to 58.4% and in Tchad Mobile from 49% to 100%.

Table 2: Total Proportionate Subscribers

Subsidiary

Djezzy (Algeria)

MobiNil (Egypt)

Mobilink (Pakistan)

Telecel (Africa)

Tunisiana (Tunisia)


Tchad Mobile (Chad)

Grand Total

31 Dec2002

168,861

713,353

844,483

395,736

-

49,754

11,574

2,183,762

30 Sept2003

550,776

870,278

1,302,526

411,685

77,139

67,254

23,204

3,302,862

31 Dec31 Dec20032003

740,256740,256935,053935,053

1,787,6771,787,677417,241417,241100,849100,84971,49771,49724,58024,580

4,077,1534,077,153


YE 2002

338%

31%

112%

5%

na

44%

112%

87%

Subsidiary

Djezzy (Algeria)

MobiNil (Egypt)

Mobilink (Pakistan)

Tunisiana (Tunisia)


Tchad Mobile (Chad)

31 Dec 2002US$

44.0

19.0

16.5

-

28.8

35.4

30 Sept 2003US$

29.9

18.8

14.1

25.9

27.1

32.5

31 Dec 200331 Dec 2003US$US$

29.629.616.816.813.913.926.626.630.030.025.225.2


YE 2002

(32.7%)

(11.5%)

(15.8%)

na

4.2%

(28.8%)

During 2003 ARPU continued to decline as strong growth led to acquisition of subscribers in market segments with lower

mobile spending habits. However, ARPUs have stabilized in comparison to last quarter.

Djezzy’s ARPU has declined significantly as mobile penetration in Algeria roughly tripled from 1.5% to 4.4% and Djezzy

captured most of the subscriber growth.

Although MobiNil’s ARPU has declined in US$, it has increased in Egyptian Pounds from LE 100 to LE 104, as MobiNil focused

its strategy on managing ARPU.

ARPU levels at Mobilink, have declined slightly over the last quarter despite the tremendous growth of over 500,000 net

additions as Mobilink improved the capacity and quality of its network.

Table 3: Average Revenue Per User (ARPU)


P A G E 6 0

Table 4: Market Share & Competition

Country

Algeria

Egypt

Pakistan

Tunisia

Congo Brazzaville

Iraq

Chad

Brand name

Djezzy

MobiNil

Mobilink

Tunisiana

Libertis

Iraqna

Tchad Mobile

MarketShare

88.9%

52.7%

61.0%

27.0%

36.9%

100.0%1

38.0%

Number ofadditional network

operations

1

1

3

1

1

2

1

Names of additionalnetwork operations

AMN

Vodafone

U-Fone, Instaphone, Paktel

Tunisie Telecom

Celtel

Wataniya, MTC1

Celtel

1. At present Iraqna is exclusively licensed to provide GSM services in Iraq’s central region. The two other operators are exclusively licensed in

two other regions. Exclusivity is expected to be lifted in 2004.

Total CAPEX for the OTH subsidiaries was US$ 682 million in 2003, with heavy focus on startup operations with significantsubscriber growth: Algeria, Pakistan, and Tunisia.

Table 5: Capital Expenditure of OTH SubsidiariesCountry

Algeria

Egypt

Pakistan

Africa

Tunisia

Service name

Djezzy

MobiNil

Mobilink

Telecel / Libertis / Chad

Tunisiana

2003US$ million

223

89

211

42

117

The major developments that have taken place in 2003 are:

Divestitures & Deconsolidation

Sale of SyriatelOn July 16th OTH announced the settlement of all legal disputes with its partner in Syriatel, DREX Technologies, and the

sale of its 25% stake in Syriatel generating a capital gain of LE 53 million.

TelecelDuring the First Half of 2003 OTH continued the divestitures of Telecel’s subsidiaries, Telecel Niger & Burkina Faso. These

divestitures resulted in a net gain of LE 12 million.

Due to economic conditions and restrictions imposed by the Zimbabwean Authorities in the repatriation of profits, OTH

decided to deconsolidate Telecel Zimbabwe, in agreement with article number 27 section (b), under IAS. This deconsolidation

has generated a profit of LE 118 million. Telecel Zimbabwe will still remain as a subsidiary of Telecel and will be treated as

an Equity investment in Telecel’s accounts. A provision charge of LE 40.7 million was taken against the cost of investment

in Zimbabwe.

Telecel finalized the divestiture of Telecel Togo in the fourth quarter of 2003, with a net gain of LE 63.7 million.

ConsolidationIn the First Quarter of 2003, OTH fully consolidated Tchad Mobile after increasing its equity stake to 100%.

In the Fourth Quarter of 2003, OTH began to proportionally consolidate Tunisiana at 20.26%, to fully consolidate OTI, OTH’s

new GSM operation in Iraq (Iraqna), and OrasInvest, OTH’s GSM service operation.

Financing

Final License Payment for DjezzyIn the Fourth Quarter of 2003, Djezzy finalised Euro 545 million in debt and equity financing. The financing was used to

fully fund network rollout and to pay the second portion of the license fee.

Loan RestructuringOTH restructured its short term debt facilities into long term loans with Banque Misr and National Societe Generale Bank

(NSGB) for an amount of over LE 350 million.

Main Financial EventsMain Financial Events


P A G E 6 2

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 & Indirect stake through Moga Holding Ltd. and Oratel.

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

Orascom Telecom applies both the Egyptian & International Accounting Standards in the consolidation of its Financial

statements.

Table 6: Ownership Structure & Consolidation Methods

Subsidiaries

GSM Operations

MobiNil (Egypt)1

Egyptian Co. for Mobile Services

IWCPL (Pakistan)2

Orascom Telecom Algeria3

Telecel (Africa)

Orascom Telecom Tunisia4


Tchad Mobile (Chad)

SyriaTel (Syria)

OTI (Iraq)

Internet Service

Intouch

Non GSM Operations

Pioneers

Ring

OrasInvest

Pharoah

Cortex

Egyptian Satellite Company

Comtel

OT ESOP

Contra Egypt

Contra Tunisia

Arpu +

Intelligent Village

Menatel Communications

2002

28.75%

16.60%

100.00%

53.60%

100.00%

-

65.00%

49.00%

25.00%

-

75.00%

100.00%

99.00%

50.00%

55.00%

95.00%

51.00%

94.00%

100.00%

-

-

-

10.25%

10.00%

2003

28.75%

16.60%

100.00%

58.35%

100.00%

20.26%

65.00%

100.00%

-

63.00%

75.00%

100.00%

99.00%

97.50%

55.00%

95.00%

51.00%

94.00%

100.00%

80.00%

80.00%

51%

10.25%

-

2002

Proportionate Consolidation


Full Consolidation

Full Consolidation

Full Consolidation

-

Full Consolidation

Equity Method

Equity Method

-

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

-

-

-

Cost Method

Cost Method

2003



Full Consolidation

Full Consolidation

Full Consolidation


Full Consolidation

Full Consolidation

-

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Full Consolidation

Cost Method

-

Ownership December 31 Consolidation Method December 31

Financial ReviewFinancial Review

RevenuesRevenues increased by 60% for the 12 months to 31 December 2003. The increase in revenues was driven by strong growth

in the subscriber base.

Approximately 66% of OTH’s revenues are in foreign currency. Contributors to revenue were Djezzy with 29.9% of total

revenues, MobiNil with 23.9%, Mobilink with 16.4%, Telecel with 14.9%, and Tunisiana with 2.1%.

Table 7: Consolidated Revenues

Subsidiary

Djezzy (Algeria)

MobiNil (Egypt)

Mobilink (Pakistan)

Tunisiana (Tunisia)

Iraqna (Iraq)

Telecel (Africa)


Tchad Mobile (Chad)

Total GSM

Total Internet Services

Total Telecom Services

OT Holding

Total ConsolidatedTotal Proforma2

31 Dec 2002(12 months)

LE (000)

553,937

1,168,119

570,111

-

-

1,243,702

103,658

-

3,639,526

40,317

384,224

-

4,064,0673,396,125

31 Dec 200331 Dec 2003(12 months)(12 months)

LE (000)LE (000)

1,942,9311,942,9311,558,1071,558,1071,070,1671,070,167

135,599135,599225225

968,434968,434161,900161,90027,21727,217

5,864,5805,864,58071,33771,337

540,054540,054--

6,475,9716,475,9716,386,2026,386,202

Inc/(dec)

251%

33%

88%

na

na

(22%)

56%

na

61%

77%

41%

na

59%

88%

Q3 - 2003(3 months)

LE (000)

582,970

446,573

323,820

-

-

236,400

50,650

4,541

1,644,954

17,689

165,348

-

1,827,9911,806,965

Q4 - 2003(3 months)

LE (000)

658,431419,315

292,9811

135,599225

288,77236,4666,741

1,838,53022,982

149,222-

2,010,7342,009,140

Inc/(dec)

13%

(6%)

(10%)

na

na

22%

(28%)

48%

12%

30%

(10%)

na

10%11%

1. The impact of changing the exchange rate against the US$ from PR 55 to PR 59 resulted in decrease in revenues of US$ 4.4 million during the period.

2. The following subsidiaries have been omitted for comparative purposes: Telecel Zimbabwe, Telecel Burkina Faso, Telecel Togo.

Costs & ExpensesDirect costs represented 25% of revenues in 2003 in comparison to 28% in 2002, while operating expenses represented

26% of revenues in 2003 in comparison to 29% in 2002. The decrease in cost and expenses as a percentage of revenues

has come as a result of OTH’s management drive to control costs, and the divestiture of the Telecel assets.


P A G E 6 4

Subsidiary

Djezzy (Algeria)

MobiNil (Egypt)

Mobilink (Pakistan)

Tunisiana (Tunisia)

Iraqna (Iraq)

Telecel (Africa)


Tchad Mobile (Chad)

Total GSM



Pioneers, Moga & OTuH2

OT Holding

Total ConsolidatedTotal Proforma3


LE (000)

193,469

634,767

374,503

-

-

355,944

32,735

-

1,591,418

780

34,687

(17,432)

(90,382)

1,519,0711,364,861


LE (000)LE (000)

989,586989,586834,616834,616739,897739,89745,13145,131

(14,594)(14,594)261,960261,96055,62055,620(5,643)(5,643)

2,906,5752,906,57515,32715,327

109,390109,390(37,994)(37,994)

(129,418)(129,418)

2,863,8802,863,8802,843,9292,843,929

Inc/(dec)

411%

31%

98%

na

na

(26%)

70%

na

83%

1,864%

215%

na

na

89%108%

Q3-2003(3 months)

LE (000)

297,592

241,217

213,910

-

-

18,8861

16,611

(2,606)

785,611

5,859

81,668

(895)

(45,296)

826,947

817,120

Q4-2003(3 months)

LE (000)

367,879226,101

194,7384

45,131(14,594)104,66416,808(7,487)

933,2403,428

16,991909

(82,620)

871,949869,987

Inc/(dec)

24%

(6%)

(9%)

na

na

454%

1%

na

19%

(41%)

(79%)

na

na

5%6%

1. EBITDA for Telecel was reduced in the 3rd quarter because of a provision of LE 40.7 million taken for the deconsolidation of Telecel Zimbabwe.

