Etisalat AnnualReport2014 English

Annual Report 2014Aspire Forward

Head Office:Etisalat BuildingIntersection of Zayed The 1st Street andSheikh Rashid Bin Saeed Al Maktoum StreetP.O. Box 3838Abu Dhabi, UAE

Regional Offices:Abu Dhabi, Dubai, Northern Emirates

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Table of contents

Key Highlights of 2014 02Business Snapshot 04Chairman’s Statement 06Board of Director’s 08Our Journey 10Chief Executive Officer’s Statement 12Management Team 14Etisalat Group Strategy 18key events of the year 20Operational Highlights 22Etisalat Group’s Footprint 26Management Review

Middle East 30Africa 38Asia 46

Awards 52Human Resorces 54Corporate Social Responsibility 56Corporate Governance 58 Independent Auditor’s Report to the Shareholders 60Consolidated Income Statement 62Consolidated Statement of Comprehensive Income 63Consolidated Statement of Financial Position 64Consolidated Statement of Changes in Equity 65Consolidated Statement of Cash Flows 66Notes to the Consolidated Financial Statements 67Notice of General Annual Shareholders Meeting 116

03Etisalat02 Annual Report 2014

Key highlights of 2014

169 Million Aggregate subscribers

48.8 AED Billion Revenue

23.4 AED Billion EBITDA

8.9 AED Billion Net Profit

8.9 AED Billion CAPEX

70 Fils Dividend per share

10 % Bonus share

Maroc Telecom Group welcome to the Etisalat Family


Aspire Forward Business Snapshot

Our aspiration is to be the leading and most admired emerging markets telecom group by pro-actively and consistently serving our customers with a common set of brand values based on innovation, customer centricity and building trusted relationships. The key pillars of our strategy reflect this desire. These pillars involve owning and managing an attractive well balanced portfolio of assets, providing differentiated, innovative service offerings that leverage our broadband infrastructure and networks and superior customer experience.

In line with our aspirations and strategy; in the past year Etisalat completed its acquisition of a 53% stake in Maroc Telecom. This acquisition marks the largest and most complex deal in the history of Etisalat. It is one of the largest cross-border Mergers & Acquisition transactions in the Middle East & North Africa region and it expands Etisalat’s reach from fifteen to nineteen markets. By combining our assets in West Africa under Maroc Telecom, we intend to establish the largest Franco-phone West Africa telecom Group.

Our business model is based on meeting our customers’ expectations. We aspire to achieve this through the continued investment in our networks and innovative service offerings to ensure we provide our customers with the best possible experience and to ensure that we continue with our practice of high cash generation so we can continue to reward our shareholders and

grow our business. We have sustained a generous dividend programme with close to AED 17 billion returned to shareholders in the past 3 years.

Over the years we have maintained a high level of capital expenditure to support wider coverage, higher speeds and greater capacity in our networks. With over 169 million customers, we are one of the fastest growing telecom operators with access to close to 0.8 billion people in the markets we operate in. The majority of our customers and the growing share of our mobile customers are in Africa and Asia. We believe that voice is still a growth area that we intend to tap into with the continued upgrade of our networks; however, primary focus is on securing leadership position in the more lucrative data segment. To that end, we have in the recent past invested in spectrum licences in Pakistan, Afghanistan, Benin and Cote D’Ivoire to support our push into mobile data services and to support future growth.

Our focus is on leveraging our technology platforms to deliver innovative products and services that offer both economic and social benefits to our customers. We aspire to transform the communities we operate in, be it through enhancing financial services access through products like ‘Flooz’, to healthcare and education. In the UAE; we continue to make great strides in technological advancements with over 85 percent of the population covered by LTE

and most recently we tested and deployed LTE-A as well as showcasing 5G at GITEX 2014.

Etisalat is committed to being a responsible global corporate citizen through strategic partnerships that enhance access to education and health care via use of technology. These efforts are contributing to bridging the gap in terms of access within the communities we serve, while generating impressive digital dividends in the form of jobs, economic growth and stability.

For nearly 40 years, Etisalat has helped the UAE sustain its position as the region’s hub for business, trade and foreign investment by providing reliable and high quality services. This was accomplished through Etisalat investment in advanced world class networks where both fibre-to-the-home (FTTH) and LTE roll-out exceeds 85% coverage of the population. Due to these investment UAE today demonstrates leadership in terms of regional technology, innovation and deployment and leads the world in terms of high-speed broadband penetration. The country enjoys one of the highest smartphone penetration rates in the world with over 75 per cent mobile consumers using smartphones. In the coming years, Etisalat will play a crucial role in driving innovative growth in the multi-billion dollar UAE telecom market, especially in the enterprise and government sectors.

Our business model is based on meeting our customers’ expectations through continued investment in our networks to support wider coverage, higher speeds and greater capacity, and to provide innovative service offerings

0706 Annual Report 2014

Innovation will continue to be at the heart of everything we do at Etisalat

Chairman’s Statement

As we look forward to the year ahead, it’s important to take stock of what an auspicious year 2014 was for Etisalat. 2014 was defined by being “future ready” – we experienced increased revenues and profits, as well as the number of subscribers, putting Etisalat in an excellent position to engage the opportunities and changing landscape of the coming year, even as the industry continues to evolve in a profound and challenging way.

It has become clear that the paradigm shift we detected at the outset of 2014 is now in full force. Telecommunications is becoming ever more present in more areas of life, and we strive to be at the forefront of transforming ICT from its current role as a set of service offerings to its future as a total customer experience, and to deliver access to as many people as possible. Our current success is a result of understanding the need our customers have to rely on Etisalat to deliver.

The aspirations we put forth at the start of 2014 have largely been realised – we accomplished impressive growth, and with this growth, fueled – and continue to fuel – innovation in the industry. Our long-held belief is that growth has to be accompanied by constant attention to the innovation that drives it. It is that synergy that is at the heart of our continued success, which will deliver an unmatched customer experience that will lead to future growth.

Etisalat’s financial results are a great benchmark of the aspirations set forth in the beginning of the year. In 2014, consolidated revenue grew by 26% to AED 48.8 billion, with net profit after Federal Royalty increasing to AED 8.9 billion, representing a 26% growth in the year. In line with our strategy to create value for our

shareholders, the Board has recommended a dividend distribution of 70 fils per share for the fiscal year 2014.

The milestone of acquiring Maroc Telecom – one of the largest in the region’s history – has added great value to Etisalat’s global footprint. This acquisition has allowed us to consolidate and begin to streamline services for millions across North and West Africa. As we aspire to be the leading emerging markets telecom provider, we view this acquisition as a critical investment in our long-term future in Africa.

We have already begun to realise not only the financial benefits, but also our ability to enact real, transformational change in local African communities through enabling small businesses to grow, create jobs, and deliver new innovative products and services that will in turn foster vast improvements in education, healthcare, and many other socially vital initiatives.

Our growth in these emerging markets secures long term success for Etisalat, building trust within these communities and allowing us to be the most reliable partner in these markets when the time comes to deliver the next round of technological achievements. This long-term commitment is what enables not only our current success, but strengthens our ability to prosper in the future.

Innovation will continue to be at the heart of everything we do. Being “future ready” means not only adapting to the changing landscape, but to continue being the agents of that change. For instance, the development of Smart Cities will come to define many functions of everyday life. Aware of this fact, we have been spearheading the development of 5G technology in order to position Etisalat as a

driver for the technology that will deliver the future of the industry.

2015 will be an important year in solidifying the growth and gains of 2014. As we move forward, Etisalat will continue to engage in bold yet prudent investments to generate value and profit for local communities and shareholders alike. As with any enterprise this large, challenges will arise. With so many working parts, it can sometimes be difficult act quickly to changes in the marketplace, even when one is looking to preempt them. Obstacles will emerge – however I am confident that, given our proven record of innovative solutions and the skill and professionalism of our teams across the Etisalat family, any challenges will be overcome.

I would like to express my gratitude to the leadership of the UAE, who have unwavering supported Etisalat in our journey to becoming one of the world’s leading telecommunications operators. And finally, most of all, I want to thank our customers, for continuing to engage our services with excitement and place their faith in us to deliver time and again.

2014 was a watershed year for Etisalat, having continued to establish ourselves as a leading telecom operator at the forefront of innovation. With the commitment of our world-class employees across 19 operations, the continued support of our investors, and the input and cooperation of our millions of subscribers, 2015 will no doubt continue this pattern of success.

Eissa Mohamed Al SuwaidiChairman - Etisalat Group

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Board of Directors

Eissa Mohamed Al SuwaidiChairmanInvestment & Finance Committee

Mohamed Hadi Ahmed Abdulla Al HussainiMemberInvestment & Finance Committee

Abdelmonem Bin EisaBin Nasser AlserkalMemberNomination & Remuneration Committee

Sheikh Ahmed Mohamed Sultan Bin Suroor Al DhaheriMemberAudit Committee

Shoaib Mir Hashim KhooryMemberNomination & Remuneration Committee

Abdulfattah Sayed Mansoor SharafMemberInvestment & Finance Committee

Khalaf Bin Ahmed Al OtaibaVice ChairmanMember-Investment & Finance Committee

Mubarak Rashed Al MansouriMemberNomination & Remuneration CommitteeInvestment & Finance Committee

Essa Abdulfattah KazimMemberChairman-Audit Committee

Abdulla Salem Al DhaheriMemberChairman-Nomination &Remuneration Committee

Hasan Al HosaniCorporate Secretary

Mana Mohamed Saeed Al MullaMemberAudit Committee

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1110 Annual Report 2013 Annual Report 2014

2000Etisalat introduces the E-Vision brand for its cable TV services.

1996Etisalat becomes one of the founding investors in satellite telecommunications provider, Thuraya.

2012Etisalat wins 3G license in Afghanistan and Ivory Coast and launches the first 3G services in Afghanistan.

2011Etisalat introduces 4G (LTE) experience to its customers in the UAE.

2005Etisalat acquires a stake and takes management control of PTCL, the incumbent fixed operator in Pakistan.

Etisalat expands into West Africa by taking a stake in Atlantique Telecom with operations in Benin, Burkina Faso, the Central African Republic, Gabon, Ivory Coast, Togo, and Niger.

1994The Middle East’s first GSM service is introduced in the UAE.

Etisalat launches Emirates Data Clearing House, now one of the world’s leading clearing houses - providing a complete solution to GSM operators to provide roaming facilities to their customers in turn.

1995Internet services are rolled out across the country, another first in the region.

2004Etisalat wins the second license to operate in Saudi Arabia, introducing Etihad Etisalat – Mobily.

Etisalat buys a stake in Canar; a fixed line operator in Sudan.

2008Etisalat completes the rollout of a nationwide fibre optic backbone over which next generation services will be provided in the UAE.

2014Etisalat completes acquisition of 53% shareholding in Maroc Telecom.

Etisalat successfully issued its inaugural bond under its Global Medium Term Note (GMTN) programme listed on the Irish Stock Exchange.

Etisalat signs SPA with Maroc Telecom for sale of Etisalat’s shareholding in Atlantique Telecoms.

2013Etisalat signed SPA with Vivendi to acquire Vivendi’s 53% stake in Maroc Telecom Group.

Etisalat Benin obtains a Universal Mobile Service License.

1999The Middle East’s first broadband Internet service using the latest ADSL technologies is introduced.

Etisalat buys stake in Tanzanian operator Zantel, its first step towards becoming a major international telecoms group.

2003Etisalat launches the Middle East’s first 3G network.

2007Etisalat acquires a stake in a green-field operator EMTS in Nigeria, the largest and fastest growing market in Africa.

2009Etisalat acquires Tigo, a Sri Lankan operator, which is later rebranded to Etisalat Lanka.

2006Etisalat wins the third mobile license in Egypt and launches the country’s first 3G network .

Etisalat awarded a license to provide mobile services in Afghanistan.

Etisalat Services Holding is formed to manage eight business units that offer mission-critical telecoms related services to the industry.

1976Emirates Telecommunication Corporation is founded.

1983The ownership structure changes with the United Arab Emirates government getting a 60% share in the company and the remaining 40% is publicly traded.

1982Emirates Telecommunications Corporation launches Middle East’s first mobile network.

Our Journey


The addition of Maroc Telecom Group to Etisalat family strengthens our portfolio

Building on the momentum established in 2013, last year’s achievements came to define Etisalat’s mantras of “growth” and “innovation.” Our expansion in North and West Africa, which increased our international presence to 19 markets across the MENA region, was accompanied by strong figures, revenue grew by 26% to AED 48.8 billion, along with continuance of steady growth for our operations in the UAE, and an accelerated effort to spearhead the development of 5G technology through leading global partnerships.

It is important to take stock of these successes and celebrate them.

In the UAE last year, we invested 2.5 billion AED in bringing 4G to its fullest potential. We remain the dominant force in the mobile industry as a result of our consistently innovative product and service offerings, coupled with competitive prices. However, it has been the realm of data and internet where we have really looked towards the future.

Etisalat has recognized that the rapid growth of data usage holds the key to success in our industry, and will be one of the principle drivers of ICT innovation going forward. New, transformative platforms such as M2M and mobile identities, as well as the digitization of traditional forms of information transfer, particularly video broadcast, are taking the industry to exciting new levels. This is where the future lies.

In 2014, in addition to further expanding our fiber-to-the-home (FTTH) network, we have actively worked towards establishing the digital infrastructure required for the ever-increasing data demands of the future. Part of this has been the introduction of cutting-edge technology; but it has also been our engagement in industry thought leadership – recognizing innovative paths that need to be taken for

the telecom sector to perform optimally to truly deliver for its customers.

Etisalat has not merely participated in these developments, but has been an initiator and enabler of them on regional and international levels. We are the first telco in the Middle East to introduce M2M technologies such as embedded SIMs to the marketplace. Moreover, we have engaged our peers and the industry at large, establishing partnerships with several global technology players, in order to build new, creative revenue streams and tackle industry obstacles in a dynamic and effective way. Etisalat will continue to explore integrating and regulating new platforms in ways that will benefit telcos, OTTs, and customers alike.

H.H. Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, President of the UAE, Ruler of Abu Dhabi and Commander of the Union Defence Force, has made the establishment Smart Cities across the UAE a priority. As our home market, we will continue to invest heavily in making this vision a reality across the UAE.

We have also taken H.H. Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai’s recent announcement to move 1,000 government services to the digital arena in the next three years as impetus for Etisalat to further develop the digital infrastructure necessary for the realization of the concept in the UAE.

2014 was also a game-changer for Etisalat internationally. We saw the addition of Maroc Telecom to the Etisalat family, and with its acquisition of Atlantic Telecom, the creation of a regional telecommunications block unrivaled on the African continent. Not only does this greatly strengthen our portfolio in Africa, but provides opportunity to revolutionize the ICT landscape in frontier markets.

Chief Executive Officer’s Statement

The delivery of affordable, accessible mobile technology is literally changing the lives of thousands of people in our African markets. Our mobile finance technology is providing people in remote and underdeveloped rural areas the ability to access the international banking system for the first time.

We will continue to focus on the unique experiences and situations of each individual market, providing the “next big thing” to each of our 19 national subscriber bases – whether that’s 5G in the UAE or nation-wide mobile data coverage in Niger. Success depends on having our finger on the pulse of each market’s individual requirements.

Ultimately, our ability to create value and profit is tied directly to our devotion to ambitious growth and cutting edge innovation. Our long-term success depends on our investment in long-term solutions. This is why Etisalat has invested in developing infrastructure that will serve shareholders, customers and markets alike for years to come.

We have a lot of work ahead of us – continuing to progress in 19 diverse markets at various levels up the technological ladder requires tenacity and creative thinking. But given the proven performance of Etisalat’s devoted employees, who are equipped with the talent and experience, and with the continued support of the UAE Government, our shareholders, and our customers, I have no doubt that we are up to the task.

Ahmad Abdulkarim JulfarChief Executive Officer - Etisalat Group

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Management Team

Serkan OkandanChief Financial Officer, Etisalat GroupMr. Okandan joined Etisalat in January 2012 as Chief Financial Officer of the Etisalat Group. Prior to his appointment, he was the Group Chief Financial Officer of Turkcell. Mr. Okandan started his professional career at PricewaterhouseCoopers in 1992, and worked for DHL and Frito Lay as a Financial Controller before joining Turkcell. Mr. Okandan is a board member and Chairman of the audit committee of Etisalat Nigeria, PTCL, Ufone, Etisalat Services Holding and a board and audit committee member of Maroc Telecom. Mr. Okandan graduated from Bosphorus University with a degree in Economics.

Dr. Daniel Ritz, Ph.DChief Strategy Officer, Etisalat GroupDaniel Ritz was appointed as Chief Strategy Officer for EG in February 2012. Prior to this appointment, he was the CSO at Swisscom Group where he held various positions including Board member of each of the Group’s Executive Board, Fastweb, Belgacom and Swisscom IT Services. He also served as Chairman of Swisscom’s Hospitality Services and as CEO of Swisscom (Central & Eastern Europe). Prior to joining Swisscom, he was a partner at BCG. Dr. Ritz also serves on the Board of Atlantique Telecom, Thuraya, Maroc Telecom, PTCL and Ufone. Dr. Ritz holds a Ph.D from the Hochschule St. Gallen in Switzerland.

Ahmad Abdulkarim JulfarChief Executive Officer- Etisalat GroupMr. Julfar was appointed as the CEO of the Etisalat Group in August 2011. Prior to this appointment, he was the Chief Operating Officer of EG. Mr. Julfar has more than 25 years’ experience in the telecommunication sector and has served in various management positions including General Manager of eCompany, ComTrust and Etisalat’s Dubai region. In addition, Mr. Julfar serves on the boards of Mobily, where he is the Chairman of the Risk Management committee, Etisalat Misr, Maroc Telecom and Etisalat Services Holding. Mr. Julfar holds Bachelor’s Degrees in Civil Engineering and Computer Science from the USA.

Saleh Al Abdooli Chief Executive Officer, Etisalat UAEEngineer Saleh Al Abdooli was appointed as Chief Executive Officer of Etisalat UAE in April 2012. A strong and charismatic leader, Saleh rose to international fame after his resounding success in Egypt as the CEO of Etisalat Misr. He built and launched the first 3G operator in Egypt in 7 months. In less than five years, he achieved 27% of revenue share, 28% market share, 36% EBITDA margin, and 99% 2G/3G coverage. Al Abdooli holds Bachelor’s and Master’s in Electrical Eng. and Telecom from University of Colorado at Boulder, USA.

Abdeslam AhizouneChairman of the Management Board, Maroc TelecomMr. Ahizoune has been Chairman of the Maroc Telecom Management Board since February 2001 and served as CEO from 1998 to 2001. Earlier, he was Minister of Telecommunications in four different governments. Mr. Ahizoune has been Chairman of the Moroccan Royal Athletics Federation since 2006, and also serves as a board member of several foundations: Inter Alia; King Mohammed V for solidarity; King Mohammed VI for the environmental protection, and Princess Lalla Salma against cancer. He is also the Vice-President of CGEM and the President of its Moroccan-Emirati economic commission. He holds an engineering degree from Télécom ParisTech.