2. Pioneers is a holding company that owned 91.6% of Fastlink until this stake was sold in December 2002. Pioneers has become a non operating

company.

3. The following subsidiaries have been omitted for comparative purposes: Telecel Zimbabwe, Telecel Burkina Faso, Telecel Togo & Telecel Niger.

4. See note 1 in Table 7.

EBITDAEBITDA reached LE 2,864 million a 89% increase over Year End results 2002. EBITDA Margin reached 44%, a 6.8% increase

over 2002. This improvement was driven by the strong operating performance of Djezzy, MobiNil, and Mobilink, and the

divestures of Telecel’s subsidiaries which had lower EBITDA margins.

Table 8: Consolidated EBITDA

Table 9: Consolidated EBITDA Margin

Subsidiary

Djezzy (Algeria)

MobiNil (Egypt)

Mobilink (Pakistan)1

Tunisiana (Tunisia)

Telecel (Africa)


Tchad Mobile (Chad)

Total GSM



EBITDA MarginProforma EBITDA Margin


LE (000)

34.9%

54.3%

60.0%

-

28.6%

31.6%

-

43.7%

1.9%

9.0%

37.4%40.2%


LE (000)LE (000)

50.9%50.9%53.6%53.6%58.4%58.4%33.3%33.3%27.0%27.0%34.4%34.4%

(20.7%)(20.7%)49.6%49.6%21.5%21.5%20.3%20.3%

44.0%44.0%44.5%44.5%

Change

16.0%

(0.8%)

(1.6%)

na

(1.6%)

2.8%

na

5.9%

19.6%

11.3%

6.8%4.3%

Q3-2003(3 months)

LE (000)

51.0%54.0%54.9% -

8.0%32.8%

(57.4%)47.8%33.1%49.4%

45.2%45.2%

Q4-2003(3 months)

LE (000)

55.9%53.9%51.7%33.3%36.2%46.1%

(111.1%)50.8%14.9%11.4%

43.4%43.3%

Change

4.9%

(0.1%)

(3.2%)

na

28.2%

13.3%

na

3.0%

(18.2%)

(38.0%)

(1.8%)(1.9%)

1. Margins as per local accounting policy in Pakistan are 65.7% in Year End 2002 and 69.1% in Year End 2003 commissions are excluded from

revenues.

Table 10: Foreign Exchange Rates used in the Income StatementCurrency

US Dollar / Egyptian Pound

FCFA / Egyptian Pound

Algerian Dinar / Egyptian Pound

Tunisian Dinar / Egyptian Pound

December 2002

4.6450

0.0062

0.0600

-

September 2003

5.7870

0.0079

0.0735

4.5260

December 2003

5.7875

0.0079

0.0735

5.1250

Source: Egyptian banks


P A G E 6 6

Net IncomeNet Income for the period reached LE 712 million in comparison to a gain of LE 1,047 million for 2002. Proforma net income

for 2003, after excluding exceptional items, (capital gain, provisions and goodwill impairment) reached LE 672 million

compared to LE 384 million in 2002.

Following the payment of the second portion of the Algerian license, a foreign exchange gain of LE 158 million was made

where the outstanding license cost was booked on Djezzy’s accounts at the exchange rate of the 78.5 Algerian Dinar to

the US dollar, however, at the date of settlement of the license payment the Algerian Dinar had appreciated by 10% against

the US dollar and reached 70.5. During 2003, gain from the sale of investments reached LE 487 million including LE 197

million from the divestiture and deconsolidation of Telecel assets, LE 170 million from the transfer of Oratel shares to

Pioneers, LE 61 million from the sale of Oratel shares, and LE 53 million from the disposal of Syriatel.

Table 11: Income Statement

EBITDA

Depreciation & Amortization

Impairment of Investment

Others

Earnings Before Interest & Tax

Interest Expense

Interest Income & other Revenues

Gain from the sale of Investment

Foreign Exchange Gain (Loss)

Differences from loans valuation

Others

Earnings Before Taxes

Income Tax Provision

Net Income (Loss) before Minority Interest

Minority Share

Net IncomeProforma Net Income1

Earnings Per ShareProforma Earnings Per Share

Inc/ (dec)

89%

395%

(32%)

75%

Q3-2003(3 months)

LE (000)

826,947

(335,137)

(97,290)

(114)

394,406

(133,633)

114,490

176,698

14,679

43,752

(2,847)

607,545

(84,963)

522,582

(105,546)

417,036

Q4-2003(3 months)

LE (000)

871,949

(417,729)-114

454,334

(187,450)(40,437)131,426161,985(31,333)(3,997)

484,528

(96,806)387,722

(230,000)

157,722

Inc/(dec)

5%

15%

(62%)

1. Proforma Net Income excludes exceptional items (capital gains, provisions and goodwill impairment). Provisions were LE 256 million in 2002and LE 355 million in 2003.

31-Dec 200331-Dec 2003(12 months)(12 months)

LE (000)LE (000)

2,863,8802,863,880

(1,373,886)(1,373,886)(97,290)(97,290)

--1,392,7041,392,704

(568,800)(568,800)146,567146,567486,989486,989182,628182,628

(179,006)(179,006)(14,485)(14,485)

1,446,5961,446,596

(293,535)(293,535)1,153,0611,153,061(441,211)(441,211)

711,848711,848671,565671,565

6.516.516.116.11

31-Dec 2002(12 months)

LE (000)

1,519,071

(1,049,448)

(188,000)

-

281,623

(521,850)

278,072

1,108,859

(96,720)

-

155,680

1,205,664

(119,603)

1,086,061

(38,577)

1,047,484

383,544

9.55

3.49

Assets

Cash

Accounts Receivables

Other Current Assets

Total Current Assets

Net Fixed Assets & Assets Under Construction

Goodwill (Net)

Other Long Term Assets

Total Long Term Assets

Total Assets

Liabilities

Bank over Draft & Short Term Debt

License Related Debt

Accounts Payable

Other Current Liabilities

Total Current Liabilities

Long Term Debt

Other Long Term Liabilities

Total Long Term Liabilities

Total LiabilitiesTotal Shareholder's Equity

Minority Share

Total Liabilities & Shareholder's EquityNet Debt1

Net Debt/EBITDA

OTH dramatically restructured its Balance Sheet in 2003. First, it reduced its leverage, Net Debt/EBITDA from 2.8 in 2002

to 1.6 in 2003. Second, it restructured short term liabilities into long term agreements and reduced short term financial

liabilities (short term debt + license debt) from LE 4,490 million to LE 1,508 million.

Table 12: Balance Sheet31-Dec 2002

LE (000)

586,409

2,582,772

1,409,825

4,579,006

3,957,637

701,450

5,185,715

9,844,80214,423,808

2,622,844

1,866,919

730,660

2,764,597

7,985,020

1,871,903

162,573

2,034,476

3,150,741

1,253,571

14,423,8084,210,000

2.8

31-Dec 200331-Dec 2003LE (000)LE (000)

1,136,6961,136,696758,736758,736

1,571,7601,571,7603,467,1923,467,192

6,811,1756,811,175533,871533,871

6,622,9236,622,92313,967,96913,967,96917,435,16117,435,161

1,508,4631,508,463--

1,016,0821,016,0823,546,4393,546,4396,070,9836,070,983

4,227,5584,227,558528,566528,566

4,756,1244,756,124

4,515,8854,515,8852,092,1692,092,169

17,435,16117,435,1614,599,3254,599,325

1.61.6

1. Net Debt is calculated as a sum of Short Term Debt, License related debt, Long Term Debt in addition to Shareholders Loans less Cash. In

2002, LE 1,956 million of receivables from Pioneers was included in the calculation of cash.

Balance SheetBalance Sheet


P A G E 6 8

MobiNil's agreement with the Telecommunication Regulatory Authority for the 1800 MHZ bandwidth.

MobiNil launches MobiNil Life.

Mobilink has significantly increased the quality and capacity of its network.

Launch of postpaid service in Iraq.

Both Djezzy and Tunisiana launched the international gateway. M-Link, a 100% subsidiary, was selected to carry

the international traffic of these subsidiaries in addition to Telecel & Iraqna.

Country HighlightsCountry Highlights

Egypt

Despite the depressed state of the Egyptian economy in 2003, MobiNil managed to improve its operational

and financial figures and it reported strong profit growth for the year. MobiNil’s subscriber base reached

2,991,214, an increase of 31% over 2002. The strong operating results reflect MobiNil's focus on continued targeting of

the more lucrative postpaid subscriber base, which increased to 22.3% of total subscribers by end-2003, from 20% at end-

2002. MobiNil managed to increase its blended ARPU for 2003 to LE 104, from LE 99 in 2002, and to maintain its market

leadership of 52.6%. Capex for 2003 reached US$ 89 million with 1,836 BTS.

Data Revenue represented 4% of revenues and, cashing in on strong tourism, roaming represented 8% of revenues.

During 2003, MobiNil managed to change the tariff structure by increasing tariffs on postpaid subscribers by LE 0.05 and

decreasing the tariffs for prepaid by LE 0.25, while also decreasing the billing time from one minute to 30 seconds, thereby

giving the prepaid subscriber more value and more airtime.

Moreover, in November, MobiNil signed an agreement with Telecom Egypt and Vodafone Egypt, whereby the two mobile

operators committed themselves to make a total payment of LE 1,240 million each over four years in installments through

the National Telecommunication Regulatory Authority. Telecom Egypt, through this agreement, would surrender its licence

to the regulator and the mobile operators would be granted access through the 1800 Mhz spectrum, 7.5 Mhz each.

MobiNil also launched MobiNil Life, a new service based on GPRS technology expected to generate further growth in non-

voice service revenues through ringtones and game downloads. The launch of this service took place in conjunction with

ARPU+, OTH’s Value Added Services provider subsidiary.

Main Operational EventsMain Operational Events

Algeria

The results in Djezzy demonstrated a consistently strong operational performance and it continued to consolidate

its position as the leading operator in Algeria, with a market share of 88.9%, along with eight exclusive distributors

by end of 2003. Djezzy’s customer base stood at 1,267,561 subscribers, with net additions for the year reaching 952,521. Djezzy

has made the Algerian customer its priority having more than 2,900 points of sale, managing the largest call centre in Algeria

and making the Djezzy brand one of the most recognizable names in Algeria.

Djezzy has 91.6% of its total subscriber base as prepaid subscribers. ARPU levels continued to decline because of the rapid increase

in prepaid subscribers, however, still a very healthy ARPU reaching US$ 29.6.

In 2003 the main competitor was AMN (Mobillis), had a total subscriber base of 150,000 subscribers. In December, Wataniya

Telecom was awarded the third license for GSM in Algeria. However, the Algerian market is still under-penetrated, with a large

potential for growth. The Capex for 2003 was US$ 223 million and covering a 72% of the population and 48 wilayas with 889

BTS and 5 MSCs.

Pakistan

During the first half of 2003, Mobilink was in the process of upgrading its networks, and improving voice quality

issues and congestion problems. In the second half of the year, Mobilink aggressively targeted the Pakistani

market and added approximately one million subscribers in six months, achieving net adds of 1,063,473. In that period, Mobilink

also managed to stabilize ARPU levels at US$ 13.9 and to achieve a low churn rate of 5.6%.

At the end of 2003, Mobilink's subscriber base reached 2,015,647, with a market share of 61%. Mobilink has two brands, Jazz,

the prepaid brand where the number of prepaid subscribers reached 92.9%, and Mobilink postpaid, where the number of subscribers

reached 7.1% of total subscribers.

In 2004, the competitive environment in the mobile market in Pakistan will start changing. Paktel, one of the current D-AMPS

operators, will convert to GSM in the first quarter of 2004. In the second half, the Pakistan Telecoms Regulator will auction two

more GSM licenses, making the number of operators in the Pakistani market reach six mobile operators. Mobilink is also in the

process of finalizing the license renewal which would end in 2007. In 2003, Mobilink has significantly expanded the capacity

and the quality of its network, Capex in 2003 was US$ 211 million with 817 BTS sites covering 87% of the urban population.

Tunisia

Tunisiana reported significant subscriber growth during the first year of its operation to reach 497,774 subscribers,

since it started its operational launch in December 27, 2002.

Tunisiana managed to capture 27% of the market share, with 490,057 prepaid subscribers, and achieved approximately 70%

coverage during this period with 285 BTS. Capex for the year was US$ 117 million.

Tunisiana has leveraged ideas from other products and services launched within OTH, namely the Al Tashil product, previously

Taksit in MobiNil, which is a prepaid product with a connection fee paid over a five month installment.


P A G E 7 0

Iraq

Immediately after the award of the Mobile license in Central Iraq, and before the signing of the license, OTH, in

an unprecedented move started deploying its network rollout to cover the Baghdad area. On December 22nd,

and during the signing ceremony of the award, OTH launched on a limited scale its postpaid service. Full commercial launch

commenced on February 2004, together with distribution networks, points of sales.

Sub-Saharan Africa

The Ivory Coast operations Loteny Telecom, reached 599,244 number of subscribers (97% prepaid) with a market

share of 48%. OTH announced that it is selling Loteny with a closing of the transaction anticipated in May 2004.

In Congo Brazzaville, where the subscriber base increased by 44% over last year to reach 109,995, Libertis has managed to maintain

its foothold with 37% against its main competitor Celtel.

The Democratic Republic of Congo operation, Oasis Telecom, maintains a small market share of 4.5%. Since April 2003, OTH has

started the restructuring of this operation and managed to increase its subscriber base by 18% to 37,267 subscribers.

Managing the Zimbabwe operations has been extremely challenging, with hyperinflation, major devaluations. OTH deconsolidated

Zimbabwe in the third quarter of 2003 under the IAS guidelines, article 27, section (b), however, OTH managed to increase the

subscriber base to 116,941, a 30% increase. Telecel Zimbabwe has a 32% market share. TchadMobile, still remains the smallest

operation in OTH’s subsidiaries, with 24,580 subscribers. Tchad mobile has a market share of 38% and all subscribers are prepaid.

Outlook for 2004Outlook for 2004

During 2004 OTH intends to continue its current strategy to:

Focus on Core Assets with particular emphasis on maintaining strong leadership position in each of the markets and

accelerating the rollout of the networks to expand capacity and quality.

OTH management believes that the core of its existing operations will continue to generate substantial subscriber

growth exceeding 50% in 2004.

Continue the divestiture of non core Sub-Saharan operations.

Auditor’s ReportTo 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, 2003 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.

Except for the matter discussed in (*) below , 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 statements 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.

* A number of subsidiary companies have been audited by other accounting firms. The assets and revenues of

the subsidiary companies not audited by us represent 46.43% & 34.63% respectively of the relevant total

figures for the assets and revenues in the consolidated financial statements.

In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary if

the above scope limitations were absent, the Consolidated Financial Statements referred to above together with the

notes attached thereto present fairly, in all material respect, the consolidated financial position of the Company as of

December 31, 2003 and the results of its consolidated operations and its consolidated cash flows for the financial year

then ended, in accordance with Egyptian Accounting Standards in compliance with applicable Egyptian laws and

regulations.

Without considering the following additional qualifications:1- As explained in note (12) the Company amended the terms relating to the method of calculation of the

repayment amounts of one of the loans granted to the company assuming that one dollar of the loan equals

to one GDR. This has resulted in a charge to the income statement for the financial year ending

December 31, 2003 amounting to LE 179 006 073 after it has been reduced by the following :


P A G E 7 2

During September 2003, Orascom Telecom Holding settled US$ 7 500 000 of the loan principal. This was

affected by instructing Telecel International BVI (a wholly owned subsidiary) to transfer 7.5 million of the

company’s GDRs owned by Telecel, at a price of US$ 1 per GDR, to PCSC with a total value of US$ 7.5 million.

This resulted in a reduction of approximately LE 82 million in the charge to income statement relating to

that loan.

On December 31, 2003,Orascom Telecom Holding agreed with PCSC on a new settlement formula by which

the outstanding loan balance as of December 30, 2003 amounting to US$ 23 888 636 equivalent to

LE 146 915 111 was remeasured. This remeasurement resulted in a reduction in the outstanding loan balance

by an amount of US$ 5 013 463 equivalent to LE 30 832 797.

2 - We draw attention to note (19), there is a dispute between the Sales Tax Authority and the Egyptian Company

for Mobile Services on whether the interconnection charges between the Egyptian Company for Mobile Services

network and the other licensed telecommunication networks in Egypt is subject to sales tax . The Egyptian

Company for Mobile Services advisors believe that subjecting the interconnection charges to sales tax is not

legal, as the total cost of the call has already been taxed and that the interconnected charges is just a portion

of the calls. Based on the above, management is of the opinion that the above claim does not represent any

real liability on the company.

KPMG Hazem Hassan

Cairo, March 11, 2004

Orascom Telecom Holding S.A.E(Egyptian Joint Stock Company)

Consolidated Balance Sheet As of December 31, 2003

Current AssetsCurrent AssetsCash at banks & on handOther debit balances (net)Prepaid expensesReceivables from selling subsidiary companyAccounts receivable (net)Inventory (net)Total Current Assets

Long-Term AssetsLong-Term Assets

Due from subsidiaries & related partiesInvestmentsAssets under constructionFixed assets (net)Deferred expenses (net)Goodwill (net)Total long-term assetsTotal Assets

Current LiabilitiesCurrent Liabilities

Banks current accounts-credit and overdraftCreditors short-termAccounts payableInvestment payableAccrued expensesOther credit balancesShort-term loansTotal Current Liabilities

Long Term LiabilitiesLong Term Liabilities

Creditors long-termLong-term loansTotal Long-Term Laibilities

Minority Interest

Shareholders' EquityShareholders' Equity

Issued capitalTreasury stockOther reservesCumulative translation adjustmentsLegal reserveRetained earningsTotal Shareholders' EquityNet profit for the yearTotal Shareholders' Equity including net profit for the yearTotal Liabilities and Shareholders' Equity

The accompanying notes form an integral part of these financial statements and are to be read therewith.

Executive Officer Finance Chairman Auditor’s Report “attached” (KPMG Hazem Hassan)

31/12/2003LE

1 136 696 2781 406 562 567

72 084 116-

758 735 513 93 113 027

3 467 191 501

25 294 460 20 962 290

1 739 740 0235 071 434 5576 576 667 161 533 870 557

13 967 969 04817 435 160 549

116 620 310 786 907 703

1 016 081 582 1 200 000

1 053 867 4701 704 463 9771 391 843 0806 070 984 122

528 566 1174 227 557 5214 756 123 638

2 092 168 353

1 100 000 000(14 523 677 )

16 689 2391 210 524 366

383 073 9111 108 271 6033 804 035 442

711 848 9944 515 884 436

17 435 160 549

31/12/2002LE

586 409 6021 299 647 707

41 518 5021 959 317 884 623 454 033 68 658 290

4 579 006 018

317 676 227 54 197 268

432 660 9103 524 975 6474 813 842 550

701 449 8289 844 802 430

14 423 808 448

153 057 4371 945 807 255 730 659 969 430 626 763 565 509 791

1 689 571 2442 469 787 2577 985 019 716

162 572 6931 871 903 2152 034 475 908

1 253 570 500

1 100 000 000(21 666 398 )

- 569 264 169 383 073 911 72 586 696

2 103 258 3781 047 483 9463 150 742 324

14 423 808 448

Note No.

(9)(8)

(2-6/4)(3)

(2-4/6)(2-5/7)

(2-1-b/5)

(10)

(13)

(11)(12)

(14)(12)

(15)(16)(16)(2-3)


P A G E 7 4


Consolidated Income StatementFor the financial year from January 1, 2003 to December 31,2003

Cellular operations revenue

Internet service revenue

Telecommunication service revenue

Total revenues

Cellular operations cost of services

Internet service cost

Telecommunications service cost

Total operating costGross profit

Other revenues

Other operating expenses

Selling, general & administrative expenses

Provisions

Earnings before interest, tax, depreciation & amortizationDepreciation & amortization

Impairment in goodwill value

Earnings before interest, tax

Other Income (expenses)Other Income (expenses)

Interest expenseAdjustment relating to loan balance

Interest income & other revenues

Gains from sale & deconsolidation of investments

Foreign currency Gain (losses)

Equity share in subsidiaries income

Capital (losses)

Earnings Before TaxIncome tax

Net profit before minority interestMinority interest

Net profit for the year

Earning per share

NoteNo.