Saeed Al HamliChief Executive Officer, Etisalat MisrMr. Al Hamli was appointed as Chief Executive Officer of Etisalat Misr in April 2012. Prior to this role, he was the Chief Executive Officer of Etisalat Afghanistan since 2007. Mr. Al Hamli has more than 20 years of experience at Etisalat and Thuraya where he was the Chief Commercial Officer before moving to Afghanistan. Mr. Al Hamli also serves on the board of Etisalat Misr. Mr. Saeed holds a Bachelor’s of Science degree in Electrical Engineering from USA and Executive Master’s of Business Administration degree from the American University of Sharjah.

Abdulaziz Al SawalehChief Human Resources Officer, Etisalat GroupMr. Al Sawaleh is the Chief Human Resources Officer (CHRO) of the Etisalat Group. Prior to this position, he was the CHRO of Etisalat UAE. Mr. Al Sawaleh has more than 25 years’ experience in various leadership positions. He is responsible for leading the global Human Capital strategies including the areas of talent development, organization effectiveness, compensation & benefits and Performance Management. He is a board member of Atlantique Telecom, Etisalat Nigeria and Etisalat Services Holding. Mr. Al Sawaleh holds an MBA degree in Global Leadership Management from UAE University and a BBA degree from the USA.

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Rainer RathgeberChief Commercial Officer, Etisalat GroupRainer Rathgeber was appointed as Chief Commercial Officer of EG in January 2013. Prior to joining Etisalat, he was Senior Vice President of Marketing in Europe of the OTE Group. Mr. Rathgeber joined Deutsche Telekom in 2002 as Head of Strategy for T-Mobile Germany, and Executive Vice President of Sales and Service Strategy for T-Mobile International. He then went on to serve in various positions including Executive Vice President of Market Management for T-Mobile International, CEO of T-Mobile Croatia and Member of the Executive Management Committee of T-Mobile International. Mr. Rathgeber is a board member of Etisalat Nigeria, PTCL and Ufone. Mr. Rathgeber holds a Diplom-Kaufmann Degree in Economics.


Khalifa Al ShamsiChief Digital Services Officer, Etisalat GroupKhalifa Al Shamsi was appointed as Chief Digital Services Officer of the EG in 2012. Prior to this role, Mr. Al Shamsi held the position of Senior Vice President of Technology Strategy of the Etisalat Group. Since joining Etisalat in 1993, Mr. Al Shamsi has held various key senior positions including Vice President and Senior Vice President of Marketing of Etisalat UAE. Mr. Al Shamsi serves on the Boards of Etisalat Afghanistan, Mobily and E-vision. Mr. Al Shamsi has a Bachelor’s degree in Electrical Engineering from the University of Kentucky, USA.

Dr. Kamal Shehadi, PhDChief Legal & Regulatory Officer, Etisalat GroupKamal Shehadi was appointed as Chief Legal & Regulatory Officer of EG in November 2012. He Joined Etisalat in 2010 as Head of the Regulatory Department. Prior to that, Dr. Shehadi was the Chairman and CEO of TRA, Lebanon. He has more than 17 years of experience in consulting and advisory services for telecom regulatory authorities and telecom service providers. Dr. Shehadi serves on the board of Atlantique Telecom. Dr. Shehadi has a B.A. in Economics from Harvard University and a PhD in International Political Economy from Columbia University, USA.

Obaid Bokisha Chief Procurement Officer, Etisalat GroupObaid Bokisha was appointed as Chief Procurement Officer of the EG in June 2012. Since joining Etisalat, he was assigned various responsibilities contributed to the network implementation of all existing systems covering GSM, UMTS, LTE and WiFi networks. Positions held include Vice President Mobile Networks Planning & Int’l Support of Etisalat UAE and Senior Vice President – Mobile Networks Optimization EG.Mr. Bokisha serves on the board of Canar, Zantel and Etisalat Nigeria. Mr. Bokisha has a degree in Communications Engineering from the Etisalat College of Engineering.

Management Team

John WilkesChief Internal Control Officer, Etisalat GroupJohn Wilkes was appointed as the Chief Internal Control Officer for EG in January 2013. Prior to this, Mr. Wilkes was the General Manager of Risk & Supply Chain of the Vodafone Hutchison Company. He has more than 24 years of experience in companies such as KPMG Air in New Zealand where he was the Group Internal Auditor and Stockland in Australia where he held the position of Chief Risk Officer. Mr. Wilkes is a qualified chartered accountant.

Hatem Bamatraf Chief Technology Officer at Etisalat Group Mr. Hatem Bamatraf was appointed Chief Technology Officer at Etisalat Group in September 2013. Prior to this position he was the Executive Vice President of Enterprise Business at Du. Hatem began his professional career in 1995 at Etisalat and was seconded to Mobily in 2004 as Director of Mobile Network Development in the Central Region, KSA. Mr. Bamatraf serves on the boards of Etisalat Afghanistan and Etisalat Sri Lanka. He graduated from the Etisalat College of Engineering and holds a bachelor’s degree in Engineering. He has been recognised by Global Telecom Business as one of the 40 under 40 telecom leaders in the world.

Javier GarciaChief Internal Auditor, Etisalat GroupJavier Garcia joined Etisalat in December 2012 as Chief Internal Auditor of the EG. Mr. Garcia was the head of Internal Audit at Telefonica Group before joining Etisalat. He held various positions with Telefonica including Business Process Audit Director and Vice President of Internal Audit (Chile) before becoming the Group Head of Internal Audit. Mr. Garcia serves on the audit committees of Maroc Telecom, PTCL and Ufone. Mr. Garcia holds a Bachelor’s in Economics and a Master’s in Financial Markets from the Autonomous University of Madrid.

Etisalat


Vision, Mission and Strategic Pillars

Vision

Mission

To be the leading and most admired emerging markets telecom group

• Provide best in class total customer experience for retail and business

• Deliver attractive returns to shareholders while investing in the company’s long term future

• Support economic development and job creation through ICT & socially responsible behavior

Strategic

Pillars

Service offering

Operational Excellence

Customer Experience

One Company

Portfolio

People & culture

19Etisalat

The Middle East, Africa and Asia continue to present strong growth opportunities for the telecom industry. Marked by its diversity, Etisalat’s footprint includes markets where people are experiencing the internet for the first time on mobile networks, while in others FTTx and 4G is fast becoming a widespread technology. Yet there is a common theme. Fuelled by the rollout of advanced networks and increasingly affordable smartphones and other data-enabled devices, demand for high quality data and voice networks and an array of data-driven consumer and business services continues to increase and support the overall growth of the telecom industry in all of Etisalat’s markets of operation.

As the industry evolves, Etisalat continues to position itself at the heart of change and to stay ahead of the challenges presented. Across its footprint, Etisalat Group’s vision, mission and corporate strategy remain valid. In 2014, Etisalat has not only made important progress in the journey of execution of its corporate strategy, but has also increased its focus on two sectors, ICT and Content. It believes this focus is vital to achieving its strategic objectives and adapting to the changing dynamics of customer demand. The areas of ICT and Content both play increasingly important roles for Etisalat, representing vital value-driven services with which it can provide a holistic and differentiated offering to its consumer and business customers, as well as monetizing the investments made in its high quality broadband networks.

Service Offering

Etisalat maintains its commitment to providing a differentiated and innovative service offering, defined by the individual needs of the markets in which it operates. Whilst not overlooking the vital importance of voice for Etisalat’s customers, the recent focus on data-driven services has enabled significant growth in data revenues across its operations. Etisalat has also increased its share of the business segment by securing major regional Multi-National Company (MNC) accounts and providing an increasingly wide range of tailored propositions to suit Enterprise and SME needs. The growing focus on Information and communications technology (ICT), particularly in key markets such as the UAE and Saudi Arabia, will continue to help drive growth in this area. In digital services, Etisalat’s

revenues continue to show encouraging growth through enhanced offerings and widened reach. Etisalat’s m-commerce service, for example, extends to 12 countries with a wide range of functionalities and services. In addition, M2M services have been launched in several key markets within Etisalat’s footprint and a unified cloud platform is currently being deployed across all major operating companies.

Customer Experience

In 2014, Etisalat continued to enhance the level of customer experience it provides across all touch points. In addition to an expanding portfolio of direct distribution channels consisting of an increasing number of flagship stores, Etisalat’s customer-value-management systems have also supported continuous improvements in customer experience. Through customer insights and data analytics, Etisalat is proud today that it understands its customers better than ever, and is able to offer products and services which effectively reflect their requirements. Finally, multiple technology enhancements have benefited customers, including the deployment of LTE Advanced technology in the UAE and the rollout of 3G services in Pakistan, Ivory Coast and Benin, which have all continued to ensure that Etisalat offers the highest level of network quality to its customers.

Operational Excellence

While maintaining its position as one of the highest margin players in the telecom industry, Etisalat nevertheless continuously strives to improve efficiency. Over the last year, significant savings have been generated as a result of Etisalat’s initiatives in procurement, which will continue to improve still further as a result of the company’s growing scale. Etisalat’s focus on operational efficiency has also included cost optimisation measures in the UAE, Egypt and Nigeria which have helped sustain its high margins overall. In addition, Etisalat has been working to optimize its capital structure through several initiatives, that included the issuance of its inaugural bond worth USD 4.2 billion in June 2014.

Portfolio

2014 has been a very active year for Etisalat’s portfolio. In line with the investment guidelines defined by its corporate strategy, Etisalat has cemented its strong position in the Middle East

Etisalat Group Strategy Achievements

and Africa through the acquisition of a 53% stake in Maroc Telecom in May 2014. Maroc Telecom is the incumbent telecom operator in Morocco and owns controlling stakes in the incumbents in four French-speaking West African countries (Burkina Faso, Mali, Mauritania and Gabon). Each of these companies boasts an integrated fixed and mobile operation, as well as number one positioning in most markets, with the combined entity providing strong synergies for Etisalat Group. In addition, Etisalat and Maroc Telecom also signed a Share Purchase Agreement for the sale of Etisalat’s shareholding in operations in Benin, Central African Republic, Gabon, Ivory Coast, Niger and Togo. In parallel, Etisalat continues to assess potential opportunities to improve positioning and create value across its footprint, such as the tower sale and leaseback transaction realized between Etisalat Nigeria and IHS.

One Company

Etisalat continues to believe that significant value can be created for a large organization by operating consistently across the portfolio with a common set of processes and systems. In 2014, many important improvements have been made in this regard. In addition to the substantial financial synergies brought about by leveraging Etisalat’s economies of scale, the company has also placed strong emphasis on deploying various Group-wide programs to enhance consistency and collaboration. Such programs include the deployment of regulatory compliance systems and the identification and resolution of revenue leakage across the group. In the future, these programs will also be extended to Maroc Telecom.

People & Culture

Etisalat recognizes that people are one of its most important assets. As such, it continues to deliver on its objectives in this regard to strengthen the company’s leadership, empower its employees and focus on execution. Talent development initiatives such as the Top 100 Talent and High Potential Program, have been enhanced this year, and our survey results indicate that employee engagement in the organization continues to rise. As an indicator of the strength of Etisalat’s management, several key management positions in our operating companies in Nigeria, Sri Lanka, Ivory Coast, Canar and Tanzania have been supplied with internal resources.

Etisalat continues to make important progress in execution of its corporate strategy, focused on ICT & Content


Key events of the year

April 2014Ufone acquires 3G licence

Ufone was one of 4 mobile operators in Pakistan to bid in the country’s initial 3G auction. Ufone; a wholly owned subsidiary of PTCL was allocated 5 MHz band on 2100 MHz band.

Accelerating interoperable mobile money service

Etisalat partners with 8 other telecom operators to accelerate the implementation of interoperable mobile money services across 48 countries in Africa and Middle East. This is part of the GSMA Mobile Money Interoperability programme.

May 2014Acquisition of 53% of Maroc Telecom

Etisalat successfully completes acquisition of 53% shareholding in Maroc Telecom for a final consideration of € 4.138 billion. Additionally, Etisalat and Maroc Telecom sign a Share Purchase Agreement (SPA) for sale of Etisalat’s shareholding in French-speaking operations in West Africa (Benin, the Central African Republic, Gabon, the Ivory Coast, Niger, Togo and Prestige Telecom). These transactions will establish the largest Franco-phone West Africa telecom cluster.

June 2014US$ 7 billion Global Medium Term Note Programme

Etisalat lists its US$ 7 billion GMTN on the Irish Stock Exchange and issues 4 bond tranches consisting of: 5-year tranche (US$ 500 million), 7-year tranche (€ 1.2 billion), 10-year tranche (US$ 500 million) and 12-year tranche (€ 1.2 billion). This bond issue is the biggest corporate issue ever in the region.

Etisalat Credit Ratings

Credit Ratings Agencies S&P, Fitch and Moody’s affirm Etisalat high credit Ratings at AA-/A+/Aa3 with stable outlook. S&P at the same time affirmed the ‘AA-’ senior unsecured debt ratings on Etisalat’s US$7 billion GMTN program.

August 2014Etisalat Nigeria and IHS sign tower sale & lease back agreement

Etisalat Nigeria signs sales and leaseback agreement with IHS Holding Limited as part of its strategy to drive improvement in the quality of network performance and to accelerate roll out of 2G and 3G coverage and new services to its customers. The transaction is the first by a major GSM operator in Nigeria.

October 2014Etisalat’s Mobile Network First In The Region To Begin Upgrades To 700 Mbps 4g LTE Tri-Band Carrier Aggregation Technology

Etisalat has tested and started a phased upgrade of it its network to the futuristic 4G Advanced (LTE-A) tri-band technology based on carrier aggregation technology, for the first time in the region. A live testing on the network was successfully concluded, making way for ultra-speeds of 700Mbps mobile broadband connectivity and ensuring network readiness once handsets are commercially available.

Etisalat showcases 5G mobile broadband at Gitex

Etisalat and Huawei have jointly showcased 5G mobile broadband services at Gitex Technology Week in Dubai. This is the first time 5G technology has been presented in the region. The demonstration showcased an 115 Gbps data transmission rate capability, which is faster than current mobile networks. An increase of capability will support the connection requirements for the Internet of Things, 4D film, MirrorSys and Vehicular Telematics.

December 2014Etisalat Group CEO elected as GSMA’ Deputy Chair

The GSMA Board has elected Ahmad Abdulkarim Julfar, CEO of Etisalat Group as Deputy Chair for a two-year period from January 2015 through December 2016. The newly elected board will oversee the strategic direction of the organisation, which represents nearly 800 of the world’s mobile operators, as well as more than 250 companies in the broader mobile ecosystem.


SubscribersEtisalat Group aggregate subscribers grew by 14% on an annual basis to 169 million in 2014. The net addition of 21 million subscribers in the year was mainly a factor of the consolidation of Maroc Telecom as well as good subscriber growth in the UAE and Nigeria.

In the UAE, the active subscriber base grew to 11.0 million subscribers from 8.4 million in 2013, representing year on year growth of 6%. Subscriber growth was mainly driven by strong growth in the mobile and eLife segments. The mobile subscriber base grew year on year by 7% to over 9.0 million subscribers representing a net addition of 0.6 million subscribers of which 34% was in the high quality postpaid segment. Fixed line subscriber segment contracted 5% year on year as we continued our efforts to migrate subscribers to the eLife segment

Delivered Strong Operational and Financial Performance

that continued to drive consistent growth with 16% year on year increase. Total broadband segment grew by 8% year on year to 1.0 million subscribers.

In the International operations, Nigeria evidenced strong subscriber growth in the year with year over year growth of 24% by adding 4.1 million net additions and closing the year with 21.1 million subscribers. In Pakistan, subscriber base declined by 7% year over year to 26.3 million impacted by the subscriber registration exercise mandated by the industry regulator and the intense competitiveness of the mobile segment. For Maroc Telecom the subscriber base exceeded 40 million customers as at 31 December 2014, representing a year over year growth of 8%. This growth is mainly attributable to international operations that grew by 17%.

RevenuesEtisalat Group’s full year consolidated revenue increased year on year by 26% to AED 48.8 billion driven by strong performance of domestic operations and the consolidation of Maroc Telecom operations. In the UAE, revenue increased 9% to AED 27.1 billion, as a result of growth of the subscriber base with increased bundled propositions (voice and data) to consumer and enterprise segments. In addition, we witnessed significant increase in handset sales benefiting from new product launch such as iPhone6.

International consolidated operations was impacted by the consolidation of Maroc Telecom Group and discontinued operations of one of our subsidiaries. Full

year revenue grew year-on-year by 55% resulting in 44% contribution to Group revenue up from 35% for the full year 2013. In Egypt, revenue for 2014 was AED 4.8 billion, increasing by 2% from the prior year mainly attributed to growth in the data segment.

In Pakistan, revenue for 2014 was AED 4.7 billion, a decline of 1% from the prior year on falling international incoming traffic that was not fully compensated by the strong performance of the fixed and wireless broadband.

Our results benefited from the consolidation of Maroc Telecom Group financials effective May 2014.

Operational Highlights

Net Profit and EPSConsolidated net profit after Federal Royalty increased by 26% to AED 8.9 billion resulting in profit margin of 18%. The increase in profit is attributed to higher EBITDA level, lower royalty and impairment charges that was partially offset by higher depreciation and amortization expenses, lower share of results of associates, higher finance costs and forex losses.

Earnings per share (EPS) amounted to AED 1.12 for the full year of 2014. On 25th of

EBITDAGroup consolidated EBITDA grew to AED 23.4 billion representing a year-over-year growth of 24% in 2014, while EBITDA margin declined 1 point to 48%. EBITDA growth was mainly due to consolidation of Maroc Telecom operations and continued strong growth in the domestic operations. EBITDA margin was impacted by a number of one-offs related to Voluntary Separation Scheme in Pakistan, provisions for disputes on interconnection rates in Egypt and provisions for bad debts and tax audits in other operations.

In the UAE, EBITDA in 2014 increased by 6% to AED 15.0 billion resulting in EBITDA margin of 55%. EBITDA growth is due to higher revenue growth while EBITDA margin was slightly lower year over year due to change in revenue mix and higher

marketing expenses and interconnect costs.

EBITDA of international consolidated operations in 2014 increased by 107% to AED 8.4 billion contributing 36% to Group Consolidated EBITDA. In Egypt EBITDA for the full year was AED 1.8 billion with an EBITDA margin of 37%, 3 points higher than 2013. In Pakistan, EBITDA for the full year declined year over year by 25% to AED 1.3 billion with EBITDA margin declining by 9 points to 27%. This decline is mainly attributed to a one-off provision related to the Voluntary Separation Scheme (VSS). Adjusting for this item, EBITDA margin would have been 33%, slightly lower than the prior year. EBITDA of international operations benefited from the consolidation of the results of Maroc Telecom Group effective from May 2014.