(12)

(2-1-c/24)

(17)

Financial yearended

31/12//2003LE

5 862 751 365

71 336 511

541 882 625

6 475 970 501

(1 185 305 934)

( 47 708 052)

( 369 950 597)

(1 602 964 583)4 873 005 918

18 689 986

( 537 952 352)

(1 154 980 079)

( 334 883 757)

2 863 879 716(1 373 886 024)

(97 290 128)

1 392 703 564

(568 800 071)

(179 006 073)

146 566 833

486 988 679

182 628 175

45 530

( 14 530 867)

1 446 595 770(293 535 299)

1 153 060 471(441 211 477)

711 848 994

6.51

Financial yearended

31/12//2002LE

3 639 526 164

40 317 394

384 223 728

4 064 067 286

(804 214 754)

(36 937 202)

(282 826 006)

(1 123 977 962)2 940 089 324

29 246 066

( 299 188 294)

( 895 440 607)

( 255 635 647)

1 519 070 842(1 049 447 743)

(188 000 000)

281 623 099

(521 849 783)

-

278 072 286

1 108 858 643

(96 720 418)

156 963 659

(1 283 596)

1 205 663 890(119 603 036)

1 086 060 854(38 576 908)

1 047 483 946

9.55


Ora

scom

Tel

ecom

Hol

ding

S.A

.E(E

gypt

ian

Join

t St

ock

Com

pany

)

Cons

olid

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tem

ent

of C

hang

es in

Sha

reho

lder

s' Eq

uity

For t

he fi

nanc

ial y

ear

from

Jan

uary

1, 2

003

to D

ecem

ber 3

1,20

03

* Cal

cula

tion

diff

eren

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mai

nly

in P

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om s

ale

of p

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and

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the

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perc

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ge in

Alg

eria

dur

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the

year

200

3.

The

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mpa

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g no

tes

form

an

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hese

fina

ncia

l sta

tem

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and

are

to b

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erew

ith.

Bala

nce

as o

f 31

/12/

2001

Tran

sfer

to re

tain

ed e

arni

ngs

Tran

sfer

from

rese

rves

Adju

stm

ent o

n tre

asur

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ock

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ive

trans

latio

n ad

just

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ts

Empl

oyee

s' pr

ofit

dist

ribut

ion

(subs

idia

ries)

Adju

stm

ent o

n re

tain

ed e

arni

ngs

Trea

sury

stoc

k

Net p

rofit

for t

he y

ear

Bala

nce

as o

f 31

/12/

2002

Tran

sfer

to re

tain

ed e

arni

ngs

Adju

stm

ent o

n tre

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y st

ock

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trans

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n ad

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Empl

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(subs

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Adju

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Trea

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k

Sale

of t

reas

ury

stoc

k

Net p

rofit

for t

he y

ear

Bala

nce

as o

f 31/

12/2

003

Not

e N

o.

(16)

Capi

tal

LE

1 10

0 00

0 00

0- - - - - - - -

1 10

0 00

0 00

0

- - - - - - - -

1 10

0 00

0 00

0

Trea

sury

sto

ck

LE

(8 1

85 9

20)

- -(6

337

757

)- - -

(7 1

42 7

21)

-

(21

666

398)

- 4

406

967

- - -(9

889

781

) 1

2 62

5 53

5-

( 14

523

677

)

Spec

ial r

esev

e(P

aid

in c

apita

lin

exc

ess

of p

ar)

LE

361

968

653

-(3

61 9

68 6

53)

- - - - - - - - - - - - - - - -

Othe

rre

serv

e

LE - - - - - - - - - - - - - - - - 1

6 68

9 23

9-

16 6

89 2

39

Cum

mul

ativ

etr

ansl

atio

nad

just

men

tLE

320

976

437

- - 337

757

247

949

975

- - - -

569

264

169

-(4

406

967

) 6

45 6

67 1

64- - - - -

1 21

0 52

4 36

6

Lega

lre

serv

e

LE

550

000

000

-(1

66 9

26 0

89)

- - - - - -

383

073

911

- - - - - - - -

383

073

911

Reta

ined

earn

ings

LE

40

893

290

(435

322

049

) 5

28 8

94 7

42 6

000

000

-(1

2 10

8 77

4)(5

5 77

0 51

3)- -

72 5

86 6

96

1 04

7 48

3 94

6- -

(36

123

407)

24

324

368

- - -

1 10

8 27

1 60

3

Net

pro

fit fo

r th

e ye

ar

LE

(435

322

049

) 4

35 3

22 0

49- - - - - -

1 04

7 48

3 94

6

1 04

7 48

3 94

6

(1 0

47 4

83 9

46)

- - - - - - 7

11 8

48 9

94

711

848

994

Tota

l

LE

1 93

0 33

0 41

1- - -

247

949

975

(12

108

774)

(55

770

513)

(7 1

42 7

21)

1 04

7 48

3 94

6

3 15

0 74

2 32

4

- - 6

45 6

67 1

64(3

6 12

3 40

7) 2

4 32

4 36

8(9

889

781

) 2

9 31

4 77

4 7

11 8

48 9

94

4 51

5 88

4 43

6

*


P A G E 7 6

Orascom Telecom Holding(Egyptian Joint Stock Company)

Consolidated Cash FlowsFor the financial year from January 1, 2003 to December 31, 2003


Cash flows from operating activitiesCash flows from operating activities

Net profit for the year

Adjustment to reconcile net profit (Loss) to cash

flows from operating activities

Depreciation & amortization

Impairment in investment value

Loan remeasurement differences

Income tax provision

Other provisions

Adjustments on retained earnings

Gain from sale & deconsolidation of investments

Changes in minority interest

Increase (decrease) in goodwill

Capital losses

Increase in cummulative translation adjustment

Net profit before change in current assets and current liabilities

Changes in current assets

Changes in current liabilities

Net cash provided by operating activities

Cash flows from investing activitiesCash flows from investing activities

Payments for fixed assets & assets under construction

Payments for deferred expenses

Payments for long term investments

Proceeds from sale of fixed assets

Proceeds from sale of investments

Net cash (used in) investing activities

Cash flows from financing activitiesCash flows from financing activities

Proceeds from (Payments for) loans & overdraft banks

(Payments for) in investment payable

(Payments for) in long term creditors

(Proceeds from (payments for) treasury stock

(Payments for) employees' profit distribution (Subsidiaries)

Net cash provided by (used in) financing activitiesNet cash movementCash & cash equivalents as at January 1stCash & cash equivalents as at December 31st

Financial yearended

31/12/2003LE

711 848 994

1 373 886 024

97 290 128

88 608 221

293 535 299

334 883 757

24 324 368

(486 988 679)

871 832 831

70 289 143

14 530 867

582 441 434

3 976 482 387

(4 834 924)

(1 213 488 354)

2 758 159 109

(3 299 155 769)

(1 880 542 878)

( 429 426 763)

301 561 759

1 959 317 884

(3 348 245 767)

1 152 664 781

-

-

23 831 960

(36 123 407)

1 140 373 334 550 286 676 586 409 602

1 136 696 278

Financial yearended

31/12/2002LE

1 047 483 946

1 049 447 743

188 000 000

-

119 603 036

255 635 647

(55 770 513)

(1 265 822 302)

664 574 886

(62 455 772)

1 283 596

830 891 018

2 772 871 285

(1 233 058 027)

1 158 563 325

2 698 376 583

(1 130 618 265)

( 505 308 400)

-

366 253 532

91 340 581

(1 178 332 552)

(2 909 209)

(771 268 651)

(580 892 670)

(7 142 721)

(12 108 774)

(1 374 322 025) 145 722 006 440 687 596 586 409 602

NoteNo.

(2-8/9)

A- Legal statusOrascom Telecom Holding S.A.E (“the Company” or “ Orascom Telecom”) is an Egyptian Joint Stock Company established

in accordance with the provisions of law No. 159 of 1981 and its executive regulations and in accordance with the law

No. 95 and its executive regulations issued in 1992. 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 for 1981 to Law No. 95 for 1992. Also, by virtue of a resolution of

the extraordinary general assembly 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 Registry under no. 134934.

B- Purpose of the companyThe 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 any way whatsoever in companies and other enterprises practicing

works similar to those of the Company. It may also merge into those companies and enterprises, purchase them or

affiliate them, pursuant to the provisions of law at its executive regulations.

C- Subsidiary companiesAs of December 31, 2003 Orascom Telecom Holding, hereafter called the “Parent“ owns subsidiary companies, that have

been consolidated in the consolidated financial statements, as follows:


Notes To The Consolidated Financial StatementsFor The Financial Year Ended December 31, 2003

1- General1- General


P A G E 7 8

% of share

100%

75%

95%

100%

100%

65%

51%

55%

97.5%

99%

58.3%

100%

94%

80%

80%

100%

87.75%

100%

100%

Country

Jordan

Egypt

(B.V.I)

(B.V.I)

Mauritius

Congo –Brazzaville

Egypt

Egypt

(B.V.I)

Egypt

Algeria

(B.V.I)

Egypt

Egypt

Tunisia

Tchad

Egypt

Mauritius

(B.V.I)

1) Fully consolidated subsidiaries:

Pioneers Investment Company

InTouch Company

Cortex service Ltd. Company (BVI)

Telecel International Ltd. Company

International Wireless Communication

Pakistan Ltd (IWCPL).

Libertis Telecom Company

Egyptian Satellite Company (ESC)

Pharaoh Telecommunication Company

* OrasInvest Holding Inc. Company

Ring Distribution Company

* Orascom Telecom Algeria Company

Orascom Telecom ESOP Company

Comtel Network Solution Company

Contra for development project Company

Contra for development project Co. (Tunisia)

Tchad Mobile Company

* Arpu for Communication services

Moga Holding Limited company

Orascom Iraq Holding company

* Includes direct and indirect ownership stake.

2) Proportionally consolidated companies:The consolidated financial statements also include the Parent’s prorata interest in the assets, liabilities, revenues and

expenses of joint ventures through proportionate consolidation of these items in the Parent’s similar accounts item by

item in the financial statements.

Indicated hereunder are the joint ventures, the Parent’s prorata interest and the period for which the financial statements

have been prepared as a basis for proportionate consolidation in the Parent’s consolidated financial statements.

- An agreement concluded between the company and the other shareholders in the joint ventures provide that all the

parties have joint control over these companies.

The significant accounting policies adopted in the preparation of these consolidated financial statements are set out

below:

2-1 Basis of preparing the consolidated financial statementsThe consolidated financial statements are prepared according to the Egyptian Accounting Standards, which are not

materially different from the International Accounting Standards as they pertain to the company.

The consolidated financial statements include all subsidiaries that are controlled by the parent company and which

management intends to continue to control (Note 1-C). The basis of the consolidation are as follows:

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

- Minority interest, in the equity and results of the entities that are controlled by the parent company, is shown as a

separate 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.

Name of the Joint Venture

MobiNil for Telecommunications

Egyptian Company for Mobile Services

Orascom Tunisia Holding Ltd Co.

Carthage Consortium Co.

Prorata Interest as of

Dec. 31, 2003

28.75%

16.6%

55.95%

4.65%

The period for which

financial statements were prepared

1/1/2003- 31/12/2003

1/1/2003- 31/12/2003

2/6/2002- 31/12/2003

2/6/2002- 31/12/2003

Country

Egypt

Egypt

(B.V.I)

(B.V.I)

2- Significant accounting policies2- Significant accounting policies


P A G E 8 0

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 and amortized over a period of 15 years, or the

remaining duration of the license granted to the operator which ever is less as the case may be.

c-Deconsolidation:

A subsidiary excluded from the consolidated financial statement 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 investment.

2-2 Translation of the foreign currencies transactionsSome of Orascom Telecom Holding’s subsidiaries maintain their books of accounts in Egyptian Pounds. Transactions

denominated in foreign currencies are recorded at the prevailing exchange rate at the date of transactions. Monetary

assets and liabilities denominated in a foreign currency at the balance sheet date are retranslated at the prevailing

exchange rates, at that date. The exchange differences resulting from the settlement of transactions and the retranslation

at the balance sheet date are taken to income statement.

2-3 Translation of the foreign subsidiaries’ financialsAs of the Balance sheet date the assets and liabilities of these companies are translated to Egyptian Pounds at the

prevailing rate as of the year end, and the shareholders’ equity accounts are translated at historical rates, where as

the income and expenses accounts are translated at the average exchange rate prevailing during the period of the

consolidated financial statements. Currency translation differences are recorded in the shareholders equity section of

the balance sheet as cumulative translation adjustment.

2-4 Fixed assetsFixed assets are recorded at historical cost and presented in the balance sheet net of accumulated depreciation. Depreciable

assets are depreciated over the estimated useful- life of each asset by using the straight-line method. The following are

the estimated useful lives, for each class of assets, used for depreciation calculation purposes:

2-5 Deferred expenses- Organization costs and pre-operating expenses are amortized over one year - five years, using the straight-line method,

immediately upon the commencement of the companies operation. Most companies had fully amortized the organization

and pre-operating expenses in 2000.

- License fees to be amortized over the license life.

2-6 InvestmentsInvestments in associated companies are stated at equity method. At each balance sheet date, management assesses the

value of these investments and in case that the recoverable value from the investment is below the carrying value; the

carrying value of the investment is reduced by the value of the impairment. The value of the impairment is charged to the

income statement.

2-7 Taxation- A tax provision is formed to meet tax obligations based on a detailed schedule for each claim.

- Due to the nature of the Egyptian tax laws and legislation, applying the principles of the deferred taxes according to the

International Accounting Standard “taxes on income” will not usually result in material deferred tax liabilities. Further,

if the application results in deferred tax assets, it will be recognized in the financial statements whenever there is sufficient

assurance that these assets will be realized in the foreseeable future.

2-8 Cash and cash equivalentsFor the purpose of preparing the statement of cash flows, the Company considers all cash on hands, bank current accounts, letters

of guarantee and time deposits with banks as cash and cash equivalents. The cash flow statement prepared according to the

indirect method.

Assets

Buildings

Cell sites

Equipment & Tools

Computers equipments

Furniture & Fixtures

Vehicles

Leasehold improvements

Depreciation period

50 years

8 years

5-10 years

3-5 years

5-10 years

3-6 years

3-5 years


P A G E 8 2

2-9 Capitalization of borrowing cost- The Egyptian Company for Mobile Services capitalizes the borrowing costs related to the acquisition or establishment

of an asset, this is in accordance to paragraph 11 of Egyptian Accounting Standard No.14.

Accordingly, the company capitalized LE 22 415 574 in fixed assets and LE 13 343 451 in assets under construction.

(LE 21 595 485, LE 16 343 705 respectively during 2002).

The average borrowing rate for the Egyptian Company for Mobile Services which was used to capitalize interest on

the assets is 9.173 % for 2003 (9.46 % for 2002).

- Orascom Telecom Algeria capitalized some of the borrowing costs related to the acquisition of the GSM license.

Accordingly the company capitalized US$ 6 million during 2003 (US$ 16.6 million during 2002).

3- Assets under construction3- Assets under construction

* The assets under construction balance as at December 31, 2003 amounting to LE 33 111 679 , represents that value

of the new administrative premises purchased from Nile City Investments Company (an affiliated company) by virtue

of an agreement signed on 17/8/2000 as well as the value of additional related work.

MobiNil for Telecommunication Company


Telecel International Company


Orascom Telecom Algeria Company

* Orascom Telecom Holding Company

InTouch Company

Ring for Distribution Company

International Wireless Communication Pakistan

Ltd (IWCPL).


Orascom Iraq Holding

Orascom Telecom Tunisia Holding

Carthage Consortium

Other companies

31/12/2003

LE

85 837 541

49 561 850

65 724 816

2 239 367

334 242 654

33 111 679

15 537 945

2 267 949

992 856 000

2 544 439

110 776 026

43 469 192

1 518 342

52 223

1 739 740 023

31/12/2002

LE

54 503 894

31 470 074

56 809 544

2 949 613

112 375 643

19 703 110

232 554

1 700

154 595 720

-

-

-

-

19 058

432 660 910

4-1 On June 30, 2003 the Company has increased its investment in Oratel International Ltd. By LE 180.9 million

equivalent to US$ 30 million, represented in 40 million share. The Company’s investment, following the aforementioned

increase, reached 27.96 % of Oratel International Ltd’s share capital. During December 2003, Orascom Telecom Holding

sold 38,200,000 share of Oratel International Ltd and realized a gain of LE 61 560 303, reported in the income statement

for the financial year ended December 31, 2003 within gains from sale of investments caption. Following this sale, the

Company’s investments in Oratel Interantional Ltd reached 4.74 % of the investee share capital.

4-2 Orascom Telecom Holding acquired an additional 51 % of the share capital of Tchad Mobile Company from Sotel

Company to become a fully owned subsidiary by Orascom Telecom Holding.

4-3 On July 16, 2003 Orascom Telecom Holding , Cylotel and Drex Technologies signed an agreement to settle all

legal disputes and litigations in the international and Syrian jurisdictions and cancelled the sale of Syriatel shares to

Cylotel. Based on this agreement Orascom Telecom Holding no longer owns any shares in Syriatel, Orascom Telecom

Holding received cash considerations to compensate the cost of its initial investment, loan made to Syriatel and other

expenses incurred. This settlement has resulted in a gain of LE 55 265 575, reported in the income statement for the

financial year ended December 31, 2003 within gains on sale of investment caption.

Positive goodwill represents the excess cost of the acquisition of the joint ventures and other investments over their

fair value at the date of acquisition. While the negative goodwill represents the excess of fair value at date of acquisition

over the cost of acquisition. As for Egyptian Company for Mobile Services goodwill and Telecel International goodwill

they relate to the mobile licenses owned by them and are amortized over the period of the licenses. As for the goodwill

of MobiNil for Telecommunication it’s amortized over the remaining period of the license.

Oratel International Co.

Mena Telecommunication Co.

(Menatel)

Intelligent village (ECDMIV)


Syriatel Mobile Telecom Co.

Other investments (in subsidiaries)

(4-1)

(4-2)

(4-3)

Percentage of Ownership

4.74%

-

10.25%

-

2%

31/12/2003

LE

-

-

7 687 500

-

-

13 274 790

20 962 290

31/12/2002

LE

27 869 752

5 000

5 125 000

301 051

2 940 817

17 955 648

54 197 268

4- Investments4- Investments

5- Goodwill (net)5- Goodwill (net)


P A G E 8 4

As for the negative goodwill of International Wireless Communication Pakistan Ltd (IWCPL) (Mauritius), it is amortized

over the remaining period of the license. As for the positive goodwill of Pakistan Mobile Ltd (Pakistan), it’s amortized

over the remaining period of International Wireless Communication Pakistan Ltd (IWCPL) license.

Goodwill at the parentcompany’s level

MobiNil for Telecommunication


*International Wireless Communication

Pakistan Ltd (IWCPL)

** Pakistan Mobile Ltd.

***Telecel International Limited

Pioneers Investment Co.

InTouch Company

Egyptian Satellite Co. (ESC)

Pharaoh Telecommunication Company


Comtel network solutions (Egypt)

Contra Egypt Co.

Tchad Mobile Co.

Goodwill at the subsidiaries’ level

MobiNil for Telecommunication in the Egyptian

Company for Mobile Services

InTouch Goodwill in Link

OrasInvest in ESC.

Telecel in X-Com

Moga Holding Company in Orascom Telecom

Algeria

Cortex Company in OrasInvest Company

Total**** Telecel goodwill impairment

***** Pioneer goodwill impairment

Net

Goodwill at

date of acquisition

LE

332 321 441

178 746 470

(130 092 123)

111 183 049

682 676 807

142 347 261

9 686 993

46 000

28 934

398 829

(45 897)

3 814 000

6 322 178

1 077 322

7 609 466

459 132

4 004 706

(10 444 866)

(14 656 195)

1 325 483 507(392 134 354)(97 290 128)836 059 025

Amortization

as of 31/12/2003

LE

76 058 340

58 989 332

(51 914 876)

51 314 254

116 801 395

45 057 133

2 583 198

15 333

17 360

48 807

(6 111)

759 486

541 521

260 292

1 521 894

244 870

1 568 008

(206 149)

(1 465 619)

302 188 468--

302 188 468

Net

as of 31/12/2003

LE

256 263 101

119 757 138

(78 177 247)

59 868 795

565 875 412

97 290 128

7 103 795

30 667

11 574

350 022

(39 786)

3 054 514

5 780 657

817 030

6 087 572

214 262

2 436 698

(10 238 717)

(13 190 576)

1 023 295 039(392 134 354)(97 290 128)533 870 557

* International Wireless Communication Pakistan Ltd (IWCPL) negative goodwill was increased with an amount of

LE 102 632 741 due to the Orascom Telecom Holding acquisition of 34.08 % of International Wireless Communication

Pakistan Ltd (IWCPL) shares, that took place during 2001.