February 2014 the Board of Directors has resolved to propose a final dividend for the second half of 2014 at the rate of 35 fils per share, bringing the full year dividend to 70 fils per share. In addition, the Board of Directors has proposed a 10% bonus share. This proposal is subject to shareholder approval at the Annual General Meeting scheduled for the 24th March 2015.

16918.9

23.4

148

48.8 billion

38.9

billio

n

90

2013 2014

112

7.18.9

Revenues(AED Bn)

EBITDA (AED Bn)

Net Profit (AED Bn) EPS (Fils)


CAPEXConsolidated capital expenditure increased by 41% to AED 8.9 billion resulting in capital intensity ratio of 18% compared to 16% in the prior year. This increase in capital spending is impacted by the 3G license acquisition and 2G license renewals in Pakistan and consolidation of Maroc Telecom. Adjusting for these items, capital expenditure would have been AED 5.8 billion and capital intensity ratio 14%.

In the UAE, capital expenditure in 2014 increased by 25% to AED 2.5 billion while capital intensity ratio increased 1 point to 9%. Capital expenditure was committed to mobile network modernization and coverage improvement in addition to FTTH/

DEBTTotal consolidated debt amounted to AED 22.2 billion as of December 2014, as compared to AED 5.9 billion as at 31 December 2013; an increase of AED 16.4 billion reflecting primarily the issuance of bonds to finance the acquisition of 53% stake in Maroc Telecom and the first-time consolidation of Maroc Telecom’s results.

Consolidated debt breakdown by operations as of 31 December 2014 is as following:

• Etisalat Group (AED 14.2 billion)

• Maroc Telecom (AED 1.9 billion)

• Etisalat Misr (AED 1.5 billion)

eLife deployments to improve footprint.

Capital expenditure in consolidated international operations amounted to AED 6.3 billion, an increase of 48% from year 2013 level. In Egypt, capital expenditure exceeded AED 1.0 billion resulting in a capital intensity ratio of 21%. Capital spending focused on capacity enhancement to address the increased demand for data. Pakistan operations capital expenditure was AED 3.0 billion, up 113% year on year and capital intensity ratio of 63%. Adjusting for the 3G license acquisition and 2G license renewal, capital intensity ratio would have been 32%.

• PTCL Group (AED 1.5 billion)

• Etisalat Afghanistan (AED 1.5 billion)

• Atlantique Telecom (AED 1.4 billion)

• Etisalat Sri Lanka (AED 0.3 billion)

57% of the debt balance is of long-term maturity that is due beyond 2017.

Consolidated cash balance amounted to AED 18.6 billion as of 31 December 2014 leading to a net debt position of AED 3.7 billion.

Currency mix for external borrowings is 52% in Euros, 23% in US Dollars, 5% in Egyptian Pounds and 20% in various currencies.

Operational Highlights

Profit and Loss Summary

(AED m) FY’13 FY’14

Revenue 38,564 48,767

EBITDA 18,901 23,365

EBITDA Margin 49% 48%

Federal Royalty 6,115 5,333

Net Profit 7,078 8,892

Net Profit Margin 18% 18%

Balance Sheet Summary


Cash & Cash Equivalents 15,450 18,543

Total Assets 85,716 129,585

Total Debt 5,872 22,229

Net Cash 9,579 (3,686)

Total Equity 49,593 60,927

Cash flow Summary


Operating 12,974 17,209

Investing (4,854) (24,102)

Financing (6,585) 9,162

Net change in cash 1,535 2,268

Effect of FX rate changes (19) 834

Ending cash balance 15,450 18,552

6.3 8.9

CAPEX (AED Bn)

5.9

22.2

DEBT (AED Bn)


Mauritania MaliNiger

Cote D’ivoire

Nigeria

GabonBenin

Burkina Faso

Egypt

Togo

Sudan

Saudi ArabiaUnited Arab Emirates

Afghanistan

Pakistan

Tanzania

Sri Lanka

Morocco

Central Africa

Etisalat Group’s Footprint

Etihad Etisalat (Mobily)Saudi Arabia

Mobile & Interent28%31186%Mobile 399%

Etisalat MisrEgypt

Mobile & Interent66%85116%Mobile 399%

EtisalatUnited Arab Emirates

Mobile, Fixed and Internet100%9Mobile 191% Fixed 25%2100%

Thuraya

Satellite Telecommunication

28%

Satellite 4140 countries

OperatorCountry

Licence Type:Etisalat OwnershipPopulation: (million)PenetrationNumber of operatorsNetwork Coverage, population

OperatorCountry

Licence Type:Etisalat OwnershipPopulation: (million)PenetrationNumber of operatorsNetwork Coverage, population

Middle EastRegionsAtlantique Telecom, MoovWest Africa

Mobile100%6674%Mobile 2-6 per country59%

CanarSudan

Fixed90%341%Fixed 231%

Africa AsiaEtisalatNigeria

Mobile

40%

17472%Mobile 582%

ZantelTanzania

Mobile and Fixed

85%

51 62%Mobile 6, Fixed 245%

Maroc Telecom GroupMorocco & West AFrica

Mobile, Fixed & Internet

53%

73 122%Mobile 3-4 / country-

PTCL/UfonePakistan

Mobile, Fixed and Internet23%186Mobile: 78% Fixed: 3%Mobile 5, Fixed 1177%

EtisalatSri Lanka

Mobile100%21126%Mobile 598%

EtisalatAfghanistan

Mobile100%3180%Mobile 478%

Middle East


Middle EastEtisalat UAE

allowance. Introduction of new 3GB and 10GB tiers, were key developments in supporting a strong revenue growth and contributing to a better customer experience by avoiding bill shock issues. Business DataShare was launched for the first time in the region, allowing business users to share one pool of data with multiple users and stay online and connected while in the office or on the go.

Also fundamental to mobile data growth, was the significant expansion of Etisalat UAE’s smart devices portfolio and the launch of affordable smartphones to incentivise migration to 3G. By offering smartphones and tablets from all major vendors and mobile operating systems, Etisalat has reaffirmed its position as the operator of choice for smart devices.

Etisalat has had strong revenue growth in its fixed business in 2014, validating the strategic investment in FTTH and reconfirming Etisalat global leadership in fibre adoption. With the revamping of eLife packages with an increased focus on content segmentation, competitive pricing and the expansion of the eLife ON multiscreen service, there has been a strong adoption of eLife packages with more than 16% increase in customers. Additionally, the launch of Smart Home solutions and online gaming has cemented Etisalat’s position as the key enabler of home entertainment and automation in the UAE.

The IPTV Customer base is now close to half a million customers, and the OTT Customer base increased by 205,000 with 17 new E-Hospitality Bulk IPTV customers. In addition the IPTV platform was upgraded to support new features and applications

In 2014, Etisalat reinforced its leadership position in the UAE market, driven by its customer-centric strategy built around differentiation, value for money, innovation and user experience; while leveraging the capacity of its best in class LTE and FTTH network, data centres, smart hub, country-wide coverage, and expanded footprint.

Having a balanced view on market realities and future prospects, allowed us to drive our revenue profile towards data, resulting in data revenues constituting 30% of mobile service revenue.

During the year, Etisalat launched several segmented propositions that have been instrumental to capturing additional growth pockets. For the mobile sector, Etisalat has focussed on targeted, highly diversified and ‘value for money’ propositions including the introduction of ‘FIVE’ – a sub brand that has become the preferred option for customers that value low tariffs, per second billing and the most competitive pricing for international calls. For postpaid customers we have launched several new and enhanced mobile service packages that offered ‘value for money’, flexibility and pricing transparency, among which was the flagship business postpaid mobile package Business Ultimate designed to cater to the specific needs of SMBs and large enterprises.

In the mobile data space Etisalat introduced several innovative propositions including Family Pack; the first consumer shared data plan in the UAE; the Global Data Plan - first in the region with local and roaming data and unlimited Wi-Fi worldwide; and Data Boosters a product that allows customers to temporarily extend their mobile data

for high level TV entertainment with a new system implemented to measure and monitor quality of service. The OTT Platform expanded to support 400,000 customer capacity and 25 new features were launched for both iOS & Android devices.

The business landscape is rapidly changing and high-speed broadband connectivity is becoming a crucial requirement for increased business productivity and profitability. In 2014, Etisalat offered free broadband speed upgrades of up to 2.5 times to Business customers, that provided faster and extremely reliable fixed-line Internet connections.

To address the needs of SMBs, who form the foundation of UAE’s economic growth, Etisalat launched Business Quick Start – the first in a series of integrated Business in a Box solutions that offer SMBs high-speed fixed broadband Internet, free voice minutes and a free smart device on a single, converged bill. A dedicated, state-of-the-art call centre for SMB customers has been launched that serves more than 72,000 SMBs and offers convenient and comprehensive ICT services and support, allowing SMBs to focus on their core competencies. Etisalat also partnered with a number of strategic business hubs - including Ajman, Fujairah and Ras Al Khaimah Free Zones, and the Abu Dhabi Department of Economic Development - to provide an improved telecom and ICT service experience. These partnerships aim at making it convenient and easy for businesses to set up in the UAE, increase SMBs competitiveness and position UAE high on the IT readiness and competitiveness index.

Management Review

Etisalat launched its new Tier III Data Centre in Abu Dhabi to meet the region’s rapidly growing demand for advanced data and managed services, and leverage the UAE’s strategic position as a regional business hub. It offers hosting and cloud services including, collocation, hot seats, Storage-as-a-Service, Backup-as-a-Service, Managed Services and public, private & hybrid cloud computing. It also includes a round-the-clock, dedicated network operations centre with an onsite support team.

Etisalat launched its Smart Security and Surveillance solution, the first of its kind in the UAE. This is a fully managed security solution that provides customers with a powerful way of monitoring their assets and supports them in the expedient response to theft, vandalism, accidents, pilferage and unauthorized access. Etisalat also expanded its managed security services portfolio, offering a firewall/Unified Threat Management service, which includes firewall, antivirus and anti-spam services, content filtering and VPN capabilities. This service provides enterprises both ‘on premise’ and ‘in cloud’ options offering end-to-end management, monitoring and maintenance services to help businesses better protect their infrastructure against evolving threats.

Etisalat significantly expanded its exposure and presence in digital and social networks. The company now has carrier billing agreements with all the major open mobile app marketplaces, benefiting from the development of digital services by third parties and OTT players. Etisalat also launched a self-service mobile app, available in all major mobile operating systems. With the Etisalat UAE mobile app

customers now have a more convenient way to subscribe to services, check their balance, pay their bills or recharge a prepaid line.

Etisalat UAE extended its global LTE roaming to 40 new international destinations, and its roaming networks to 723 partners in 207 countries, while launching its Smarthub IPX with 14 major global peering agreements and launching the Smarthub IX as a national internet exchange.

In 2014, Etisalat UAE has continued its commitment to customer experience by significantly expanding its footprint through increased points-of-sale and the roll-out of its Smart shops. Etisalat also expanded its indirect channels with eight “shop-in-shops” installed in major partner retailers, and six new franchise locations established to increase customer convenience. To increase brand awareness Etisalat is rebranding independent reseller shops and participated in major commercial events such as the Ramadan Night Market, GITEX Shopper and Global Village. With this expansion, indirect channels completed almost 4 million customer interactions in 2014.

Etisalat UAE’s infrastructure and network will assure our leadership in the ICT and digital arena. To maintain a forward-looking perspective, mandates the continued investment in network transformation to improve customer experience, enhance operational efficiency and support new offerings that require higher capacity.

Etisalat significantly improved the mobile broadband Customer Experience with a multiple of initiatives, including the launch of LTE Advanced and use of six carriers

on the network. These initiatives elevated Etisalat to position two worldwide in Mobile Broadband ranking as per MBB World Ranking. LTE coverage was also enhanced to cover 90% of populated areas across UAE, leading to a traffic increase of 18%.

As part of the modernization efforts, Etisalat upgraded more than 3,648 sites with state-of-the-art single RAN technology resulting in improved broadband speeds and higher capacity to cater for increased traffic. The Fiber to Mobile Network (FTTM) was enhanced by adding 3,500 additional links for mobile network modernization & additional 1,900 links for expansion purposes. Additionally, over 70,000 voice customers and over 28,000 internet customers were offloaded from legacy equipment further enhancing customer experience on our network.

Moving Forward

Moving forward, Etisalat UAE will continue its leadership journey through well-structured strategies that adapt to changes in consumer behaviours, industry dynamics, and intensifying competition. We remain focused on our key strategic pillars that evolve around customer experience excellence, data verticals, ICT and digital services, superb government partnership, strong Emirati brand and engaged staff.

Customer experience excellence, data verticals, ICT and digital services, superb government partnership, building a strong Emirati brand and engaged staff are our key strategic pillars


Middle East Mobily

refocused on this target group through the relaunch of our Fallah brand. Our Fallah Youth Programme engages with the youth through specialised apps and social media. Fallah has been instrumental in the growth of our youth customer base and this growth momentum has been sustained through additional products introduced throughout the year, coupled with community activities and our team of youth ambassadors.

Mobily constantly evolved its data leadership position by introducing an enhanced version of data packages focused on volume based offering with higher speeds and better customer experience. Mobily also launched digital advertising platforms, location based advertising, and missed call notifications advertising. We were also the first to introduce a telesales-based stimulation programme comprising over 300 agents, targeting our mid and high value customers.

In addition, Mobily maintained its position in being the first operator in Saudi Arabia to introduce latest smart devices: Samsung Galaxy S5, Note and Alpha; HTC M8; Sony Z2 and Z3; Lumia, and LG G Flex.

Since inception Mobily evolved as a market leader in the mobile and fixed broadband segments through first-to-market innovations and launch of several new concepts. 2014 has been an eventful year for the company following the revamping of market segmentation process that resulted in a more focused approach.

This change in the market segmentation approach included the introduction of segment specific value propositions. As a result, Mobily’s mid and high value segments benefitted from improved postpaid voice plans offering, an enhanced Raqi and Wajid service resulting in double-digit growth in Wajid postpaid revenue during the year. Our prepaid platform enjoyed our Prime bundle offers, which were introduced in Saudi Arabia for the first time. Additionally we shifted the focus of our international segment, which predominantly caters to expatriates, to prepaid plans for Hajj, Umrah as well as Embassy activities.

Another important segment that Mobily targeted was the 15- to 25-year-old youth demographic. During the year, we

We secured an exclusive partnership with UEFA and HTC until 2015 whereby we are able to engage with our football-loving customers for all UEFA-related activities. We further capitalised on our long standing partnerships with device manufacturers to showcase exclusive launches such as the UEFA engagement for our Fallah customers and the LG G Flex’s unique product offer to our RAQI subscribers.

Mobily’s holistic end-to-end approach during the World Cup 2014 resulted in a number of dedicated offers for our value customers as well as data subscribers. Furthermore, we effectively leveraged our online and on-ground activities for our youth segment resulting in our highest ever viewership and subscriber numbers across our social media channels.

Finally, in 2014, Mobily continued to offer a world-class working environment for its employee and added a success in the field of human resources after being awarded the Best Employer Brands Award 2014 for the GCC countries and the MENA HR Certificate of Excellence.

Management ReviewMiddle East Etisalat Egypt

Etisalat Misr continued to capitalize on its successful e-commerce product, flous with the launch of a virtual credit card, becoming the first mobile operator to launch such service in the MENA region. This pioneering service enhanced Etisalat Misr’s competitive advantage in a growing digital market and supported customers’ awareness of the service while reducing customers’ reluctance to use electronic payments as the traditional requirements for owning a credit card have been eliminated. The virtual credit card offers customers a specific monetary amount that is deducted from their mobile wallet and is valid for 24 hours.

As the mobile industry in Egypt evolves Etisalat Misr is focusing on expanding the scope of call centers to promote greater customer self-care via web-based channels, including social media. Recognizing this Etisalat Misr appointed a team to effectively handle back-office and customer complaints to ensure the best customer experience and first-contact resolution with an improved response time reduced from 51 minutes to 4 minutes. Etisalat Misr have implemented listener reports designed to monitor any mention of Etisalat across social media and take immediate and appropriate corrective action where necessary.

2014 marked a year of telecom regulatory changes in Egypt, requiring Etisalat Misr to adapt to a new regulatory environment. The first such changes occurred on a national level following the government’s mandated sale of new SIMs through controlled channels with the purpose of collecting customers’ information. To comply with such regulatory requirements, Etisalat Misr designed a fully-fledged platform to update its customers’ data and expanded its retail footprint through mini franchises and shop-in-shop concepts. Egypt’s second regulatory change outlined a roadmap for a Unified License framework including procedures, conditions and obligations applicable to all telecom players by 2018. Etisalat Misr, in an effort to preserve shareholders and key stakeholders value, voiced its concerns to the regulator after evaluating the potential impact of the framework on the telecom market and its market position.

Etisalat Misr continued its efforts to resolve its pending issues with Telecom Egypt and the Egyptian Telecom Regulator prior to the fourth mobile operator launch. These issues include international rate settlement, reference Interconnection offer and Service Level Agreement with Telecom Egypt, compensation for spectrum, granting a third carrier, and band interference with regulator.

The successful launch of the first postpaid lifestyle portfolio, My Life, marked another milestone for Etisalat Misr. My Life allows customers to enjoy a variety of lifestyle benefits depending on their chosen tariff. Benefits include: free monthly cinema tickets, free airline tickets to Europe and shopping vouchers My Life embodies Etisalat’s Misr’ strategy to widen our scope through partnership opportunities in the non-telecom market, resulting in improved retention of high value customers coupled with new revenue streams, the creation of a lifestyle community, and partnerships with companies targeting the same segment.

Following the launch of Kol Youm Gedeed in 2013 (an initiative offering customers daily promotions via SMS), Etisalat Misr launched an interactive communication platform where customers can dial a short-code and customize their promotional categories and offers. This interactive platform enables customer value management team to know what to offer, to whom and when, resulting in more targeted and relevant offers providing customers total flexibility. The platform includes: Voice; BoR; SMS; MI, and ADSL.

In 2015, Etisalat Misr’ focus will be on capturing the growth potential of data by investing in a third carrier.

As the mobile industry evolves in Egypt, one of Etisalat Misr’ key priorities will be to continue building its data service capabilities and provide excellence in the customer experience

Mobily continues to evolve its data leadership position in Saudi Arabia with higher speeds and enhanced customer experience


Middle East Thuraya

of payment enables our customers to recharge their pre-paid SIMs at any time, with no extra fee, even in areas with limited distribution.

The Space Pioneer event held during the year marked a celebratory moment for the UAE’s burgeoning satellite and space industry as well as Thuraya’s milestone achievements in innovating mobile satellite solutions. Hosted by Thuraya the event also honoured space pioneer and former American astronaut, Dr. Buzz Aldrin, who was the lunar module pilot on Apollo 11, the first manned moon landing in history.

An agreement with Viasat was signed to develop and launch a dedicated Machine-to-Machine (M2M) platform combined with M2M specific products and commercial packages.

M2M will be a key growth engine for satellite services over the next few years. Thuraya envisions being a key strategic player in this development.