During 2002, International Wireless Communication Pakistan Ltd (IWCPL) reclassified an amount of US$ 3 million previously

paid by Orascom Telecom Holding to a current account due to Orascom Telecom Holding, the negative goodwill was increased

with an amount of LE 10 350 000.

** Pakistan Mobile Ltd reclassified an amount of US$ 1.8 million previously paid by Orascom Telecom Holding to a current

account due to Orascom Telecom Holding accordingly the goodwill was increased during 2002 with an amount of

LE 7 188 034.

- During the third quarter of year 2003, the company has sold its direct investments in Pakistan Mobile limited which

represent 30% of the shares to the International Wireless Communications Pakistan Ltd (IWCPL), a wholly owned subsidiary

to Orascom Telecom Holding, and as it is an intercompany transactions the effect has been eliminated from the consolidated

financial statements.

*** In December 2002 the sale agreement signed by Telecel of its operations in Zambia, Uganda, South Africa, Burundi, and

Centrafrique became binding; therefore Orascom Telecom received the remaining 20% of Telecel shares it did not own.

Accordingly Telecel goodwill was increased with an amount of LE 62 455 772 in 2002.

**** In 2001, and based on a valuation study prepared by an Investment Bank of Telecel International limited,

LE 204 134 354 was considered as an impairment of the investment value. That led to a decrease in the goodwill value by

the same amount. In 2002 the value of Telecel International was additionally reduced by LE 188 million, which was considered

as an impairment of the investment value based on a valuation study prepared by an Investment Bank. Accordingly the

value of impairment of Telecel International investment amounted to LE 392 134 354. Knowing that the difference between

the cost of the acquisition of Telecel International Ltd. (B.V.I) and Orascom Telecom Holding share in the net assets of Telecel

is amortized over fifteen years starting on January 2000.

***** During the third quarter of year 2003 the company has accelerated the amortization for the remaining carrying amount

of the goodwill in Pioneer investment company in Jordan, the accelerated portion from the goodwill amounted to

LE 97 290 128.


P A G E 8 6

Orascom Telecom Algeria fixed assets amounted to D.A 18 470 820 019 equivalent to LE 1 611 797 002 was pledged against loans and credit

facilities obtained from Moga Holding Ltd to group of banks and International Financial Organization.

6- Fixed Assets (Net)6- Fixed Assets (Net)

Cost

Balance 1/1/2003

Additions

Disposals

Balance 31/12/2003

Accumulated Depreciation

Accumulated depreciation 1/1/2003

Depreciation for the year

Accumulated depreciation of disposals

Accumulated depreciation 31/12/2003

Net book value 31/12/2003

Net book value 31/12/2002

Land

LE

2 164 948

59 393

-

2 224 341

-

-

-

-

2 224 341

2 164 951

Buildings

LE

49 577 759

4 753 950

(1 956 650 )

52 375 059

14 521 775

6 453 534

(1 442 453 )

19 532 856

32 842 203

30 060 083

Cell Sites

LE

5 067 418 325

1 894 419 738

(568 191 028 )

6 393 647 035

1 384 770 678

771 145 191

(254 644 269 )

1 901 271 600

4 492 375 435

3 204 474 564

Equipment

& Tools

LE

170 136 518

153 897 143

( 415 809 )

323 617 852

63 342 066

38 171 450

( 250 249 )

101 263 267

222 354 585

76 999 060

Computer

Equipment

LE

212 601 715

108 868 677

( 750 911 )

320 719 481

72 649 545

54 887 505

( 608 907 )

126 928 143

193 791 338

121 994 174

Furniture &

Fixtures

LE

84 827 699

26 116 720

( 655 842 )

110 288 577

32 461 352

13 545 322

( 287 355 )

45 719 319

64 569 258

45 275 789

Vehicles

LE

36 360 022

20 563 136

(3 163 423 )

53 759 735

15 504 856

8 885 729

(2 065 514 )

22 325 071

31 434 664

17 749 772

Leasehold

improvments

LE

58 771 450

19 035 031

( 412 633 )

77 393 848

27 825 076

17 880 962

( 154 923 )

45 551 115

31 842 733

26 257 254

Total

LE

5 681 858 436

2 227 713 788

(575 546 296 )

7 334 025 928

1 611 075 348

910 969 693

(259 453 670 )

2 262 591 371

5 071 434 557

3 524 975 647

Organization costs (net)

Deferred expenses (net)

Licenses fees (net)

Advance payments to suppliers

Accrued revenue

Deposit with others

Due from affiliated companies

Taxes

SWAP agreement receivables

Other debit balances (net)

Cash on hand

Banks- current accounts & checks under collection

Banks- Letters of Guarantee

Banks- Time deposits*

* Time deposits as of December 31, 2003 include an amount of LE 138 137 722 blocked as a collateral for loans and letters

of guarantee and letters of credit.

7- Deferred expenses (net)7- Deferred expenses (net)

31/12/2003

LE

-

406 310 853

6 170 356 308

6 576 667 161

31/12/2003

LE

235 705 732

352 736 083

6 324 270

-

49 504 342

264 591 973

497 700 167

1 406 562 567

31/12/2003

LE

12 180 335

928 595 469

9 424 622

186 495 852

1 136 696 278

31/12/2002

LE

22 049 850

44 695 159

4 747 097 541

4 813 842 550

31/12/2002

LE

130 621 659

158 386 667

13 722 479

350 737 417

10 037 335

473 773 647

162 368 503

1 299 647 707

31/12/2002

LE

3 231 804

337 990 629

11 194 359

233 992 810

586 409 602

8- Other debit balances (net)8- Other debit balances (net)

9- Cash at banks and on hand9- Cash at banks and on hand


P A G E 8 8

*Orascom Telecom Algeria

(Algerian government-license fees )

** Due to Tunisian government–License fees

Sundry creditors

* The Company has obtained the 2nd license to operate a GSM network in Algeria through investment in its subsidiary

" Orascom Telecom Algeria " for an amount of US$ 737 million for a period of 15 years starting from August 2001 and

can be extended for another 3 years without paying any extra fees. Orascom Telecom Algeria has paid the first 50%

of the license fees in August 2001 and the remaining 50% which is equivalent to US$ 368.5 million was paid on

December 27, 2003 in addition to an annual interest rate of 5.5 %.

** On May 11, 2002 the Company has obtained the 2nd license to operate GSM network in Tunisia through investment

in its subsidiary "Orascom Telecom Tunisia” for an amount of US$ 454 million for a period of 15 years starting from

December 2002 to be paid on two equal installments equivalent to US$ 227 million each. The company has paid the

first installment on May 21, 2002 where as the second and final installment in addition to an annual interest rate of

six month Libor + 2% is due on September 30, 2004. The amount represent Orascom Telecom Holding proportionate

share in Orascom Telecom Tunisia Holding Ltd. and Carthage Consortium Ltd. Company with an amount of

LE 333 547 533 and LE 11 650 530 respectively.

Taxes & Provisions

Deferred revenues

Deposit to others

Income tax provision

Due to affiliated companies

Contingent liabilities

SWAP agreement payables

Other credit balances

31/12/2003

LE

-

345 198 063

441 709 640

786 907 703

31/12/2003

LE

549 037 467

292 841 570

17 384 004

21 578 709

144 781 000

95 793 216

269 342 089

313 705 922

1 704 463 977

31/12/2002

LE

1 830 267 885

-

115 539 370

1 945 807 255

31/12/2002

LE

274 566 062

94 886 657

17 255 545

7 533 036

221 683 505

53 462 582

421 945 233

598 238 624

1 689 571 244

11- Other credit balances11- Other credit balances

10- Creditors short-term10- Creditors short-term

Bor

row

er

1-Th

e Eg

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n Co

mpa

ny M

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Ser

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s

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3-Or

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.

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6-IW

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7-Li

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ny

8-M

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9-Or

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m Ir

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10-O

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oldi

ng

11-

Cart

hage

Con

sort

ium

Com

pany

12-O

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elec

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oldi

ng

Lend

ing

Inst

itutio

n

Gro

up o

f ban

ks

Gro

up o

f ban

ks

Gro

up o

f ban

ks

Gro

up o

f ban

ks &

fina

ncia

l org

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atio

n

Gro

up o

f ban

ks

Gro

up o

f ban

ks &

fina

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l org

aniz

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n

Loa

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f cre

dit f

acili

ties

Gro

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f ban

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Gro

up o

f ban

ks

Gro

up o

f ban

ks

Inte

rest

Rat

e

1.6%

- 0

.9%

(ove

r lib

or)

The

aver

age

time

depo

sit

rate

s +

a m

argi

n of

0.5

%12

.25%

1.6%

- 0

.9%

(ove

r lib

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The

aver

age

time

depo

sit

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s +

a m

argi

n of

0.5

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Trea

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Bill

rate

+ 1

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4.25

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Eurib

or4.

25%

+ Eu

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Eurib

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+ Eu

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4.25

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Eurib

or4.

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+ Eu

ribor

5%+

Eurib

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EPC

+ 5

%

3%+

Eurib

or3%

+ Li

bor

Libo

r +2%

14%

Acco

rdin

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con

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t8% Li

bor +

3%13

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Libo

r +2.

65%

14.0

0%

Outs

tand

ing

amou

nt31

/12/

2003

LE

314

352

852

544

436

415

506

120

465

218

190

1 25

8 63

2 89

5

685

349

850

30

098

010

1 18

3 86

7 68

1

184

232

204

118

737

358

4 1

47 3

95

829

821

631

5 61

9 40

0 60

1

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Ter

mPo

rtio

n31

/12/

2003

LE

232

282

648

402

296

754

-

380

747

422

1 14

8 10

3 82

7

555

886

200

30

098

010

921

686

933

184

232

204

940

666

32

857

371

250

000

4 22

7 55

7 52

1

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t Ter

mPo

rtio

n31

/12/

2003

LE

82

070

204

142

139

661

506

120

84

470

768

110

529

068

129

463

650

-

262

180

748

-

117

796

692

4 1

14 5

38

458

571

631

1 39

1 84

3 08

0

US$ L

E L

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US$ L

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E

US$

US$

US$

US$

US$

US$

US$

US$ L.E

L.E

US$

US$ L.E

US$ L.E

Curr

ency

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t

220,

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0,00

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0,00

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220,

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onds

189,

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322

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Colla

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l Give

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* Th

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is se

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:

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CMS

shar

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*A fi

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signm

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the n

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whi

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illio

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ny sh

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*A p

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teny

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ares

*A p

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even

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and

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shar

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12-

LO

ANS

12-

LO

ANS


P A G E 9 0

- In 2002 the company received several loans from PCSC. In the financial period ending June 30, 2003 the method ofrepayment and the interest rate relating to one of these Loans amounting to US$ 20 million were amended. By virtueof this amendment the loan principal is reduced by the repayment as adjusted in accordance with a formula wherebythe repayment is divided by the market price of Orascom Telecom GDR at the repayment date. This formula assumesthat one dollar of the loan is equal to one GDR.