The Thuraya IP Commander, our first rugged satellite broadband terminal designed using military specification components, was launched this year. The terminal became commercially available from all Thuraya Service Partners in Q3, 2014. Developed in collaboration with US-based SRT Wireless, the IP Commander is engineered to enable mission-critical voice and data connectivity in mobile or stationary applications in the most extreme and remote environments.

We started the year with the launch of the world’s first satellite adaptor for the smartphone, the Thuraya SatSleeve. Designed for Android-based smartphones, this game-changing product allows Samsung Galaxy users to turn their smartphone into a satellite phone to make phone calls, send SMS messages and access apps via our satellite network when they are unable to connect to a terrestrial GSM network. Awarded the Innovation Award from The Mobile Satellite Users Association, the Thuraya SatSleeve enables users to enjoy ubiquitous coverage in the most remote environments that are not served or are under-served by terrestrial GSM networks.

Our first dedicated maritime broadband terminal, Thuraya Orion IP, was launched this year reinforcing our focus in this growing segment. Thuraya Orion IP leverages the company’s highly reliable and uncongested network with Maritime Broadband pricing packages to provide the best value for connectivity for users in the shipping sector.

In an effort to further extend our maritime product portfolio, we also launched Atlas IP, a feature-rich broadband satellite terminal. Atlas IP is our second maritime-specific product launch in 2014 and is designed to complement the Thuraya Orion IP broadband terminal by offering a fully-featured voice and data product with additional built-in functionality.

Our innovative path continued with the launch of our first dedicated vehicular IP broadband terminal. Thuraya IP Voyager is a cost-effective, high-quality satellite terminal designed for end-users in the government; oil and gas; media, and relief sectors. It is the only terminal available in the market capable of achieving streaming IP rates of up to 384 kbps as well as user-

definable asymmetric streaming. Thuraya IP Voyager enables remote users to communicate reliably and efficiently using video, data and VoIP services to achieve mission-critical tasks in remote areas.

We were also selected by Smart Communications to provide mobile satellite handsets and airtime services to its subscribers in the Philippines. The multi-year deal will see Smart partner with us on a combined voice services and handset offer branded as SmartSAT.

Our new partnership with Talia, a top-tier provider of data communications and voice services, was also announced this year. Headquartered in the UK, Talia owns and operates a teleport facility in Germany and offers satellite communication solutions. Talia’s customer base spans various market sectors, primarily oil and gas, that now have access to our portfolio of mobile satellite products and solutions.

Our recent partnership with Airtel Africa will provide their customers across 17 countries with voice and broadband connectivity via Thuraya’s satellite network across the continent’s most remote areas. .

Our recent collaboration with Satcom Direct, a US-based provider of voice and data communication services, will see Satcom Direct expand its portfolio of mobile satellite services for its enterprise; government; maritime; media, and relief customers.

We now offer top-up services for Thuraya prepaid SIMs for voice and data services using the Western Union® Quick PaySM service. The service is available at participating Western Union agent locations in the majority of the 200+ countries and territories in which it operates. This new and convenient method

Management Review

Strengthening our commitment to provide unmatched communication capabilities by pioneering innovations and strategic partnerships


2014 has been a successful year for Etisalat Services Holding (EHS) that is strategically positioned as an independent service provider to deliver value added telecom related services to the group as well as to external business entities. ESH’ portfolio consists of eight companies working across a wide spectrum of industries providing state-of-the-art products and services, innovative and disruptive technologies, and addressing the needs of the telecom, government and private sectors in the UAE, the Middle East and globally.

In 2014 ESH conducted a comprehensive benchmarking exercise and identified areas of new opportunities, implemented the EFQM Excellence Model in five of our companies, and evaluated synergies across our companies to create new products and services. We also implemented programmes for employee motivation and engagement, including spot awards; employee of the quarter, and appreciation for outstanding performance on projects; thereby paving the way to making ESH one of the best places to work in the Middle East.

These initiatives aspired us to innovate tools that will add value to our clients’ businesses in the coming year.

ETISALAT FACILITIES MANAGEMENT

Etisalat Facilities Management (EFM) provides a single point of contact to our valued customers by offering integrated facilities management solutions tailored to our customers’ needs. We have progressed further with several unique initiatives, including Mabanina (the combination of Energy Management and Facilities Management) that established a consortium with the Emirates Green Building Council as well as a strategic alliance with Etihad Esco. The aim is to increase awareness of energy management, while also supporting

E-MARINE

E-marine is the trusted principal provider of submarine cable solutions in the Middle East and Asia Subcontinent.

E-Marine entered the offshore energy market in 2014 and invested in Vessel CS SAMA, to be commissioned soon. Handover of another vessel is expected in early 2015, in a bid to enhance our market share and service quality.

In response to the increase in customer demand for spare storage, we have expanded our storage facilities in Salalah, Oman and the Hamriyah Free Zone, UAE. This will give E-Marine an edge to become the preferred choice for our customers in the region.

TAMDEED PROJECTS

Tamdeed Projects is the UAE leader in the field of mega Fiber to the Home and outside plant projects covering network consultancy; design, and deployment. Tamdeed also offers service provisioning; inside plant projects implementation; in-building solutions, and end-to-end turnkey solutions.

In 2014, we again were the recipient of multiple awards for business excellence - namely ”The Peak of Success” under the category of Display of Business Excellence and we were internationally recognised by bodies such as the World Confederation of Businesses.

Tamdeed introduced several new initiatives, including turnkey offerings to target new customers in the external market. We also introduced the Annual Maintenance Contract to UAE customers, thereby enabling more value added services. Tamdeed plans to cross-sell more capabilities to strengthen relationships

Etisalat Services Holding (ESH)

ESH aspires to create innovative products and services thataddress the needs of our customers both locally and internationally

new energy services companies in the UAE through industry knowledge transfer, and in some cases, financial investment.

A joint venture with Emirates Transport was also established to cater exclusively to the government sector.

In the coming year one of the key focus area will be the healthcare sector considering the market potential in the UAE and our capabilities in offering healthcare providers with innovative and customised solutions.

EMIRATES DATA CLEARING HOUSE

Emirates Data Clearing House (EDCH) is one of the world leading clearing houses offering comprehensive solutions to GSM operators around the globe. In 2014, EDCH focused on introducing value added services like mobile money hub solutions and bill shock prevention. We also expanded our services into Asia with a new client base.

To refine the customer experience, EDCH adopted a consultative approach towards proposing new solutions to our customers by ensuring active involvement with our clients through dialogue, workshops and regular surveys of their value chain competence and how we can improve them further.

The enhancement of our online reporting via several dashboards for data, financial, and roaming traffic was achieved this year, in addition to the release of comprehensive fraud management tools and reporting; RAP out recovery; advanced RAEX, and TAX recovery service.

EDCH also exhibited thought leadership by hosting the GSMA Fraud Forum #60, which took place in February in Dubai.

Our aim, in 2015, is to be the preferred roaming and value added services partner to global telecom operators.

Management Review

with the existing customer base, while simultaneously targeting new customers.

Tamdeed is also collaborating with other companies under ESH to generate strong synergies and introduce value added products that will enhance revenue streams ultimately through a more tailored range of solutions.

ETISALAT INFORMATION SERVICES

Etisalat Information Services (eIS) is considered the leading directory services provider in the UAE. While the directional media industry has been evolving, eIS has identified potential avenues of growth and is putting in place building blocks for transformation to ensure leadership.

In 2015, eIS will focus on the digital media advertising industry, which is expected to grow at a CAGR of 38% over the next few years. We have signed partnership agreements with a number of global players and are in the process of bringing those tools to the UAE and localising the content to ensure maximum reach to our end users.

In 2015 eIS plans to offer multiple features and functionalities through a consolidated platform across multiple industry verticals benefiting from the shift in the digital advertising industry; thereby capturing significant value for eIS and its stakeholders.

EBTIKAR CARD SYSTEMS

Ebtikar Card Systems (ECS) is a major provider of smart card solutions. Established in 1996, ECS is designed to fulfil the market’s growing demands for smart card applications .

ECS received certification by the GSM Association’s Security Accreditation Scheme for SIM/smart card manufacturers,

with the prestigious United Arab Emirates University (UAEU) to provide the Executive MBA in EA facility in Dubai. This partnership positions EA as the sole provider of this product outside Al Ain and Abu Dhabi, where the UAEU is based.

2014 also saw the introduction of a new system for customer relationship management and training delivery to increase operational efficiency; automate training, and provide real-time customer intelligence.

Our overseas expansion saw the conclusion of two major projects in Saudi Arabia. Meanwhile, our local market is experiencing tremendous growth after the signing of the Mega Project with a local government entity in the UAE.

ETISALAT REAL ESTATE

Etisalat Real Estate (eRE) oversees and manages the portfolio of Etisalat properties in the UAE. eRE introduced a new property portfolio management system called TRIRIGA that provides enterprise level tools for space and asset management, tenant management, staff location management and movement, and third party integration.

eRE has initiated asset optimisation activities for Etisalat properties in the UAE to enhance efficient utilisation of office space in order to optimise rental costs and rent out vacant spaces to external clients thereby improving revenue generation. eRE is also considering the leasing of open office spaces within business centres and HQ buildings to enhance revenue generation.

demonstrating Ebtikar’s ability to produce high volumes of high quality SIM cards while adhering to a strict set of standardised security criteria. Ebtikar currently is in the final stages of implementing ISO 14000 (Environmental Management) and Ohsas 18001 (Occupational Health and Safety Management), along with the ISO 7810 and ISO 7816 (Identification and Smart Card Management) to enhance product quality.

2015 will be about enhancement of production capacity to support growth potential coupled with aggressive customer acquisition. Ebtikar is also planning multiple new product offerings like Machine to Machine and 4G/LTE cards, which will not only ensure client retention through cross selling, but will also enable Ebtikar to move into new markets in a focused manner.

ETISALAT ACADEMY

Etisalat Academy (EA) is the largest in-bound and out-bound single source-training provider for the Middle East for telecommunications, technology and business training. EA also offers human resources and competency consultancy training.

In 2014, EA launched a new Talent & Leadership Centre (TLC) in partnership with world-renowned organisations to help develop leaders from local talent. TLC programmes include: learning tours of private and public companies in Europe, America and South East Asia such as Apple, Samsung and Siemens and Women Leadership 2020.

EA is also finalising plans to introduce experiential learning for academic as well as management trainees and has partnered

Africa


Africa Maroc Telecom Group

The Maroc Telecom Group constantly strives towards innovation as well as enriching and adapting its products and services to meet the evolving needs of its customers

in Morocco and abroad, pay bills, top-up Jawal and Manzil Pass, and make purchases from authorised dealers. These services are particularly useful for customers who don’t have a bank account or are seeking increased mobility.

Making 3G Internet accessible to our customers is a top priority for us at Maroc Telecom and we are continuously working on enhancing customer experience by extending and upgrading our telecommunications network. Substantial investment amounting to MAD 15 billion was planned for the period 2013-2015 for an extensive networks renovation. This commitment applies to all of our mobile-network infrastructures and entails the radical modernisation of existing technologies. The majority of our current mobile access facilities need to be replaced with Single Radio Access Network equipment, the most advanced technology to date. Through the installation of this equipment, we will effectively increase the performance of our services and can ultimately accommodate 4G more easily. For fixed-line access, the Multi-Service Access Node equipment is deployed in

The Maroc Telecom Group constantly strives towards innovation, always enriching and adapting its products and services to meet the evolving needs of its customers.

In 2014, Maroc Telecom continued with its unlimited rate plans in Morocco, offering two to four free additional hours of talk-time and 500 to 1,000 free SMS and MMS messages. The Company also launched the Unlimited Mobile for those customers who communicate the most. This year also saw the launch of MT Talk Pass. Designed to facilitate access to social networks without subscribing to a 3G Mobile Internet plan, MT Talk Pass provides subscribers with access to Facebook, Facebook Messenger, Twitter, WhatsApp and MTV music channels. It highlights our commitment to the development of mobile content and, in partnership with Anghami, serves as Morocco’s first music streaming offer for mobile users.

The enhancement of the customer experience was also extended to our professional and business customers with Optimis and Business offer, which provides free communication along with options

for free hours, unlimited numbers, free SMS messages, unlimited calls and texting within a company, 3G Internet generous volumes and extra national unlimited numbers.

Maroc Telecom also exclusively launched the MT-Track service for geolocation of vehicles via mobile phone. This service enables businesses to monitor their fleet and runs on any mobile device, without the need for GPS or data subscription.

Our year of enhancements extended to include TV service over ADSL with the introduction of our new thematic channels: education, information, nature and discovery, entertainment and cinema. We also improved our Video On Demand service by including best TV series and children’s content.

Mobicash, our innovative M-payment solution launched in 2010 continued its momentum and growth this year. We were the first operator to launch this game-changing service in Morocco and the region, allowing our customers to deposit, withdraw and transfer money

Management Review

close physical proximity to our customers. Furthermore, Fibre to the Home was also launched this year with speeds of 100 Mbps.

One of our primary focuses at Maroc Telecom is building customer loyalty and our points-based loyalty scheme, Fidelio was the first of its kind to be introduced in Morocco. Fidelio allows our postpaid customers to accumulate points on the basis of billable spending and rewards them with free or discounted handsets as well as free talk-time and SMS messages. To thank our customers for their loyalty, we organised several sports- and music-themed raffles throughout the year at major national and international events.

Maroc Telecom continues to develop synergies with its subsidiaries aimed at promoting investment and sharing technology and operational expertise. The Trans-African - an almost 5,700 km fibre optic cable linking Maroc Telecom with its subsidiaries in Mauritania, Mali and Burkina Faso - is almost complete. The Malian section was inaugurated in February 2014 by His Majesty the King, Mohammed VI

and President Ibrahim Boubacar Keïta. This cable strengthens the connectivity of our subsidiaries by increasing the bandwidth available to them.

Maroc Telecom Group has additionally launched several projects to raise the competitiveness of its subsidiaries to an international standard. These projects included implementation of cost accounting, a system of pooling purchases and inventory cost optimisation.

Maroc Telecom and its subsidiaries constitute a unique network providing lower roaming charges. Nomadis, launched in 2010, ensures that all of Group roaming customers are charged domestic rates while using one of our networks in Morocco, Mauritania, Burkina Faso, Gabon and Mali.

We believe Information and Communication Technologies (ICT) is one of the engines of sustainable economic growth and an essential tool for improving the living conditions of people everywhere. It is our ambition to expand ICT access to everyone. To this end, we are using all available technologies to cover the most

remote regions and ensure that our offers are accessible to our low-income segment. We now successfully cover over 7,000 isolated areas within the framework of the Program for Universal Telecom Access (PACTE) as well as 20,000 other isolated areas beyond PACTE’s reach.

Maroc Telecom’s environmental policy underlines our dedication to reduce direct and indirect emissions of greenhouse gases; the struggle against climate change; improvements in waste treatment; the reduction of visual pollution at technical sites;, and the awareness and promotion of environmental protection. Our continued efforts strive to reduce the consumption of electricity and raw materials through the use of renewable energy; the installation of free-cooling ventilation systems at technical facilities, and the promotion of paperless processes.

In 2015, we aspire to continue to promote growth through evolution and innovation while remaining true to our moral compass and committed to our social responsibility.

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Africa Atlantique Telecom

of our service on their Android device. Flooz Appli is supported by a comprehensive communications campaign across social media where customers can share experiences and testimonials.

Our customers remain the drive behind everything we do and to that end, we extended our customer call centre hours and now operate 24-hours a day, seven days a week. This positioned Moov as the only operator in CDI to offer round-the-clock customer service, ensuring improved customer care and support availability.

Spreading across Central Africa, Flooz was also introduced in Gabon where a solid distribution network and aggressive launch campaign has positioned it as another pioneering service. Our Gabon Facebook fans reached 28,000, which currently represents the country’s highest penetration rate in the youth segment; a segment that continues to enjoy the benefits of our tailor-made rewards scheme, Epiq Nation. Having undergone a series of improvements in 2013, Epiq Nation now has over 50 partners across the country and in addition to its existing services, now offers the youth market a special tariff plan at CFA Franc 1 per second in a closed user group with free minutes, SMS and Internet, based on usage.

In 2015, Moov operations under Atlantique Telecom aspires to build on our winning customer-centric focus by committing ourselves to new and bolder innovations and a deeper and broader market penetration that further strengthen our position as a leading telecom operator in West and Central Africa.

Atlantique Telecom Group (AT) is geographically represented in the six African countries of Benin, Ivory Coast, Gabon, Niger, Central African Republic, and Togo. The group’s focus in 2014 was on enhancing customer experience and providing unmatched service quality.

The year began with the launch of 3.75G in Benin, the fastest mobile broadband service in the country. Our free web browsing packages on Wikipedia, Bing and the AT website coupled with our key social package offering of WhatsApp, Facebook and Twitter highlight our ongoing commitment to engage and enhance the lives of our Sub-Saharan customer base.

Founded on the belief that we are only as strong as our team, the Winfiol system was established to empower our front office and call centre team members. The system ensures the real time management of customer queries and complaints, of which 99% are now resolved at the first point of contact. To further enhance the customer experience, we introduced Qmatic, an automated queuing system geared to attend to customers. Qmatic has enabled us to remotely manage each branch based on their specific query and profile; efficiently monitor customer satisfaction in our outlets, and effectively assess human resource issues in the front office and service quality in remote locations.

A year has passed since the launch of our pioneering mobile money service in Togo, Flooz, and today, we are still the only operator offering this game-changing utility service. We enhanced Flooz’ functionalities with cash in and cash out; money transfer; payment of electricity bills for postpaid and prepaid customers; payment of university tuition; payment of insurance fees; merchant payments,

and airtime purchases. Our most critical addition is the payment of salaries. We have signed an agreement with the UN organisation, Plan Togo, to administer the salary payment of over 16,000 individuals living in the most remote areas by providing them with MoovSIM cards. We have successfully recruited additional partners such as the US Embassy and the United Nations Children’s Fund to further our initiative and to date over CFA Franc 1.5 billion has been paid through the Flooz platform for outbound payments.

Our year of innovation extended to the Central African Republic (CAR) where we launched our Internet high speed solution, Move Internet Haut Debit. For the first time ever, our customers now have access to affordable high speed Internet everywhere. We also introduced SOS credit to our loyal customers, where in the event of an emergency, customers can access a temporary and limited credit line that is then deducted from their account at a later date.

In Côte d’Ivoire (CDI), our focus has been on female customer base through our exclusive Weena service. Subscribers to Weena get free member to member calls, per second billing, complimentary Flooz account for every member, plus a host of other benefits specific to their professional activity. In return for using this service, Weena members have to guarantee a certain level of monthly revenue per member. Launched during the first quarter of 2014; Weena boasts approximately 5,000 subscribers to date and was nominated at the GSMA Mobile World Congress awards in Barcelona.