During September 2003 the company settled US$ 7 500 000 of the loan principal. This was effected by instructing TelecelInternational BVI (a wholly owned subsidiary) to transfer 7.5 million of the company’s GDRs owned by Telecel, at a priceof US$ 1 per GDR, to PCSC with a total value of US$ 7.5 million. This resulted in a gain to Orascom Telecom ofapproximately LE 82 million reduced from adjustment relating to loan balance in the income statement.

On December 31, 2003, Orascom Telecom Holding and PCSC agreed to settle the outstanding loan balance as of December30, 2003 which amounted to US$ 23 888 636 which is equivalent to LE 146 915 111 ignoring the formula mentionedabove, this settlement reduced the adjustment relating to a loan balance reflected in the income statement with anamount of US$ 5 013 463 which is equivalent to LE 30 832 797. Accordingly the balance due to PCSC as of December31, 2003 amounted to US$ 7 120 066 which is equivalent to LE 43 788 406.

Based on the above, the total amount paid & settled from the principle loan as of December 31,2003 wasUS$ 39 022 816 which is equivalent to LE 239 990 318, and as for adjustment relating to a loan balance reflected inthe income statement as of December 31,2003 an amount of LE 179 006 073.

Subsequent to the financial statement date , the company fully paid the due balance to PCSC which is amounted toUS$ 7 120 066 and equivalent to LE 43 788 406.

- Banque du Caire loan is guaranteed by a pledge on 915,000 share of the Egyptian Company for Mobile Services (Interestrate 14%).

- The Arab Investment Company loan is guaranteed by a pledge on 1,907,000 share of the Egyptian Company for MobileServices shares (interest rate Libor + 2%).

- Misr Iran Loan is guaranteed by a pledge on 2,041,000 share of Egyptian Company for Mobile Services (Interest rate13.5%).

- On August 26, 2003 an agreement was signed between Orascom Telecom Holding and Misr Bank, whereby the Companywill settle its short-term facilities due to the bank and obtain a long-term loan amounting to LE 250 million payableover five years, after one year grace period during which only interest will be paid, while the principle will be paid in eight equal, semi-annual installments during the following four years. The loan is guaranteed by a pledge on6,900 shares of MobiNil Telecommunications Company (Interest rate 14%) .

- On September 30, 2003 Orascom Telecom Holding restructured the National Societe Generale Bank Loan into a long-term loan payable in eight equal, semi-annual installments the last of the which is to be settled on October 31, 2007,the loan is guaranteed by a pledge on 5,652,000 shares of the Egyptian Company for Mobile Services.

- The Arab Investment Company Loan is guaranteed by a pledge on 1,897,000 shares of Egyptian Company for Mobile Services Company (Interest rate Libor + 2.65%) .

- Moga Holding Company (SPV) obtained credit facilities amounted to 153.3 million from several Banks and InternationalFinancial Institution to Orascom Telecom Algeria, those credit facilities assist Orascom Telecom Algeria to finance its projects (roll out of a GSM cellular mobile telephone services network in Algeria) .

Motorola

Amounts due to the shareholders’ of Contra for

development projects-Egypt

14- Creditors long-term14- Creditors long-term

* Due to shareholders’

Sundry creditors

* Due to shareholders’ is as follows:

Mr. Naguib Sawiris

Mr. Nassef Sawiris

The Company concluded some transactions with some shareholders, the shareholder provided funds to the company to

finance the acquisition of 20 million share at a par value of US$ 1 each in Oratel International Ltd. as well as other related

acquisition costs. The total value of funds provided is US$ 21.5 million.

15- Share capital15- Share capital

The Company’s authorized capital is fixed at LE 2.5 Billion represented in 250 million shares of a nominal value of LE 10

each. The issued and paid up share capital is LE 1.1 Billion represented in 110 million shares of a nominal value LE 10 each

(1 Share = 2 GDRs).

16- Treasury stock16- Treasury stock

Employees Stock Option Plan – Treasury Stock

Orascom Telecom Holding sold 1,000,000 of its treasury stocks which had a cost of LE 12 625 535 for an amount of

LE 29 314 774, the difference between the selling price and the acquisition price was credited to other reserves.

31/12/2003

LE

-

1 200 000

1 200 000

31/12/2002

LE

430 626 763

-

430 626 763

31/12/2003

LE

181 415 970

347 150 147

528 566 117

49 190 970

132 225 000

181 415 970

31/12/2002

LE

135 845 695

26 726 998

162 572 693

23 185 695

112 660 000

135 845 695

No of shares

178,709

LE

14 523 677

13- Investment payable Company13- Investment payable Company


P A G E 9 2

17- Earning per share17- Earning per share

Earning per share is calculated using the weighted average number of shares outstanding through out the year.

Number of shares Year

109 337 261 1/1/2003-31/12/2003

Therefore the weighted average number of shares through out the year are 109,337,261 shares.

Financial year ended Financial year ended

31/12/2003 31/12/2002

Net profit for the year LE 711 848 994 1 047 483 946

Weighted average of shares through the year 109,337,261 109,733,874

Earning per share LE 6.51 9.55

The group concluded SWAP transactions during the financial year ended December 31, 2003 in order to hedge foreign currency

exposure relating to commitments dominated in foreign currencies. Unsettled transactions as at December 31, 2003 was as follows:

Egyptian Company for Mobile ServicesAmount Future Duration

US$ conversion price

10 000 000 6.3958 8 months10 000 000 6.3098 9 months5 000 000 6.4272 8 months5 000 000 6.4008 6 months

10 000 000 6.481 6 months10 000 000 6.3804 6 months5 000 000 6.4683 6 months

20 000 000 6.4684 8 months5 000 000 6.4714 8 months6 000 000 6.7055 12 months4 000 000 6.7055 12 months

Orascom Telecom HoldingAmount Future Duration

US$ conversion price

2 000 000 6.1856 20 days

These transactions are recorded at fair value under “other debit balances & other credit balances” according to International

Accounting Standard No. (39).

18- SWAP transactions18- SWAP transactions

The contingent liabilities as at December 31,2003 are represented in the followings:

- On December 23, 2002 Pioneers, a Jordanian subsidiary Company (“the seller”), sold its share in Pella a Jordanian

company. The execution of the contract was subject to fulfillment of certain conditions, which included but not limited

to procuring the approval of the Regulatory Authorities in Jordan. In January 2003 the said approval was obtained

and the contract became effective. Pursuant to this contract, Orascom Telecom Holding guaranteed the implementation

of the seller’s obligations at a maximum amount of US$ 50 million up till the date of issuing the financial statements

of Pella Company for the financial year ending as of December 31, 2003 considering that the seller has fulfilled his

obligations. However, the purchaser shall have the right to make recourse to the sellers up till December 31, 2007 in

case sellers representations in respect of the tax position of Pella Company are proved inaccurate and incorrect

without maximum limit for damages.

- X-Com Company (subsidiary of Telecel International Company – B.V.I) obtained a loan amounting to 24.4 million

equivalent to LE 188.75 million from Fortis Bank guaranteed by Orascom Telecom Holding.

- On October 19, 2003 Orascom Telecom Holding signed a Corporate guarantee to guarantee Orascom Telecom Iraq

liabilities towards the suppliers (Motorola & Alcatel) of cellular equipment for the GSM Network in Iraq without any

limitation on these liabilities.

Subsequent to the financial statements date the Company signed a corporate guarantee to guarantee Orascom Telecom

Iraq settlement of its obligations under the credit facilities agreement signed with Motorola (US$ 40 million) and

Alcatel ( 15 million).

- On December 5, 2003 Orascom Telecom Holding has signed as a guarantor for Orascom Telecom Algeria and Moga

Holding Ltd to guarantee their obligations under loans & credit facilities obtained from a few suppliers and International

financial organizations for a total amount of 461 million. To secure these loans Orascom Telecom Holding has

pledged its investments in IWCPL, Moga Holding Ltd and Orascom Telecom Algeria to the suppliers and the International

financial organizations until November 15, 2010 (the date on which these credit facilities & loans will be fully settled).

Orascom Telecom Holding maximum liabilities under these pledge agreements is up to 470 million, in addition to

any interest or costs may occur incase of default of payment.

- Orascom Telecom Holding signed a corporate guarantee in favour of LLC Italia for the amount of 12.5 million to

secure Orascom Telecom Algeria obligation toward LLC Italia in connection with purchase of equipment and the

construction of facility sites.

- Orascom Telecom Holding signed a corporate gurantee in favour of Sumitomo Corporation to secure Orascom Telecom

Algeria obligations toward Sumitomo in respect of a purchase order amounting to US$ 2.4 million.

19- Contingent liabilities19- Contingent liabilities


P A G E 9 4

- Societe General Bank-France has filed a lawsuit against Orascom Telecom Holding alleging that US$ 900 000 success

fees in connection with its efforts in securing investor participation in financing the cost of Algeria license. The

Company’s management is in opinion, that the company legal status is strong since Societe General Bank did not exert

any efforts to secure such investment participation in financing the license.

- Orascom Telecom Holding signed a corporate guarantee in favour of Siemens to secure the settlement by Atlantic

Company for Telecommunications for its obligations to Siemens in respect to the sale of West Africa countries group,

this corporate guarantee is effective until August 31, 2004.

- On February 12, 2004 Orascom Telecom Holding signed a corporate guarantee, whereby it became jointly and severally

obliged together with Telecel International (wholly owned subsidiary) to reimburse the down payment received for

selling its share in Loteny Telecommunication capital amounting to 9.5 million in case Telecel fails to finalize the

Sale/Purchase Agreement signed with Atlantic Telecommunications.

- The Company’s proportionate share in the Egyptian Company for Mobile Services contingent liabilities is

LE 3 941 761 which represents the uncovered portion of the letters of guarantee.

- Egyptian Satellite Company contingent liabilities amounted to LE 344 112 represent uncovered portion of letters of

guarantee.

- In Touch Company contingent liabilities amounted LE 39 600 represent the uncovered portion of the letters of guarantee.

- Ring Egypt for distribution and subsidiaries contingent liabilities amounts to :

• Letters of guarantee to other amounted to US$ 2 500 000 equivalent to LE 15 375 000 against blocked deposits

with the same amount (Egypt).