We have also enhanced Flooz service in CDI with Flooz Appli, a free app that gives customers quick, easy and full functionality

Management ReviewAfrica Etisalat Nigeria

Etisalat Nigeria’s ongoing commitment to high quality service and network, improved customer experience and strengthened the Company’s market position

60,000 calls daily. This has been a win-win for customers and Etisalat.

In a first in the Nigerian telecom arena, our digital media team launched an exciting new video ringtone service, Vringo in Q3 2014. Vringo allows subscribers to replace their regular ringtone with a video of their choice. This innovative service has also been backed by a library of exciting local and international content covering music; movies; sports; comedy, and more.

Etisalat’s Vidyo video conferencing solution is assisting corporates customers in bridging the distance gap between them and their clients, staff and business partners alike. The result is improved customer engagement; unified communication, and reduced associated costs for training and distance learning. The Vidyo video conferencing solution has presented Etisalat as a solution-oriented operator. This solution has helped Etisalat gain more market share in the enterprise segments. evidenced by more customers willing to connect to the Etisalat network.

As part of the Company’s efforts to increase network coverage and capacity which is already rated number one for quality of service by the Nigerian Communications Commission (NCC) and to accelerate roll out of 2G & 3G coverage and new services to its customers, Etisalat signed a tower sale and leaseback agreement with IHS holding. This was the first tower transaction by a major GSM operator in Nigeria.

In 2015, Etisalat Nigeria endeavours to continue to build on the growth momentum witnessed in 2014 in terms of growth in subscribers and the set financial KPI’s. This will be attained by providing customers with even more reasons to connect with Etisalat through innovative products and services, a quality network and excellent customer service.

This has been a remarkable year for Etisalat Nigeria with key achievements in terms of growth in revenue and market share; highlighting the Company’s ongoing commitment to providing customers with the quality service they deserve, and keeping to Etisalat Group’s tradition and mission.

One of our more noteworthy innovations of 2014 was the development and launch of Cliqlite. Cliqlite provides safe and easy access to Internet sites; gaming and social networking sites, as well as e-learning tools for minors. It has been developed with a strong parental control feature that ensures security while browsing the Internet. Cliqlite has been heralded as an opportunity to contribute to Nigeria’s educational development by zero-rating access to pre-selected educational websites. Cliqlite has received endorsements; accolades, and support from key stakeholders across the country, including the Nigerian Federal Government; the Lagos State Government; parents, as well as education industry watchers in Nigeria. In addition, Cliqlite has been positively received by school administrators with many schools partnering with Etisalat.

Etisalat Nigeria undertook a study on the data consumption behaviour exhibited by customers across the network. The study revealed the preferences (social networking, chat, and video) of customers with an emphasis on time spent and preferred services. By analysing the volume of data that customers consumed on popular services and apps like Facebook, YouTube and WhatsApp for instance, the company was able to determine what services were most important to customers. In response to this study Etisalat Nigeria launched Smartpaks, an app-based plan that provides customers an easy way to understand how to purchase data plans for their specific

needs. Customers only need to select the Smartpak that suits their needs from three variants focused on popular chat apps, social networks and video streaming content.

Another 2014 critical project for the distribution channels team was Auctus. The objective of Auctus was to create a sales channel that can exploit the full extent of the network coverage; customers’ strong preference for the brand, and deliver Etisalat value proposition distinctly from competition by enhancing channel capability, improving visibility to retailer level transactions, and increasing service capable touch points. Successfully launched in 2014, project Auctus has recorded significant results with an approximate growth rate of 20% in pipeline sales; increased capacity utilisation and usage in lagging clusters, and visibility across 40,000 retailers nationwide.

Our digital media team has had an exciting year with the launch of several products that have helped demonstrate Etisalat’s customer centricity and innovation. Easy Credit was launched in the second quarter of the year and provides Etisalat subscribers with access to advance airtime that can be used to make calls or browse the web. Customers then simply repay when they next recharge. Since its launch, the service has been well-received by customers, with over five million subscribers taking advantage of the service to date.

During the second quarter of 2014, Etisalat Nigeria also launched the Interactive Voice Response (IVR) tool, an automated, fully-interactive, self-service voice menu that provides quick solutions to the most common customer complaints. As a result, excellent customer adoption has been recorded with over 20% increase in self-service rate and a reduction in call volumes to the call centre – from 400,000 calls to

Atlantique Telecom focus in 2014 was on providing unmatched service quality with emphasis on growing e-commerce services and expanding coverage of our mobile data services


Africa Canar

This year marks several pioneering achievements by Canar in Sudan cementing our foothold in the market and building on our growth and aspiration to be the first choice for customers. Governed by customer-centric principles, our team of qualified professionals are connecting customers and businesses and striving to serve them better than ever before. With the launch of our spam filtering services and Internet service control, along with our managed wide area network and call centres, Canar once again brought an innovative product and service offering to the Sudanese market. We also introduced our co-location and infrastructure as a service (Iaas) provisioning this year.

In our bid to enhance the customer experience, we have created a new division within our enterprise sales unit catering to our corporate customers. The new dedicated call centre was established by shifting the enterprise technical support function from the OMC (NOC) to the customer service unit as part of the commercial team. This was further enhanced by outsourcing the technical support to a third party. As a result, our enterprise customers now benefit from a streamlined and exclusive service that enables our account managers to

focus their attention and efforts more effectively.

For the sole purpose of further enhancing our customer service, our technical team has implemented another step toward delivering an excellent QoS. By defining a set of Key Quality Indicators for Canar’s different services offerings, we can regularly monitor service trends to proactively preempt customer complaints.

To rectify a frequent service shutdown issue, we identified an optical bypass to be a viable, cost-effective solution to be connected at the metro rings. This enhancement of metro service uptime aims to resolve a customer’s dropped call due to having a second customer on the same ring shutting down the power.

In an effort to improve work flow, a Business Process Mapping automation system was introduced to facilitate our operation’s processes ensuring effectiveness and efficiency.

In addition to our existing point of sale payment options, Canar now provides our customers even greater flexibility to purchase vouchers and pay their bills through a network of 3,000 ATM machines. We also introduced our Flexible

Canar continues to improve its processes and enhance its solutions and services to add value to our customers and help businesses grow

Credit Control policy extending the current repayment period.

Since our inception in 2005, Canar has strived to improve and streamline our processes with the aim of bringing more value to our customers and allowing businesses to grow. Testament to this vision lies in our e-procurement initiative that revamped Canar’s tendering process starting from the initiation of the tender straight through to the final approval.

Although fixed voice was impacted by the stiff competition from other mobile operators and the fixed to mobile substitution phenomena, broadband penetration in the country remains low providing ample opportunity for growth of the fixed line segment. In addition, demand for ICT services and solutions is expected to grow in the coming years and Canar is well posi-tioned to play a critical role in providing these services and benefit from potential growth.

Looking forward, Canar aims to build on the milestones gained in 2014 and introduce further initiatives and an enhanced customer experience in Sudan in the years to come.

Management ReviewAfrica Zantel

In our ongoing commitment to provide affordable, accessible and seamless telecommunication services to our customers in Tanzania, Zantel has deployed and launched 3G services. By offering our customers an uncongested network, we have successfully enhanced our customer experience and increased customer acquisition across the mainland. Recognising the power of strategic partnerships in the expansion of our digital footprint, Zantel this year signed a Memorandum of Understanding with Tanzania Posts Corporation (TPC). This agreement has provided Zantel access to over 100 TPC branches, thereby enhancing our distribution channels and increasing our reach in providing a more accessible product and service offering to our customers.

Our recent collaboration with the Zanzibar Electricity Company provided our Zanzibar

customers, constituting a major part of our total customer base, the ability to purchase electricity through Ezypesa, our mobile money transfer service. This strategic partnership has resulted in an enhanced user experience and greater brand visibility. In addition, our Ezypesa agents are now able to access and replenish their virtual accounts from various channels including leading banks such as People’s Bank of Zanzibar (PBZ) and CRBD Bank. This will ensure that our Ezpesa customers have more points of presence to transact hence greatly enhancing their convenience.

Realizing the large potential in the mainland of our country, Zantel launched an aggressive marketing campaign aimed at attracting quality customers into our network. Our aim is to continue with this initiative during 2015 while enriching the offerings of our portfolio of products and services in the mainland.

Enhancing customer experiences through launching services and strategic partnerships that enable Zantel to expand its digital footprint

This year also saw a number of regulatory developments introduced by the Tanzania Communications Regulatory Authority (TCRA). The just implemented New Licensing Procedure Rules are designed to streamline the tender process following an announcement by TCRA stipulating to the operators which radio frequency locations are available and when. Additionally, new regulations have been drafted highlighting the requirements for listing Mobile Network Operators on the Dar es Salaam Stock Exchange. Looking ahead in 2015, TCRA will also be launching mobile number portability.

For Zantel, our mission in 2015 is to be recognized as a value for money brand. We aspire to achieve this by remaining true to our core mission, which is to provide affordable and innovative products and services that aim to elevate the customer experience.

Asia


Asia PTCL Pakistan

Growing consumer awareness and demand for data has seen PTCL launch a number of innovative data products and services during the year; helping it cement its position as Pakistan’s leading integrated telecommunications provider.

PTCL adopted a strategy of collaboration with existing wireless local loop (WLL) operators and signed agreements with TeleCard and WorldCall to utilise their spectrum. The spectrum acquired supported PTCL’s launch of 4G services in Pakistan and carrier expansion across the EV-DO (Evolution Data Optimised) network adding value in terms of product, brand, capacity, and quality.

In order to cater to customers’ increasing bandwidth requirements, PTCL upgraded its submarine cable systems in Asia-Africa-Europe 1 and South East Asia – Middle East – Western Europe 4. The recent 3G/4G spectrum auction along with the increase in data usage preferences of customers have opened up new avenues for business growth and diversification. Service providers are facing challenges such as network congestion, coverage and Quality of Service (QoS) related issues. In order to address these challenges, Carrier and Wholesale Services (CS&W) has taken the initiative of deploying hotspots in high footfall areas in major urban centres.

Our unparalleled network capabilities and country-wide presence make PTCL the broadband market leader in Pakistan. Various products and services were introduced in 2014 to provide customers a broadband connectivity that is not only reliable and faster, but affordable. EVO, PTCL’s 3G-enabled wireless broadband

In order to provide our customers with practical knowledge for trouble-shooting basic issues we have established a Contact Centre with professional tutorials and trouble-shooting videos available on the myPTCL portal, company website and across social media. We also provide email support and have a dedicated team of agents available on the web-chat portal for customers requiring instant resolution. These initiatives have enabled customers to successfully trouble-shoot on a personal level and decreased their dependency on helplines, which ultimately, means a reduction in call loads to our helplines.

We are committed to deploying state-of-the-art energy solutions that provide round-the-clock services to our valued customers irrespective of Pakistan’s existing power crisis. Some of these initiatives include the provision of solar power at a number of sites as well as a windmill project. We also provide fast charging battery solution for sites, battery backup solutions, replacement of battery banks and deployment of inverter-based air conditioners rather than conventional air conditioners to reduce operational expenses.

Being the only unified service provider in Pakistan serving all segments of customers, PTCL’s aspirations for 2015 remain focused on providing sustainable and innovative solutions tailor-made for our customers that ensure our continued market leader position in Pakistan.

The key to PTCL’s broadband leadership is our bespoke solutions supported by unparalleled network capabilities and nation-wide presence

service, has become synonymous with high-speed wireless broadband Internet in Pakistan and continued to grow in 2014 both in terms of revenue and subscriber base. One of our foremost achievements is the Broadband 4 Mbps for All as well as our Charji EVO campaigns that were launched for wireline and wireless customers respectively.

Our most significant launch in 2014 was our high-speed Charji EVO service providing ultrafast connectivity of up to 36 Mbps, the fastest wireless broadband service in Pakistan. Charji EVO has received a positive response from the market even with the launch of 3G and 4G services by other mobile operators. Additionally, a high speed offering will enable customers to enjoy multi-play services in the future on our wireline broadband network.

PTCL’s Smart TV service continues to grow at a fast pace. Our 2014 customer base increased by 50%, a growth made feasible by the enrichment of content as new products roll out. In line with international trends, we also launched Over-The-Top services that enabled multi-screen TV viewing in Pakistan allowing customers to watch live TV programmes and on-demand content on personalised screens without any location restrictions or limitations.

PTCL launched the Landline and Broadband Reconnect Campaign seeks to reconnect churned customers. Discounts were offered to churned customers, giving priority to those who had churned for a longer duration. This campaign provided an excellent platform to win back a total of approximately 40,000 landline and broadband customers.

Management ReviewAsia Ufone Pakistan

In 2014 Pakistan witnessed the auction of 3G/4G spectrum and the launch of 3G services in the country. Ufone was one of four mobile operators to bid in the country’s initial 3G auction and was the first operator to launch 3G commercial services in Pakistan.

During 2014 Pakistan Telecommunications Authority (PTA) published timelines for biometric-based verification of telecom subscribers, as part of the Pakistani government’s enhanced checks on the sale and activation of mobile SIMs. Ufone successfully enabled four major channels for the Biometric Verification System (BVS) based processes; service centres, franchises, retailers and priority service executives. This was achieved well-within the agreed timelines for the business units to continue their activities uninterrupted in a post-BVS era.

Ufone launched Super Card in 2014 - a game-changing recharge platform that rewards subscribers with monthly free minutes (both on-net and off-net), SMS and data. This has resulted in a simple one-window solution for our customers while also increasing the visibility of charging elements. Super Card has shown a strong uptake in the market and Ufone plans to use the platform to introduce multiple variants of the product.

The industry’s first mobile financial services provider, Upaisa, was launched in the course of the year. Upaisa acts as a debit card for mobile wallet holders and can be used on all 1-Link powered ATM machines as well as thousands of UnionPay supported POS machines nationwide.

control all their connections under a single account. In contrast to the traditional management of a single connection under an individual account, customers can now create a single username account for all of their connections. Customers now enjoy complete freedom to access any information, manage subscriptions, and change the details for all connections collectively.

With the close of another eventful year, Ufone’s aspirations for 2015 remain focused on growing the mobile data segment, innovation and quality of service by listening to the growing demands of the market and serving our customers to the best of our ability.

Ufone was the first operator in Pakistan to launch 3G commercial services and accelerated mobile data adoption in 2014

In the wake of the launch of 3G, Pakistani operators grappled with the issue of bill shock for the new users of 3G services. To mitigate the fallout of bill shock, Ufone introduced the 1 MB offer. The 1 MB offer introduced a step-charging mechanism that only charged pay-as-you-go customers for the first Mb of the day, with the subsequent 19 Mbs free for the rest of the day. The 1 MB Offer has substantially improved the customer experience while keeping their costs down and retaining them on Ufone’s network.

Analysis of customer behaviour trends presented Ufone with an opportunity to optimse network utilisation. As a result, Ufone launched the Mega Daily Internet Bucket, offering unlimited volume between the hours of midnight and ten o’clock in the morning across both the 2G and 3G networks.

Before the advent of 3G, Pakistan’s 3G handset penetration stood at 13% with penetration hovering at 17% in today’s 3G environment. While 3G is slowly making inroads into people’s daily lives, the biggest barrier to adoption remains the cost of 3G-enabled smartphones. Ufone designed a 3G smartphone through various vendors and developed an Android Jelly Bean (upgradeable to Android Kit Kat), 1.2 GHz quad-core processor smartphone for the mass market with a price tag of USD 60. With ample above the line support and strong distribution, the device proved to be an instant success.

Under the Project One Initiative, Ufone enhanced the customer experience on our Self Care Portal by enabling them to


Asia Etisalat Sri Lanka

Innovative technologies have presented Etisalat Lanka with opportunities of providing our customers with new products and services they consider to be essential in their lives. Following years of double-digit growth rates, the Sri Lankan mobile industry has entered into a phase of stable growth with penetration reaching 100% in the voice market. As a market with a regulated floor price governing the local call and messaging rates, Sri Lanka’s price-based competition has moved to IDD and Data where below-cost offerings are not uncommon. With data penetration levels at approximately 20%, Data is seen as the main driver of growth in the years to come and Etisalat Lanka aims to harness the immense growth potential through migrating voice-only customers to voice and data. With a fully IP-based backbone and the fastest 3.75G network across the island, we are well equipped to be a strong player in the nation’s data growth.

A key highlight in Etisalat Lanka’s innovative product offering was the launch of our Super SIM in the first quarter of this year. Super SIM ensures customers are billed on the duration of their calls based on a per-second charge, with a complimentary additional 12-second talk-time per minute. To further enhance the product offering, we also launched Super Data and Super IDD.

Earlier this year, Etisalat Lanka became the first mobile operator in Sri Lanka to receive the GSMA accreditation for High Definition Voice. We now rank among the 26 international mobile operators that meet the internationally-recognised criteria

for Etisalat Lanka with over two million Facebook users. In celebration of the World Social Media Day, Etisalat Lanka hosted Mashable Social Media Day 2014 for the third consecutive year. The Colombo event was listed among the world’s top eight social media day events by Mashable.

Etisalat Lanka continues to be driven by competitive pricing, innovative service offerings and a high quality network with improvements in customer service encouraging a spirit of loyalty as the focus remains on providing a unique customer experience.

Founded on Etisalat’s belief that customers are always winners, Etisalat Lanka designed several reward promotions, including Game of Tunes for loyal users of Personal Ring Back Tones. The three-month long promotion rewarded customers with daily and weekly cash prizes, with the grand prize being a brand-new SUV. We also gave away a one million LKR cash prize to the grand winner of the April seasonal promotion.

As we seek to build on the successes of 2014, our focus in 2015 will be on enhancing customer experience, as well as improving efficiency and optimising cost structures. Moving forward, our record for innovation in the market remains our strategic benchmark. Our innovative solutions will influence mobile usage and positively impact the community through the launch of value-added products and services catered to customers’ needs and preferences.

Etisalat Lanka focus remains on providing a unique customer experience through competitive pricing, innovative solutions and a high quality network

Enriching the customer experience through enhanced and improved network quality has ensured Etisalat Afghanistan’s progress in a highly competitive environment

related to noise cancellation; voice clarity, and multiple technical features. Etisalat Lanka is also the only mobile operator in the South Asian region to be included in the GSMA HD Voice Ecosystem.

We are Sri Lanka’s first mobile operator to collaborate in the M-commerce business and integrated two M-Commerce platforms with our own. As a result, Etisalat Lanka now provides our 4.5 million-plus customer base with an unparalleled advantage to engage in M-Commerce transactions with over 18 million mobile subscribers across Sri Lanka.

We also extended our services to an estimated 250,000 Sri Lankan expatriates living and working in the UAE through the provision of innovative mobile solutions offering competitive market rates for Calls, SMS and Data by leveraging our relationship with Etisalat Group.

Pursuant to and in keeping with our ongoing provision of innovative products and services, a number of collaborations with various government entities are in effect; most recent of which is our partnership with the Department of Pensions. Sri Lanka’s current pensioner population stands at 600,000 and to reach and cater to this demographic, Etisalat Lanka launched an exclusive product and services bundle-offer designed to cater to their specific needs. Our Smart Pensioner initiative is a tribute to our commitment to all Sri Lankans.