• Letters of guarantee to others amounted to JD 100 000 Jordanian Dinar equivalent to LE 868 644 (Jordan).

• Letters of credit with an amount of JD 1 166 076 Jordanian Dinar equivalent to LE 10 129 919 (Jordan).

- International Wireless Communications Pakistan Ltd (IWCPL) subsidiary has certain cases are pending in different

courts of law. The management of the company is confident that these cases will be decided in favor of the company

and no provisions have been made in the account.

- Pharaoh Communication Networks Company has a legal dispute with United Bank of Egypt – Cairo branch with respect

to computing the interest rate over foreign currency financing a matter that led to file litigation by the company

against the bank in October 2003. Accordingly the company has not received any statement of account from the bank

starting from that date, based on that the company couldn’t record any expenses and interests as well as the foreign

currency reevaluation related to that account, supported by the legal consuls opinion the company’s management is

in opinion, that the company legal status is strong therefore the company didn’t establish any provisions.

- On January 21, 2003 the Egyptian Company for Mobile Services received a claim from Telecom Egypt stating that it has

retroactively changed the method of calculating international call minutes resulting in a charge for international calls

due for them amounting to approximately LE 64 million for the years from 1998 to 2002 inclusive. The differences resulting

from the change in the calculation for the period from January 1, 2003 to August 31, 2003 amounted to LE 14.2 million

according to the last claims received.

The Egyptian Company for Mobile Services management has responded by a letter to Telecom Egypt rejecting this method

of treatment based on the following grounds:

1- The interconnect agreement signed between the two companies clearly states the method of calculating the minutes

in which Telecom Egypt has already issued its invoices for these periods in accordance with the signed contract.

2- The management of the Egyptian Company for Mobile Services has obtained a legal opinion from its legal advisor

confirming that in accordance with the signed contract it is applying the calculation correctly and that Telecom Egypt

does not have the right to change the method of calculation.

Based on the above, management is of the opinion that the above claim is without any basis and does not represent any

liability on the Egyptian Company for Mobile Services. The dispute is still outstanding.

- The sales tax authority has sent a letter to the Egyptian Company for Mobile Services dated May 10, 2003 notifying the

Company that the interconnection charges between the company’s network and the other licensed telecommunication

networks in Egypt is subject to sales tax based on the assumption that this charge is work performed on behalf of others

(Rental and use of equipment). The tax on this revenue, as included in the letter, amounted to approximately LE 115 million

for the period from inception to December 31, 2001 excluding additional sales tax. The tax on this revenue for 2002 is

LE 44.8 million excluding additional sales tax. Based on the same basis of calculation for 2003, the sales tax due would

amount to LE 44.5 million.

The Egyptian Company for Mobile Services advisors believe that subjecting the interconnect charge to tax is not legal, as

the total cost of the call has already been taxed and that the interconnect charges are just a portion of the call.

Based on the above, management is of the opinion that the above claim does not represent any real liability on the Egyptian

Company for Mobile Services. The Egyptian Company for Mobile Services has filed a legal case on December 6,2003 objecting

the changes that Sales Tax Authority made.

20- Capital commitments20- Capital commitments

- The Company’s proportionate share in the Egyptian Company for Mobile Services capital expenditure commitments is

LE 130 483 883 which represents contracts to purchase plants and equipments were not yet completed as of the consolidated

financial statement date.

- InTouch Company capital expenditures commitments amounted to LE 4 613 000 which represents the unpaid capital of

the company’s long-term investment.


P A G E 9 6

- Telecel has entered into a contract to purchase plants and equipments for 24.4 million equivalent to LE 188.75 million

was not yet completed as of the consolidated financial statements date.

- International Wireless Communication Pakistan Ltd (IWCPL) has commitments in respect of capital and other expenditure

amounted to US$ 28 821 338 equivalent to LE 177 251 229.

- Orascom Telecom Algeria capital expenditure commitment amounted to approximately D.A 21 billion, which equivalent to

LE 1 832.5 million represented in fixed assets contracted and ordered but not received.

- Orascom Iraq Holding capital commitments amounted to US$ 13 920 000 which represent the unpaid capital of Orascom

Telecom Iraq Corporation (subsidiary).

- A memorandum of understanding was signed between the Egyptian Company for Mobile Services, Vodafone Egypt (the

operators) and Telecom Egypt. The Egyptian Company for Mobile Services and Vodafone Egypt are obligated to pay

LE 1 240 million each to the National Telecommunication Regulatory Authority on installments, the maturity dates have

not yet been determined.

The operators shall be able to use 7.5 MHZ from the 1800 MHZ spectrum from Telecom Egypt against the irrevocable

cancellation of Telecom Egypt license to use this spectrum.

Additionally, the two operators and Telecom Egypt agreed to amend some of the commercial agreement, between them with

the aim to develop the telecommunication Mobile sector in Egypt.

21- Employee stock option plan21- Employee stock option plan

- The Company has approved a plan to grant some of its employees’ stock options in the Company’s shares through Orascom

Telecom Esop Ltd., (a wholly owned subsidiary). According to this plan the employees will have the right to receive the

appreciation between the stock option price and the exercise price of the shares when the option vests. Orascom Telecom

Holding shares held by Orascom Telecom Esop Ltd., are presented as treasury stock in the consolidated financial statements.

- During 2001,Orascom Telecom Holding provided funds amounting to US$ 3 752 888 to purchase 357,418 GDRs.

On June 10, 2003 the board of directors approved the allotment of 825,000 shares to senior management at a price 20%

less than the average share price during 30 days prior to the allotment date.

22- Tax status of the parent22- Tax status of the parent

22-1 Corporate tax and movable capital taxYears from 1997 till 1999:

The Company submitted its tax returns for these years, and received form No. 18 taxes in the name of Orascom Technology

concerning tax assessment for these years. However, the Company’s management filed an appeal, against the assessment

included in this form, on 16/1/2003.

Years from 2000 till 2002:

The Company submitted its returns for these years, and the Company’s records for these years have not yet been inspected

by the tax authority.

- As per the tax return, there is no corporate tax due on the current year net income. Management has applied, when

preparing the tax return, article # 111 of the Income Tax Law No. 157 for 1981. According to the aforementioned article

net profit derived from activities that are being undertaken abroad by independed entity is not subject to tax in Egypt.

22-2 Stamp duty & state resources development dutyStamp duty and state resources development duty were settled up to the financial year ended December 31, 2001.

22-3 Salary taxThe salary tax was settled up to the financial year ended December 31, 1999. With respect to 2000 and 2001, the tax authority

has carried out an inspection and an assessment for LE 2 946 694 was received by the Company. However, management

filed an appeal against this assessment and an internal committee at the tax authority shall consider the matter.

23- Sale of subsidiaries23- Sale of subsidiaries

On December 31, 2002, pursuant to the agreements and plans of de-Merger (the de-Merger Agreements) dated July 2002

and October 2002, the company completed the major legal and contractual requirements to finalize the sale agreements for:

A) The South & East African Subsidiaries (CAR, Burundi, Uganda, Zambia and PTY).

Under the terms of this agreement the Company acquired 7.5 million GDR’s of Orascom Telecom Holding’s outstanding

shares for US$ 1 per GDR. Also the company received the remaining 26.5% of it’s own capital for a value of approximately

US$ 24 million along with receiving a debt forgiveness of a US$ 27 million loan due to the buyer. From its part the

company paid the buyer US$ 9.5 million in cash along with giving a loan forgiveness on approximately US$ 77 million

representing the balances due on the sold subsidiaries.

In compliance with (EAS 17), the results of the disposed subsidiaries are included in the consolidated income statement

until December 31, 2002 (the date of disposal).

B) West Africa Deal: The Central and West African Subsidiaries (Benin, Gabon, Burkina- Faso, Togo).

The company has completed the sale of Benin , Gabon in 2002 and Niger, Burkina – Faso and Togo in 2003.

24- Gains from sale & deconsolidation of investment24- Gains from sale & deconsolidation of investment

As a result of severe hyper inflation that is effecting the Zimbabwe economy accompanied by the restricted foreign currency

laws which impairs Telecel Zimbabwe ability to transfer funds, Telecel management has elected to apply the accounting treatment

stated in EAS 17, paragraph (11-b) which is equivalent to IAS 27, paragraph (13-b) and therefore deconsolidated Telecel Zimbabwe.


P A G E 9 8

The standard allowed Telecel management to exclude Zimbabwe financials from the consolidated financial statements and

account for it using the equity method. The deconsolidation of Telecel Zimbabwe has resulted in a net gain of US$ 20.4

million that is reported in gain from sale and deconsolidation of investment in the consolidated income statement for the

period ended September 30, 2003 it should be noted that Telecel Zimbabwe losses which are recorded in the comparative

figures for the year ended December 31, 2002 amounted to US$ 11.6 million.

25- Subsequent events25- Subsequent events

- On February 26, 2004, OrasInvest Holding Inc. reversed the selling agreement with Cortex Service Ltd dated July 10, 2003,

which state the selling of 29,250 shares from Mobiserve, 47,500 share from First service and 47,500 share from Egyptian

company for Collection (Collect).

- On January 30, 2004, Telecel signed a term sheet “ Protocol d’accord “ with Atlantic Telecom to sell its equity stake in

Loteny Telecom (subsidiary to Telecel in Ivory Coast) for US$ 45 million . Telecel is currently in process to obtain the legal

and formal consents to finalize the deal. Once Telecel transfer the shares title to the buyer, Loteny Telecom will be

deconsolidated from Telecel consolidated financial statements.

26- Financial instruments & related risk management26- Financial instruments & related risk management

The financial instruments are represented in cash on hand & at banks, accounts receivables, debit balances, investments,

due to/from subsidiary and affiliated companies, loans, bank overdrafts and suppliers. The carrying value of these financial

instruments represent a reasonable estimate to their fair values with exception of loans whose present value represent a

reasonable estimate of their fair values.

27- Management of financial risk27- Management of financial risk

27-1 Exchange rate riskAs some transactions are executed in foreign currencies, the company may be subject to risk of exchange rate fluctuations.

28- Comparative figures28- Comparative figures

Some of the comparative figures have been reclassified to be consistent with existing classification of the consolidated

financial statements.

w w w . o r a s c o m t e l e c o m . c o m

Documents

ANNUAL REPORT 2003Annual2003.pdf · This strategy has enabled OT to fully focus on its core operations: Djezzy (Algeria), Mobilink (Pakistan), MobiNil (Egypt), Tunisiana (Tunisia)