Social Media is one of the highest engagement communication channels

As the telecommunications sector in Afghanistan enters into a higher competitive phase through the arrival of a fifth operator, Etisalat Afghanistan increased its affinity to its customers through attractive pricing; improved network performance, and key innovative products to help drive our focus on new acquisition as well as existing subscriber base retention.

In 2014, we at Etisalat Afghanistan focused on our network expansion efforts and rolled out a series of technological upgrades and innovative products to boost our market and customer base. With our 2G network operational across Afghanistan, we are growing our 3G network and currently cover 20 provinces.

The customer experience was further enhanced through the introduction of a wide range of attractive on net bundle offers, including new data bundles. With a view to expanding our regional footprint, Etisalat Afghanistan launched an intensive sales micro marketing programme aimed at new customer acquisition; improving revenue, and reducing churn. Focused efforts were made to enhance our enterprise customer base, which subsequently led to a 140% increase.

several governmental ministries in tandem with local banks created a successful Salary Payment project, simultaneously providing customers with various M-Commerce services.

We believe the future lies in improved communication services leading to better opportunities and better living. As an operator, we aspire forward to improve customer experience by ensuring improved network quality and coverage, affordable pricing and more innovative products.

Asia Etisalat Afghanistan

Management Review

We continued to enhance our loyalty programme through new reward schemes and events to heighten and enrich the customer experience; to increase product awareness, and to engage users. Our management met with the Top 20 High Value Customers; Top 20 Data Customers; Top 20 Enterprise Business Customers, and Top 20 Retailers. The one-to-one interaction provided valuable insights into the customer’s preferences, needs and requirements.

In an effort to identify and resolve the root cause of customer grievances, Etisalat Afghanistan successfully reduced customer complaints by almost 64% this year. Our customers’ call waiting time at the call centres was also reduced by 78%, with an average waiting time reduced to 11 seconds.

In a year focused on customer centric improvements, Etisalat Afghanistan successfully fostered relationships with various government entities and socioeconomic organisations. Our alliances with USAID; the Afghan Ministry of Women Affairs, and the Electricity Distribution Company of Afghanistan saw the implementation of Mobile Money services. While collaborative initiatives with


Awards

Good is never enough for us

2012

2012

2013

2013

2014

2014

TeknoTel AwardsBest Customer Care

5th Asia Best Employer Brand Awards Best Employer Brand

Marketing and Customer Care

Managemant

2012 2013 2014

CommsMEABest Overall Operator of the Year

International Business Awards Corporate Social Responsibility Programme of the Year

Arabia CSR Awards First Runner-Up in NGO-partnership

Forbes Middle East Most powerful company in the UAE

Corporate

Telecom World Middle East Awards Best Operator

9th Annual CommsMEA Awards Overall Mobile Operator

9th Annual CommsMEA Awards African Mobile Operator

TMT Finance MENA Best Deal of the Year

TMT Finance MENA Best Innovative Technologies

9th Annual CommsMEA Awards Telecom Deal of the Year

GSMA Global Mobile Awards Best Mobile Product and Service for Women in Emerging Markets

International Business Awards Best New Product or Service of the Year Health

International Business AwardsBest Executive of the Year in Telecommunications

Mobile Money Global Awards Best Bank Led Mobile Money Programme (Egypt)

Mobile Money Global Best Mobile Money Deployment in the Middle East

Arabian BusinessCEO of the Year


Human Resources Management Review

At Etisalat, we believe the nurturing of talent at all levels will be the determining factor in our ability to achieve results, grow our business and to realise our vision to be the leading and most admired telecom group in emerging markets.

Over the course of 2014, our leadership portfolio has been complemented with the addition of two new Best-in-Class development programmes: the Core Leadership Programme (CLP) for middle management, and the Global Leadership Programme (GLP) for executive development. These come in addition to the execution of our second Group-wide High Potential Leadership Programme (HiPo). These programmes help our talent pools to be the best they can be; from growing their functional skills and market knowledge linked to our business strategy and priorities, to developing the leadership skills required now and in the future.

Our Talent Acquisition function focus on ensuring that the Group functions are staffed with best-in-class specialists who are able to set the agenda and govern the operations within their areas of expertise. Talent Acquisition teams across our footprint now work in tandem with our strategic sourcing capability building, delivered during 2014, and receive regular tactical support through Yammer, our newly-introduced social enterprise network.

Etisalat’ UAE continued commitment to supporting the progress, learning & development of UAE nationals is part of a wider approach to develop local communities. Nurturing National talent and investment in enhancing the skills and capabilities of UAE nationals remains a key strategic priority.

In 2014, Etisalat UAE has the distinction of maintaining a high Nationalisation rate of 47% of its workforce. Our Human

of excellence. This programme was also a great opportunity for the Etisalat Group to foster collaboration across all OpCos and functions and to share best practices group-wide. The 5th HR Excellence programme has already started with an improved format that increases efficiency.

HR Performance Management has become instrumental in delivering our strategy as the Etisalat Group’s objectives are now shared and aligned across all OpCos’ executives. This maximises group-wide collaboration; delivers greater results, and realises our strategic vision.

Employee engagement continues to occupy prime position in the priorities of management. The Etisalat Global Employee Survey was conducted for the second year across all OpCos with nearly 80% of the staff responding to the survey. The survey is being conducted as part of a five-year programme to enhance employee engagement and, by extension, business performance across the Etisalat Group. The annual survey has been well-received by our staff, who regard it as an excellent driver of required change and an opportunity to voice their views and opinions for the attention of management.

One of the outcomes of the previous year’s survey has resulted in the design of a Global Values Framework for the Etisalat Group. Designed following extensive consultations with all stakeholders, including customers and staff, the Global Values Framework is aimed at enhancing and cultivating the One Etisalat Family concept across the Etisalat Group. The One Family concept is part of the Etisalat Corporate Strategy and a key component of the People pillar.

We strongly believe that our people are a key strategic pillar to our long term growth. In 2015 we will continue to develop and enhance the capabilities of our talent pool.

Resource strategy is well aligned with Ministry of Presidential Affairs, under “Absher” initiative with a commitment to recruit & develop 1,400 UAE Nationals. In this regard, Etisalat participated in five career fairs in the year; more than 300 UAE Nationals were provided the opportunity for internship and work placement as well as summer training. Another focus area was people capability building programs that supported long term skills development. As a result more than 3,000 unique staff trained with 5 training days per staff.

We continued to develop our International Assignment programme to be more cost-effective and have forged stronger links between Talent Acquisition; Global Mobility; Succession, and Talent Management. There is now a greater collaborative focus on career planning and management. New tools have been rolled out including the Assignment Management Solution and Talent Bank software. By working closer together, we have been able to identify, recruit and deploy top talent to our Operating Companies (OpCos) where the assignees have continued to add value and provide knowledge transfer as well as develop their own technical and managerial skills. The Global Mobility of our assignees is one of the pillars of our Talent Management approach and is seen as a valuable tool in deploying, developing and retaining top talent. By actively managing our assignees and working closely with key stakeholders, we have optimised assignment management resulting in a more effective and efficient business model.

In 2014, we successfully conducted the 4th annual HR Excellence programme, based on the European Foundation for Quality Management (EFQM) methodology. Thirteen OpCos managed to improve their HR Excellence score year-on-year, three of them proudly reached international levels

Nurturing of talent at all levels will be the determining factor in realising our vision to be the leading and most admired telecom group in emerging markets


Corporate Social Responsibility

Management Review

Etisalat’s ongoing investments and commitment to corporate social responsibility have been focused on improving the communities in which we have a presence. Embracing its CSR efforts with the same passion and leadership it brings to every part of Etisalat’s business, 2014’s key CSR efforts have strived to empower the communities that Etisalat serves in the Middle East, Africa and Asia. This has been through various ‘Mobile for Development’ initiatives that aim to provide commercial mobile services to people in emerging markets and particularly in areas with limited access.

To further this goal, a number of CSR initiatives were undertaken during the year to address local economic development; education; environment; health and personal finance.

In the UAE, the Go Green initiative converted over 99% of post-paid customers to e-Bill, stemming from its environmentally conscious convictions. Additionally, Etisalat UAE contributed the net proceeds from 21 auctioning campaigns that support charitable activities including the H.H Sheikh Mohammed bin Rashid’s Ramadan Yearly Charity Campaign Committee campaign to provide clean drinking water to 5 million lives. Etisalat UAE’s CSR activities support the nation’s vision to be “the world’s capital for humanitarian relief work”

Etisalat’s ‘mobile for development’ programme, Weena, expanded rapidly in 2014 and is now available in Togo; Benin; Cote d’Ivoire; Nigeria; Afghanistan, and Pakistan. Throughout the year, Weena has positively impacted the lives of over 93,000 women employed as selling agents “Weena agents”. The largest impact Weena has had is on the lives of its end customers resource poor women, organised in associations, who own and use mobile phones and are rewarded for that usage through a unique, community-focused programme based on Etisalat’s mobile money platform. Since the service launch, over 1.3 million women have been reached through Weena.

have been potentially exposed to the virus.

In addition to this timely reaction to contain and eradicate Ebola in Nigeria, seven Etisalat Group OpCos in Benin; Côte d’Ivoire; Gabon; Niger; Central African Republic; Togo, and Nigeria, partnered with the Af-rican Union and other telecom operators in a drive to support the fight against Ebola in West Africa. The drive is envisaged to combat the virus by using an SMS-dedicated platform to raise funds for the deployment of African health workers to affected countries.

The focus of the CSR contribution of the newest member of the Etisalat Group, Maroc Telecom, has been to cover the remote areas of Morocco to ensure accessibility to low-income communities. By the end of October 2014, Maroc Telecom provided coverage to over 7,000 isolated areas within the framework of PACTE (Program for Universal Telecom Access) and over 20,000 areas beyond the PACTE programme in Morocco. This initiative is in addition to other CSR programmes Maroc has con-ducted including: internship programmes; environmental initiatives, and community support throughout its footprint.

Etisalat’s operations in Pakistan, Ufone and PTCL, have also been a valuable contribution to the Etisalat Group’s CSR mission, with efforts focused on healthcare initiatives; humanitarian responses to the flood crisis in Sindh, and Tharparker relief operations. Ufone and PTCL have been involved in a number of educational initiatives for underprivileged communities in Pakistan, in addition to introducing innovative power management and green management programmes.

Recognising the importance of computer literacy as an essential lifelong skill in the 21st Century, Thuraya supports Information City’s “Educate a Child, Build a Nation” initiative. This initiative advocates computer literacy for children in the UAE, helping them develop literacy skills from a young age. Com-puter literacy is an essential.

In Benin, Etisalat is distinguished by its sustainable social engagement programme, especially in the less fortunate communities. It has invested in a variety of education and health projects, such as the commitment to build an amphitheatre and several classrooms in Parakou, as well as offering solar kits to more than 20 villages in order to obtain free energy.

Another remarkable CSR programme is Etisalat Misr’s Origin programme in Egypt. Launched in 2009, this programme was established to tackle water issues through various elements inclduding connections; purification and irrigation canals. Since its launch, over a half million people have benefited from Origin.

In Sri Lanka, 2014 saw Etisalat Lanka successfully complete two additional Knowledge Centres at Angulana and Welimada bringing the total number of knowledge centres to six - as part of its continuing efforts to develop ICT knowledge among school children. ICT education has been an integral part of Etisalat Lanka’s CSR initiatives over the years, encapsulating its vision of giving students access to knowledge through various platforms, including the donation of a fully-equipped library and other edu-cational materials.

In an effort to combat maternal and infant mortality while sustaining the company’s innovative edge, Etisalat Nigeria has introduced the use of Mobile Technology in the provision of health services. The mHealth service provides a solution where midwives and healthcare providers use technology to cap-ture, analyse, diagnose and ultimately prevent clinical conditions that lead to maternal and infant mortality.

In an effort to assist in a quick response to the Ebola crisis, Etisalat Nigeria teamed up with Samsung Electronics in September in a bid to curb the spread of the deadly virus by providing healthcare crews devices with Etisalat SIM cards equipped with data and airtime bundles. These measures are to assist in the collection of data on individuals who

Etisalat

Etisalat has continued to leverage its technological expertise and network capabilities to help address the challenges of communities within the Group footprint aiming to create long-term value


The General Assembly:

The General Assembly is composed of all the shareholders of the Corporation, and it exercises all its powers in accordance with the law and the Articles of Association. The General Assembly is entrusted with approving the Board’s Annual Report on the Corporation’s activities and financial position during the preceding financial year.

The General Assembly is also entrusted with appointing external auditors and approving their report, discussing and approving the balance sheet and the profit and loss account for the previous year as well as the Board of Director’s recommendation with regards to the distribution of dividends.

Board of Directors:

The Board of Directors carries out the Corporation’s business and, for that purpose, it exercises all powers of the Corporation except those reserved by the Law or the Articles of Association for the General Assembly of the Corporation.

The Board of Directors of Etisalat consists of eleven members, seven of whom were appointed, including the Chairman of the Board, pursuant to the Federal Decree No.74 of 2012, appointing the Government’s Representatives in the Board of Emirates Telecommunications Corporation.

The other four members of the Board of Directors were elected by National (non-government) shareholders who hold 40 per cent of the Corporation’s shares.

The Corporation is committed to apply best practices and corporate governance

tasks mentioned therein, which include the following:

• Ensuringthesafetyand integrityoftheCorporation’s financial statements,

• Reviewingandimplementingsystemsandinternal control policies, and supervising the Internal Control Department to ensure that it is undertaking its duties accurately,

• MonitoringtheCorporation’sabidancebythe laws and regulations,

• Developing and implementing a policycontract with the external auditor and ensuring its independence and

• Reviewingfinancialcontrol systemsandrisk management.

The Committee’s Charter has clarified the Audit Committee’s duties in detail, how it shall be comprised, the conditions and the quorum to convene its meetings and the way it shall take its decisions.

The Committee is comprised of three (3) non-executive and independent members of the Board of Directors, in addition to an external member experienced in accounting and finance. The Committee convene quarterly or whenever necessary.

Nominations and Remunerations Committee:

To implement governance best practices and in compliance with applicable Laws in this regard, the Board of Directors has composed the Nominations and Remunerations Committee to undertake its duties according to its Charter, which complies

Corporate Governance

standards, taking into account best international standards in this regard and the applicable laws in the UAE. Therefore, the composing of the Corporation’s Board of Directors took into account the requirements of the Ministerial Resolution No. 518 of 2009 Concerning Governance Rules and Corporate Discipline Standards with respect to the capacity of the Board members, where all current Board members are non-executives and independent.

Committees of the Board of Directors:

There are currently three Board Committees that have been established to assist the Board with its responsibilities. Those Committees are:

1) Audit Committee,

2) Nominations and Remunerations Committee and

3) Investment and Finance Committee.

Audit Committee:

As the Corporation is committed to abide by best governance standards and international practices, which are also compatible with applicable Laws and Regulation in the UAE, the Board of Directors has composed the Audit Committee to support it in discharging its duties.

The Audit Committee undertakes its duties in accordance with its Charter, which complies with the Ministerial Resolution No. 518 of 2009 concerning Governance Rules and Corporate Discipline Standards. This Charter is considered a delegation from Board to the Audit Committee to undertake the

with the Ministerial Resolution No. 518 of 2009 Concerning Governance Rules and Corporate Discipline Standards. This Charter is considered a delegation from the Board of Directors to the Committee to discharge its duties mentioned therein.

The main objective of the Nominations and Remunerations Committee is to ensure that the Board of Directors is undertaking its duties diligently and is complying with the Governance Rules and Discipline Standards. The Committee is also responsible for organising the procedures regarding the Nomination to the Board of Directors and to constantly ensure the independence of the members of the Board of Directors and to report to the Board if any Board member becomes no more independent.

The Committee is further entrusted with developing policies with respect to determining the Corporation’s needs for talents at the level of executive management and employees as well as developing policies with respect to granting awards, incentives, Board members’ remunerations and salaries of the executive management and employees in a manner that achieves the Corporation’s objectives and suits its performance.

The Committee’s Charter provided for the detailed powers of the Committee and how to be constituted and formed, the terms of convention of its meetings, the required quorum for convention of its meetings and how to make its decision.

In the course of exercising its functions, the Committee takes into consideration the

Operating Structure of the Corporation

During 2014, Etisalat Group continued to implement its revised group structure, which was commenced in 2009. The purpose was to manage its international expansion strategy, protect value resulting from the Corporation’s United Arab Emirates operations, secure value creation from its nineteen international operations, and to gain the trust of its stakeholders by putting in place a solid structure based on corporate punctuality and governance in line with best practices.

At the level of the United Arab Emirates, the Group organization structure features two autonomous Operating Units: Etisalat UAE Unit (which is entrusted with providing Licensed Telecom Services in the United Arab Emirates); and the Etisalat Services Unit (a wholly owned holding company entrusted with providing certain non-core, non-telecom services to the Corporation as well as third parties).

The Group exercises and sets its various activities and responsibilities and sets its key corporate policies, prepares plans, and monitors the operational and financial performance of its operating companies, and reports the same to the Board of Directors on a regular basis.

competitive nature of the Corporate Strategy and the fair compensations commensurate with the same to attract and retain talented employees for achievement of best results.

Nominations and Remunerations Committee comprises four (4) non-executive independent members from the Board of Directors.

Investment and Finance Committee:

In addition to the Audit Committee and the Nominations and Remunerations Committee provided for in the Ministerial Resolution No.518 of 2009 Concerning Governance Rules and Corporate Discipline Standards, the Board of Directors of Etisalat constituted the Investment and Finance Committee to assist the Board to carry out its functions related to the Corporation’s internal and external investments. The Charter of the Committee defined the functions and duties assigned to the Committee and specified the cases where the Committee is entitled to make decisions as it deems appropriate. On the other hand, it defined the cases where the Committee’s role is exclusive to issuance of recommendations for the Board to pass appropriate resolutions thereon. The Committee’s Charter is deemed an authorization by the Board for the Committee to carry out the functions and responsibilities stipulated therein.

The Investment and Finance Committee comprises five (5) independent non-executive members from the Board of Directors.


Financials

Independent Auditor’s Report to the Shareholders

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Emirates Telecommunications Corporation (“the Corporation”) and its subsidiaries (together “the Group”) which comprise the consolidated statement of financial position as at 31 December 2014 and the consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that

we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial

position of the Group as at 31 December 2014, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on Other Legal and Regulatory Requirements

We have obtained all the information and explanations considered necessary for the purposes of our audit. The Corporation has maintained proper books of account and has carried out physical verification of inventories in accordance with properly established procedures and the financial information included in the Chairman’s statement is consistent with the books of account of the Corporation. Nothing has come to our attention which causes us to believe that the Corporation has breached any of the applicable provisions of the UAE Federal Act No. (1) of 1991, as amended by Decretal Federal Code No. 3 of 2003, or of its Articles of Association, which would materially affect its activities or its financial position as at 31 December 2014.

Deloitte & Touche (M.E.)Abu Dhabi, United Arab EmiratesMutasem M. DajaniRegistration No. 72625 February 2015

Financials

The accompanying notes on pages 67 to 115 form an integral part of these consolidated financial statements. The Independent Auditor’s report is set out on page 1.



FinancialsEmirates Telecommunications CorporationConsolidated statement of profit or loss for the year ended 31 December 2014

Notes 2014AED’000

2013AED’000

Continuing operations

Revenue 48,766,875 38,564,181

Operating expenses 5 (31,832,583) (24,397,205)

Impairment and other losses 9 (931,963) (1,374,176)

Share of results of associates and joint ventures 13 (461,065) 1,754,341

Operating profit before federal royalty 15,541,264 14,547,141

Federal royalty 5 (5,333,084) (6,115,016)

Operating profit 10,208,180 8,432,125

Finance and other income 6 2,653,494 468,558

Finance and other costs 7 (1,736,511) (437,572)

Profit before tax 11,125,163 8,463,111

Taxation 8 (1,153,576) (648,647)

Profit for the year from continuing operations 9,971,587 7,814,464

Loss from discontinued operations 36 (118,108) (63,516)

Profit for the year 9,853,479 7,750,948

Profit attributable to:

The equity holders of the Corporation 8,892,019 7,078,388

Non-controlling interests 961,460 672,560

9,853,479 7,750,948

Earnings per share

Basic and diluted 35 AED 1.12 AED 0.90

______________________ ________________________

Chairman Board Member

Emirates Telecommunications CorporationConsolidated statement of comprehensive income for the year ended 31 December 2014

Notes 2014AED’000

2013AED’000

Profit for the year 9,853,479 7,750,948

Other comprehensive income / (loss)

Items that will not be reclassified subsequently to profit or loss:

Remeasurement of defined benefit obligations - net of tax (141,593) (126,618)

Items that may be reclassified subsequently to profit or loss:

Exchange differences arising during the year

Exchange differences on translation of foreign operations (2,376,730) (1,969,056)

Gain on hedging instruments designated in hedges of the net assets of foreign operations

22 1,301,869 -

Available-for-sale financial assets

Loss on revaluation of financial assets during the year (27,969) (138,909)

Reclassification adjustment relating to available-for-sale financial assets impaired during the year

- 264,310

Reclassification adjustment relating to available-for-sale financial assets on disposal

29 (284,991) -

Total other comprehensive loss (1,529,414) (1,970,273)

Total comprehensive income for the year 8,324,065 5,780,675

Attributable to:

The equity holders of the Corporation 7,426,551 6,063,592

Non-controlling interests 897,514 (282,917)

8,324,065 5,780,675

Financials




Emirates Telecommunications CorporationConsolidated statement of financial position as at 31 December 2014

Notes 2014AED’000

2013AED’000

Non-current assetsGoodwill 9 15,690,382 5,552,266Other intangible assets 9 19,094,776 9,447,281Property, plant and equipment 10 45,972,612 31,319,161Investment property 11 41,378 41,211Investments in associates and joint ventures 14 5,822,453 7,062,009Other investments 15 983,997 866,984Other receivables 18 803,828 595,981Derivative financial instruments 22 293,584 -Loans to related party 16 2,390,194 2,390,194Deferred tax assets 8 317,383 243,042

91,410,587 57,518,129Current assetsInventories 17 624,652 498,232Trade and other receivables 18 17,376,549 10,613,248Current income tax assets 8 637,299 503,396Due from associates and joint ventures 16 459,855 683,833Other investments held for sale 15 - 448,448Cash and cash equivalents 19 18,542,859 15,450,248

37,641,214 28,197,405

Assets classified as held for sale 36 532,757 -

Total assets 129,584,558 85,715,534Non-current liabilitiesOther payables 20 1,075,480 828,565Borrowings 21 18,619,459 4,467,122Payables related to investments and licenses 23 936,699 68,751Deferred tax liabilities 8 4,740,292 1,749,839Finance lease obligations 24 17,283 2,460Provisions 25 126,736 201,089Provision for end of service benefits 27 2,044,540 1,911,773

27,560,489 9,229,599Current liabilitiesTrade and other payables 20 30,988,248 21,164,411Borrowings 21 3,609,711 1,404,543Payables related to investments and licenses 23 3,133,794 2,963,623Current income tax liabilities 8 369,379 185,812Finance lease obligations 24 6,983 2,564Provisions 25 1,862,566 1,172,286

39,970,681 26,893,239

Liabilities directly associated with the assets classified as held for sale 36 1,126,517 -

Total liabilities 68,657,687 36,122,838Net assets 60,926,871 49,592,696EquityShare capital 28 7,906,140 7,906,140Reserves 29 26,852,704 28,266,980Retained earnings 7,517,339 4,359,024Equity attributable to the equity holders of the Corporation 42,276,183 40,532,144Non-controlling interests 12 18,650,688 9,060,552Total equity 60,926,871 49,592,696

______________________ _______________________ Chairman Board Member

Emirates Telecommunications CorporationConsolidated statement of changes in equity for the year ended 31 December 2014

Attributable to equity holders of the Corporation

Share capital Reserves

Retained earnings

Owners’ equity

Non-controlling

interestsTotal

equity

Notes AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

Balance at 1 January 2013 7,906,140 29,115,839 3,492,333 40,514,312 9,398,260 49,912,572

Total comprehensive income for the year

- (985,167) 7,048,759 6,063,592 (282,917) 5,780,675

Transfer to reserves 29 - 136,308 (136,308) - - -

Transaction with owners:

Disposal of partial interest in a subsidiary

12 - - 284,220 284,220 87,233 371,453

Acquisition of non-controlling interests

12 - - (7,804) (7,804) (5,782) (13,586)

Additional equity from non-controlling interests

12 - - - - 16,835 16,835

Dividends 34 - - (6,322,176) (6,322,176) (153,077) (6,475,253)

Balance at 31 December 2013 7,906,140 28,266,980 4,359,024 40,532,144 9,060,552 49,592,696

Balance at 1 January 2014 7,906,140 28,266,980 4,359,024 40,532,144 9,060,552 49,592,696

Total comprehensive income for the year

- (1,432,516) 8,859,068 7,426,552 897,514 8,324,066

Other movements in equity - - 325 325 362 687

Transfer to reserves 29 - 18,240 (18,240) - - -

Acquisition of a subsidiary 30 - - - - 8,159,944 8,159,944


Acquisition of non-controlling interests

12 - - (150,933) (150,933) 132,563 (18,370)

Equity contribution from non-controlling interests for acquisition of a subsidiary

12 - - - - 1,791,831 1,791,831

Dividends 34 - - (5,531,905) (5,531,905) (1,392,078) (6,923,983)

Balance at 31 December 2014 7,906,140 26,852,704 7,517,339 42,276,183 18,650,688 60,926,871

Financials



Emirates Telecommunications Corporation Notes to the consolidated financial statements for year ended 31 December 2014

Emirates Telecommunications Corporation Consolidated statement of cash flows for the year ended 31 December 2014

Notes 2014AED’000

2013AED’000

Operating profit 10,099,333 8,418,003Adjustments for:

Depreciation 10, 11 5,163,502 3,798,455

Amortisation 9 1,694,716 809,093

Impairment and other losses 9,10 931,963 1,374,176

Share of results of associates and joint ventures 13 461,065 (1,754,341)

Provisions and allowances 965,915 300,806

Other non-cash movements (21,694) -

Operating profit before changes in working capital 19,294,800 12,946,192Changes in working capital:

Inventories 51,816 (75,475)

Due from associates and joint ventures 223,979 (175,392)

Trade and other receivables (2,560,724) 210,436

Trade and other payables 3,171,317 995,923

Cash generated from operations 20,181,188 13,901,684 Income taxes paid (2,266,300) (490,317)

Payment of end of service benefits 27 (706,363) (437,806)

Net cash generated from operating activities 17,208,525 12,973,561

Cash flows from investing activitiesNet proceeds from disposal / (acquisition) of other investments 486,928 (71,038)

Proceeds from capital reduction of a joint venture 14 - 40,000

Purchase of property, plant and equipment (6,874,794) (5,567,248)

Proceeds from disposal of property, plant and equipment 239,141 73,586

Purchase of other intangible assets (2,038,764) (766,638)

Proceeds from disposal of other intangible assets 25 -

Dividend income received from associates and other investments 797,559 1,010,169

Acquisition of Maroc Telecom, net of cash acquired 30 (18,660,985) -

Acquisition of additional equity in subsidiary (18,370) -

Finance and other income received 1,966,853 427,682

Net cash used in investing activities (24,102,407) (4,853,487)

Cash flows from financing activitiesProceeds from borrowings and finance lease obligations 34,636,255 3,491,716

Repayments of borrowings and finance lease obligations (18,608,720) (3,142,979)

Equity contribution from non-controlling interests for acquisition of a subsidiary 1,813,528 -

Dividends paid (6,923,983) (6,475,253)

Finance and other costs paid (1,755,522) (458,607)

Net cash generated from/ (used) in financing activities 9,161,558 (6,585,123)

Net increase in cash and cash equivalents 2,267,676 1,534,951Cash and cash equivalents at the beginning of the year 15,450,248 13,934,076

Effect of foreign exchange rate changes 833,849 (18,779)

Cash and cash equivalents at the end of the year 19 18,551,773 15,450,248

1. General information

The Emirates Telecommunications Corporation Group (“the Group”) comprises the holding company Emirates Telecommunications Corporation (“the Corporation”) and its subsidiaries. The Corporation was incorporated in the United Arab Emirates (“UAE”), with limited liability; in 1976 by UAE Federal Government decree No. 78, which was revised by the UAE Federal Act No. (1) of 1991 and further amended by Decretal Federal Code No. 3 of 2003 concerning the regulation of the telecommunications sector in the UAE. In

accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE transferred its 60% holding in the Corporation to the Emirates Investment Authority with effect from 1 January 2008, which is ultimately controlled by the UAE Federal Government. The address of the registered office is P.O. Box 3838, Abu Dhabi, United Arab Emirates. The Corporation’s shares are listed on the Abu Dhabi Securities Exchange.

The principal activities of the Group are to provide telecommunications services, media and related equipment including

the provision of related contracting and consultancy services to international telecommunications companies and consortia. These activities are carried out through the Corporation (which holds a full service license from the UAE Telecommunications Regulatory Authority valid until 2025), its subsidiaries, associates and joint ventures.

These consolidated financial statements were approved by the Board of Directors and authorised for issue on 25 February 2015.

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

Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to companies reporting under IFRS. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. The consolidated financial statements are prepared under the historical cost convention except for the revaluation of certain financial instruments and in accordance with the accounting policies set out herein.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date,

regardless of whether the price is directly observable or estimated using another valuation technique.

The consolidated financial statements are presented in UAE Dirhams (AED) which is the Corporation’s functional and presentational currency, rounded to the nearest thousand except where otherwise indicated.

Acquisition of Maroc Telecom

On 14 May 2014, the Group acquired 53% stake in Maroc Telecom at a net adjusted price of EUR 4.1 billion (AED 20.9 billion). This amount included the cash value of the 2012 dividend amounting to EUR 0.3 billion (AED 1.5 billion). Maroc Telecom is accordingly consolidated in this consolidated financial information from the date of acquisition, as aforesaid.

The acquisition is effected by the Group through an entity specifically created to acquire and hold the shares of Maroc Telecom. Abu Dhabi Fund for Development acquired 8.7 per cent. of the shareholding of this entity. Information about the acquisition is detailed in note 30.

New and amended standards adopted

The following revised IFRSs have been adopted in these consolidated financial

statements. The application of these revised IFRSs has not had any material impact on the amounts reported for the current and prior periods but may affect the accounting for future transactions or arrangements.

• Amendments to IAS 32 Financial Instruments: Presentation relating to offsetting financial assets and liabilities

• Amendments to IFRS 10 Consolidated Financial Statements

• IFRS 12 Disclosure of Interests in Other Entities

• IAS 27 Separate Financial Statements relating to investment entities and exemption of consolidation of particular subsidiaries

• Amendments to IAS 36 Impairment of Assets relating to recoverable amount disclosures for non-financial assets

• Amendments to IAS 39 Financial instruments relating to recognition and Measurement amendments for novations of derivatives and continuation of hedge accounting

• IFRIC 21 Levies relating to guidance on when to recognize a levy imposed by a government

2. Significant accounting policies

2. Significant accounting policies (continued)

New and amended standards in issue but not yet effective

At the date of the consolidated financial statements, the following Standards, Amendments and Interpretations have not been effective but have not been early adopted:

Effective date

IFRS 9 Financial Instruments (as amended in 2010) 1 January 2018

Amendment to IFRS 7 Financial Instruments: Disclosures relating to transition to IFRS 9 (or otherwise when IFRS 9 is first applied)

When IFRS 9 is first applied

IFRS 14 Regulatory deferral accounts 1 January 2016

Amendments to IAS 39 Financial instruments – Continuation of hedge accounting When IFRS 9 is first applied

Amendments to IFRS 11 - Accounting for acquisitions of Interests in Joint operations 1 January 2016

Amendments to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and amortisation

1 January 2016

Amendments to IAS 16 and IAS 41 - Agriculture: Bearer plants 1 January 2016

IFRS 15 – Revenue from contracts with customers 1 January 2017

Amendment to IAS 27 Separate Financial Statements (as amended in 2011) relating to reinstating the equity method as an accounting option for investments in in subsidiaries, joint ventures and associates in an entity’s separate financial statements

1 July 2016

Amendments resulting from September 2014 Annual Improvements to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting

1 July 2016

Amendments to IFRS 10 and IAS 28 clarify that the recognition of the gain or loss on the sale or contribution of assets between an investor and its associate or joint venture depends on whether the assets sold or contributed constitute a business

1 January 2016

Annual Improvements 2010-2012 Cycle, IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and 38 and IAS 24 1 July 2014

Amendments to IAS 19 Defined Benefit Plans relating to employee contributions 1 July 2014

Annual Improvements 2011-2013 Cycle, IFRS 1, IFRS 3, IFRS 13 and IAS 40 1 July 2014

Management anticipates that the application of the above Standards and Interpretations in future periods will have no material impact on the consolidated financial statements of the Group in the period of initial application with the exception of IFRS 15 revenue from contracts with customers and IFRS 9 financial Instruments which management is currently assessing. However, it is not practicable to provide a reasonable estimate of effects of the application of these standards until the Group performs a detailed review.

Basis of consolidation

These consolidated financial statements

incorporate the financial statements of the Corporation and entities controlled by the Corporation. Control is achieved when the Group has:

• haspowerovertheinvestee;

• isexposed,orhasrights,tovariablereturns from its involvement;

• hastheabilitytouseitspowertoaffect its returns.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has the power to control another entity.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interests share of changes in equity since the date of the business combination. Total comprehensive income within subsidiaries is attributed to the Group and to the non-controlling interest even if this results in non-controlling interests having a deficit balance.

Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are excluded from

consolidation from the date that control ceases. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Intercompany transactions, balances and any unrealised gains/losses between Group entities have been eliminated in the consolidated financial statements.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group.

Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the fair value, at the date of exchange, of the assets given, equity instruments issued and liabilities incurred or assumed. The acquiree’s identifiable assets and liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair values at the acquisition date. Acquisition-related costs are recognised in the consolidated statement of profit or loss as incurred.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the acquisition-date net fair value of the acquiree’s identifiable assets and liabilities exceeds the cost of the business combination, the excess is recognised immediately in the consolidated statement of profit or loss.

The non-controlling interest in the acquire is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

Step acquisition

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquire is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in the consolidated statement of profit or loss. Amounts arising from interests in the acquire prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

Associates and joint ventures

A joint venture is a joint arrangement whereby the Group has joint control of the arrangement and has corresponding rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Associates are those companies over which Group exercises significant influence but it does not control or have joint control over those companies. Investments in associates and joint ventures are accounted for using the equity method of accounting except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Investments in associates and joint ventures are carried in the consolidated statement of financial position at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associates and joint ventures less any impairment in the value of individual investments.

Losses of the associates and joint ventures in excess of the Group’s interest are not recognised unless the Group has incurred legal or constructive obligations.

The carrying values of investments in associates and joint ventures are reviewed on a regular basis and if impairment in the value has occurred, it is written off in the period in which those circumstances are identified.

Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the associates at the date of acquisition is recognised as goodwill and included as part of the cost of investment. Any deficiency of the cost of acquisition below the Group’s share of the fair values of the identifiable net assets of the associates at the date of acquisition is credited to the consolidated statement of profit or loss in the year of acquisition.

The Group’s share of associates’ and joint ventures’ results is based on the most recent financial statements or interim financial statements drawn up to the Group’s reporting date. Accounting policies of associates and joint ventures have been adjusted, where necessary, to ensure consistency with the policies adopted by the Group.

Profits and losses resulting from upstream and downstream transactions between the Groups (including its consolidated subsidiaries) and its associate or joint ventures are recognised in the Group’s financial statements only to the extent of unrelated group’s interests in the associates or joint ventures. Losses may provide evidence of an impairment of the asset transferred, in which case appropriate provision is made for impairment.

Dilution gains and losses arising on deemed disposal of investments in associates and joint ventures are recognised in the consolidated statement of profit or loss.

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2. Significant accounting policies (continued)

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2. Significant accounting policies (continued) 2. Significant accounting policies (continued)

Revenue

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for telecommunication products and services provided in the normal course of business. Revenue is recognised, net of sales taxes, discounts and rebates, when it is probable that the economic benefits associated with a transaction will flow to the Group and the amount of revenue and associated cost can be measured reliably. Revenue from telecommunication services comprises amounts charged to customers in respect of monthly access charges, airtime usage, messaging, the provision of other mobile telecommunications services, including data services and information provision and fees for connecting users of other fixed line and mobile networks to the Group’s network.

Access charges and airtime used by contract customers are invoiced and recorded as part of a periodic billing cycle and recognised as revenue over the related access period, with unbilled revenue resulting from services already provided from the billing cycle date to the end of each period accrued and unearned revenue from services provided in periods after each accounting period deferred. Revenue from the sale of prepaid credit is recognised on the actual utilisation of the prepaid credit and is deferred as deferred income until such time as the customer uses the airtime, or the credit expires.

Revenue from data services and information provision is recognised when the Group has performed the related service and, depending on the nature of the service, is recognised either at the gross amount billed to the customer or the amount receivable by the Group as commission for facilitating the service.

Incentives are provided to customers in various forms and are usually offered on signing a new contract or as part of a promotional offering. Where such incentives are provided on connection of a new customer or the upgrade of an existing customer, revenue representing the fair value of the incentive, relative to other deliverables provided to the customer as part of the same arrangement, is deferred

and recognised in line with the Group’s performance of its obligations relating to the incentive.

In revenue arrangements including more than one deliverable that have value to a customer on standalone basis, the arrangement consideration is allocated to each deliverable based on the relative fair value of the individual elements. The Group generally determines the fair value of individual elements based on prices at which the deliverable is regularly sold on a standalone basis.

Contract revenue is recognised under the percentage of completion method. Profit on contracts is recognised only when the outcome of the contracts can be reliably estimated. Provision is made for foreseeable losses estimated to complete contracts.

Revenue from interconnection of voice and data traffic with other telecommunications operators is recognised at the time the services are performed based on the actual recorded traffic.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset’s net carrying amount.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

i) The Group as lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Revenues from the sale of transmission capacity on terrestrial and submarine cables are recognised on a straight-line basis over the life of the contract. Rental income from operating leases is recognised

on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

ii) The Group as lessee

Rentals payable under operating leases are charged to the consolidated statement of profit or loss on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Foreign currencies

i) Functional currencies

The individual financial statements of each of the Group’s subsidiaries, associates and joint ventures are presented in the currency of the primary economic environment in which they operate (its functional currency). For the purpose of the consolidated financial statements, the results, financial position and cash flows of each Group company are expressed in UAE Dirhams, which is the functional currency of the Corporation, and the presentation currency of the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency are recorded at exchange rates prevailing at the dates of the transactions. At end of reporting period, monetary items that are denominated in foreign currencies are retranslated into the entity’s functional currency at rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

ii) Consolidation

On consolidation, the assets and liabilities of the Group’s foreign operations are translated into UAE Dirhams at exchange rates prevailing on the date of end of each

reporting period. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are also translated at exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences are recognised in other comprehensive income and are presented in the translation reserve in equity. On disposal of overseas subsidiaries or when significant influence is lost, the cumulative translation differences are recognised as income or expense in the period in which they are disposed of.

iii) Foreign exchange differences

Exchange differences are recognised in the consolidated statement of profit or loss in the period in which they arise except for exchange differences that relate to assets under construction for future productive use. These are included in the cost of those assets when they are regarded as an adjustment to interest costs on foreign currency borrowings. Exchange differences on transactions entered into to hedge certain foreign currency risks; and exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign operation are recognised initially in other comprehensive income and reclassified from equity to the consolidated statement of profit or loss on disposal of net investment.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the consolidated statement of profit or loss in the period in which they are incurred.

Government grants

Government grants relating to non-monetary assets are recognised at nominal value. Grants that compensate the Group for expenses are recognised in the consolidated statement of profit or loss on a systematic basis in the same period in which the expenses are recognised. Grants that compensate the Group for the cost of an asset are recognised in the consolidated statement of profit or loss on a systematic basis over the expected useful life of the related asset upon capitalisation.

End of service benefits

Payments to defined contribution schemes are charged as an expense as they fall due. Payments made to state-managed pension schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution scheme.

Provision for employees’ end of service benefits for non-UAE nationals is made in accordance with the Projected Unit Cost method as per IAS 19 Employee Benefits taking into consideration the UAE Labour Laws. The provision is recognised based on the present value of the defined benefit obligations.

The present value of the defined benefit obligations is calculated using assumptions on the average annual rate of increase in salaries, average period of employment of non-UAE nationals and an appropriate discount rate. The assumptions used are calculated on a consistent basis for each period and reflect management’s best estimate. The discount rates are set in line with the best available estimate of market yields currently available at the reporting date with reference to high quality corporate bonds or other basis, if applicable.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by end of the reporting period.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method.

Deferred tax is calculated using relevant tax rates and laws that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax is charged or credited in the consolidated statement of profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that sufficient taxable profits will be available in the future against which deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable profit nor the accounting profit.

Financials





Taxation (Continued)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Property, plant and equipment

Property, plant and equipment are only measured at cost, less accumulated depreciation and any impairment. Cost comprises the cost of equipment and materials, including freight and insurance, charges from contractors for installation and building works, direct labour costs, capitalised borrowing costs and an estimate of the costs of dismantling and removing the equipment and restoring the site on which it is located.

Assets in the course of construction are carried at cost, less any impairment. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Group’s

accounting policy. Depreciation of these assets commences when the assets are ready for their intended use.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to consolidated statement of profit or loss during the period in which they are incurred.

Other than land (which is not depreciated), the cost of property, plant and equipment is depreciated on a straight line basis over the estimated useful lives of the assets as follows:

Buildings:

Permanent – the lesser of 20 – 30 years and the period of the land lease.

Temporary – the lesser of 4 – 10 years and the period of the land lease.

Plant and equipment: Years

Submarine – fibre optic cables 20

– coaxial cables 10

Cable ships 15

Coaxial and fibre optic cables 15 – 25

Line plant 15 – 25

Exchanges 5 – 10

Switches 15

Radios/towers 10 – 15

Earth stations/VSAT 5 – 10

Multiplex equipment 10

Power plant 5 – 7

Subscribers’ apparatus 3 – 5

General plant 2 – 7

Other assets:

Motor vehicles 5

Computers 5

Furniture and fittings 4-6

The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of the reporting period.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the consolidated statement of profit or loss.

Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is carried at cost less accumulated depreciation and impairment loss.

Investment properties are depreciated on a straight-line basis over the lesser of 20 years and the period of the lease.

Intangible assets

(i) Goodwill

Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the Group’s share of net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (CGUs) expected to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other non-financial assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of an associate, joint venture, or a subsidiary or where Group ceases to

exercise control, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

(II) Licenses

Acquired telecommunication licenses are initially recorded at cost or, if part of a business combination, at fair value. Licenses are amortised on a straight line basis over their estimated useful lives from when the related networks are available for use. The estimated useful lives range between 10 and 25 years and are determined primarily by reference to the unexpired license period, the conditions for license renewal and whether licenses are dependent on specific technologies.

(III) Internally-generated intangible assets

An internally-generated intangible asset arising from the Group’s IT development is recognised at cost only if all of the following conditions are met:

• anassetiscreatedthatcanbeidentified(such as software and new processes);

• itisprobablethattheassetcreatedwillgenerate future economic benefits; and

• thedevelopmentcostoftheassetcanbe measured reliably.

Internally-generated intangible assets are amortised on a straight-line basis over their useful lives of 3-10 years. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred.

(IV) Indefeasible Rights of Use (“IRU”)

IRUs correspond to the right to use a portion of the capacity of a terrestrial or submarine transmission cable granted for a fixed period. IRUs are recognised at cost as an asset when the Group has the specific indefeasible right to use an identified portion of the underlying asset, generally optical fibres or dedicated wavelength bandwidth, and the duration of the right is for the major part of the underlying

asset’s economic life. They are amortised on a straight line basis over the shorter of the expected period of use and the life of the contract which ranges between 10 to 20 years.

(V) Other intangible assets

Customer relationships and trade names are recognised on acquisition at fair values. They are amortised on a straight line basis over their estimated useful lives. The useful lives of customer relationships range from 3-13 years and trade names have a useful life of 15-25 years.

Impairment of tangible and intangible assets excluding goodwill

The Group reviews the carrying amounts of its tangible and intangible assets whenever there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life (including goodwill) is tested for impairment annually.

Recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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Financial instruments (continued)

Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Inventory

Inventory is measured at the lower of cost and net realisable value. Cost comprises direct materials and where applicable, directs labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Allowance is made, where appropriate, for deterioration and obsolescence. Cost is determined in accordance with the weighted average cost method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

i) Fair value

Financial assets and financial liabilities are initially measured at fair value The fair values of financial assets and financial liabilities are determined as follows:

• the fair value of financial assets andfinancial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and

• the fairvalueofotherfinancialassetsand financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions.

ii) Financial assets

Financial assets are classified into the following specified categories: ‘held-to-maturity’ investments, ‘available-for-sale’ financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

All financial assets are recognised and derecognised on trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

iii) Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments that are held-to-maturity, are available-for-sale, or are loans and receivables

iv) Held-to-maturity investments

Bonds and Sukuk bonds with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less any impairment, with

revenue recognised on an effective yield basis. The Group considers the credit risk of counterparties in its assessment of whether such financial instruments are impaired.

v) Available-for-sale financial assets (“AFS”)

Listed securities held by the Group that are quoted in an active market are classified as being AFS and are stated at fair value at the end of each reporting period. Gains and losses arising from changes in fair value are recognised directly in equity in the investment revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in the investments revaluation reserve is included in the consolidated statement of profit or loss.

Dividends on AFS equity instruments are recognised in the consolidated statement of profit or loss when the Group’s right to receive the dividends is established.

The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the exchange rate prevailing at the end of each reporting period. The foreign exchange gains/losses that are recognised in the consolidated statement of profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains/losses are recognised in other comprehensive income.

The Group assesses at the end of each reporting period. whether there is objective evidence that AFS assets are impaired. In the case of equity securities, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. Impairment losses recognised in the consolidated statement of profit or loss on equity instruments are not reversed through the consolidated statement of profit or loss.

Impairment of tangible and intangible assets excluding goodwill (continued) AFS equity investments that do not have

a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.

vi) Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Appropriate allowances for estimated irrecoverable amounts are recognised in the consolidated statement of profit or loss where there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the assets’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The allowance for doubtful debts reflects estimates of losses arising from the failure or inability of the Group’s customers to make required payments. The estimates are based on the ageing of customer’s accounts and the Group’s historical write-off experience.

vii) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

viii) Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at fair value through

profit or loss’ (“FVTPL”) or other financial liabilities.

ix) Financial guarantee contract liabilities

Financial guarantee contract liabilities are measured initially at their fair values and are subsequently measured at the higher of:

• theamountoftheobligationunderthecontract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and

• the amount initially recognisedless, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies set out above.

x) Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading or it is designated as such. A financial liability is classified as held for trading if it has been incurred principally for the purpose of disposal in the near future or it is a derivative that is not designated and effective as a hedging instrument. Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the consolidated statement of profit or loss.

xi) Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

xii) Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s

obligations are discharged, cancelled or they expire.

xiii) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including forward foreign exchange contracts, interest rate swaps and cross currency swaps.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability.

xiv) Embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not measured at fair value with changes in fair value recognised in the consolidated statement of profit or loss.

xv) Hedge accounting

The Group may designate certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign exchange risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges where appropriate criteria are met.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item.

In the application of the Group’s accounting policies, which are described in Note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future, and other key sources of estimation

uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are disclosed below.

i) Fair value of other intangible assets

On the acquisition of mobile network operators, the identifiable intangible assets

3. Critical accounting judgements and key sources of estimation uncertainty

may include licenses, customer bases and brands. The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset, where no active market for the assets exists. The use of different assumptions for the expectations of future cash flows and the discount rate would change the valuation of the intangible assets.

The relative size of the Group’s intangible assets, excluding goodwill, makes the judgements surrounding the estimated useful lives critical to the Group’s financial position and performance.

The useful lives used to amortise intangible assets relate to the future performance of the assets acquired and management’s judgement of the period over which economic benefit will be derived from the asset.

ii) Business combinations

The recognition of business combinations requires the purchase price of acquisitions to be allocated to the identifiable assets acquired and the liabilities assumed measured at their acquisition-date fair values. The Group makes judgments and estimates in relation to the fair value determination of the assets acquired and liabilities assumed and allocation of the purchase price. If any unallocated portion is positive it is recognised as goodwill and if negative, it is recognised in the statement of profit or loss.

iii) Impairment of goodwill and associates

Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating unit to which the goodwill has been allocated. The value-in-use calculation for goodwill and associates requires the Group to calculate the net present value of the future cash flows for which certain assumptions are required, including management’s expectations of:

• longtermgrowthratesincashflows;

• timing and quantum of future capitalexpenditure; and

• theselectionofdiscountratestoreflectthe risks involved.

The key assumptions used and sensitivities are detailed on Note 9 of the consolidated financial statements. A change in the key assumptions or forecasts might result in an impairment of goodwill and investment in associates.

iv) Impairment of intangibles

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of:

• longtermgrowthratesincashflows;

• timing and quantum of future capitalexpenditure; and

• theselectionofdiscountratestoreflectthe risks involved.

v) Property, plant and equipment

Property, plant and equipment represent a significant proportion of the total assets of the Group. Therefore, the estimates and assumptions made to determine their carrying value and related depreciation are critical to the Group’s financial position and performance. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. Increasing/decreasing an asset’s expected life or its residual value would result in a reduced/increased depreciation charge in the consolidated statement of profit or loss.

vi) Impairment of trade receivables

The Group determines the impairment of trade receivables based on their ageing when objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the trade receivables. Management exercises significant judgments in assessing the impact of adverse indicators and events on recoverability of trade receivables.

vii) Classification of associates, joint ventures and subsidiaries

The appropriate classification of certain investments as subsidiaries, associates and joint ventures requires significant analysis and management judgement as to whether the Group exercises control, significant influence or joint control over these investments. This may involve consideration of a number of factors, including ownership and voting rights, the extent of Board representation, contractual arrangements and indicators of defacto control.

Changes to these indicators and management’s assessment of the power to control or influence may have a material impact on the classification of such investments and the Group’s consolidated financial position, revenue and results.

viii) Federal royalty

The computation of Federal Royalty in accordance with the Cabinet of Ministers of UAE decision No. 320/15/23 of 2012 and guidelines issued by the UAE Ministry of Finance (“the MoF”) dated 21 January 2013 and subsequent clarification letters dated 24 April 2013, 30 October 2013 and 29 January 2014 requires a number of calculations. In performing these calculations, management has made certain critical judgments, interpretations and assumptions. These mainly relate to the segregation of items between regulated and other activities and items which the Corporation judges as not subject to Federal royalty or which may be set off against profits which are subject to Federal royalty.

In addition, during the year, certain clarifications have been received from Ministry of Finance vide its letter dated 23 December 2014 on the mechanism of computation of federal royalty for the prior years. These clarifications have been considered for the computation of federal royalty for the year ended 31 December 2014.

The calculation basis and methodology to be applied for future periods is still subject to ongoing discussion and may change.

Financials




2. Significant accounting policies (continued) 3. Critical accounting judgements and key sources of estimation uncertainty (continued)

Financial instruments (continued)

xvi) Put option arrangements

The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed amount of cash or another financial asset for a fixed number of shares in the subsidiary.

The amount that may become payable under the option on exercise is initially recognised at fair value within borrowings with a corresponding charge directly to equity. The charge to equity is recognised separately as written put options over non-controlling interests, adjacent to non-controlling interests in the net assets of consolidated subsidiaries. For options that involve a fixed amount of cash for a fixed number of shares in the subsidiary, the Group recognises the cost of writing such put options, determined as the excess of the fair value of the option over any consideration received, as a financing cost.

Such options are subsequently measured at amortised cost, using the effective interest rate method, in order to accrete the liability up to the amount payable under the option at the date at which it first becomes exercisable. The charge arising is recorded as a financing cost. In the event that the option expires unexercised, the liability is derecognised with a corresponding adjustment to equity.

xvii) Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset or substantially all the

risk and rewards of ownership to another entity. If the Group neither transfer nor retains substantially all the risks and reward of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

xviii) Financial asset at fair value through profit or loss

A financial asset at fair value through profit or loss is a financial asset that meets either of the following conditions:

a) It is classified as held for trading, i.e. it is:

(i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term;

(ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit taking; or

(iii) a derivative (except for a derivative that is a designated and effective hedging instrument).

b) Upon initial recognition it is designated by the entity as “at fair value through profit or loss” (FVTPL). An entity may use this designation only when doing so results in more relevant information (i.e. it eliminates or significantly reduces a measurement or recognition

inconsistency that would otherwise arise from measuring assets or liabilities and their gains and losses on different basis; or a group of financial assets and/or financial liabilities is both managed and its performance is evaluated on a fair value basis; or if the instrument contains one or more embedded derivatives)

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the reporting date, and are discounted to present value where the effect is material.

Transactions with non-controlling interests

The Group applies a policy of treating transactions with non-controlling interest holders as transactions with parties external to the Group. Disposals to non-controlling interest holders result in gains and losses for the Group and are recorded in the consolidated statement of profit or loss. Purchases from non-controlling interest holders result in goodwill, being the difference between any considerations paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

Dividends

Dividend distributions to the Group’s shareholders are recognised as a liability in the consolidated financial statements in the period in which the dividends are approved.

ix) Regulatory expenses

The Corporation is required to pay the UAE Telecommunication Regulatory Authority (TRA) 1% of its revenues annually as regulatory expenses towards ICT contributions. In the computation of the regulatory expenses, the Corporation has made certain critical judgments and assumptions relating mainly to the interpretation of revenues, which the Corporation contends to include UAE regulated revenues only and not revenues in other UAE entities as well as overseas subsidiaries.

x) Valuation of derivative financial instruments

The fair values of derivative financial instruments measured at fair value or generally obtained by reference to quoted market prices, discounted cash flow models and recognized pricing models as appropriate. Information about the valuation techniques and inputs used in determining the fair value of derivative are disclosed in note 22.

xi) Recognition of deferred tax asset

The recognition of deferred tax asset

is based upon whether it is more likely than not that there will be sufficient and suitable taxable profits in the relevant legal entity or tax group against which to utilise the assets in the future. Judgement is required when determining probable future taxable profits, which are estimated using the latest available profit forecasts. Prior to recording deferred tax assets for tax losses, relevant tax law is considered to determine the availability of the losses to offset against the future taxable profit.

4. Segmental information

Information regarding the Group’s operating segments is set out below in accordance with IFRS 8 Operating Segments. IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Group’s chief operating decision maker and used to allocate resources to the segments and to assess their performance.

a) Products and services from which reportable segments derive their revenues

The Group is engaged in a single line of business, being the supply of telecommunications services and related products. The majority of the Group’s revenues, profits and assets relate to its operations in the UAE. Outside of the UAE, the Group operates through its subsidiaries and associates in nineteen countries which are divided in to the following operating segments:

• Pakistan

• Egypt

• Morocco

• International-others

Revenue is attributed to an operating segment based on the location of the Group Company reporting the revenue. Inter-segment sales are charged at arms’ length prices.

b) Segment revenues and results

Segment results represent operating profit earned by each segment without allocation of finance income, finance costs and federal royalty. This is the measure reported to the Group’s Board of Directors (“Board of Directors”) for the purposes of resource allocation and assessment of segment performance.

The Group’s share of results from associates and joint ventures has been allocated to

the segments based on the geographical location of the operations of the associate and joint venture investments. The allocation is in line with how results from investments in associates and joint ventures are reported to the Board of Directors.

c) Segment assets

For the purposes of monitoring segment performance and allocating resources between segments, the Board of Directors monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments. Goodwill is allocated to reportable segments. Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments.

The segment information has been provided on the following page.

Financials




3. Critical accounting judgements and key sources of estimation uncertainty (continued) 4. Segmental information (continued) International

UAEAED’000

MoroccoAED’000

EgyptAED’000

PakistanAED’000

OthersAED’000

EliminationsAED’000

ConsolidatedAED’000

31 December 2014RevenueExternal sales 27,807,689 6,061,090 4,814,366 4,436,395 5,647,335 - 48,766,875Inter-segment sales 454,367 38,089 29,983 282,143 175,469 (980,051) -Total revenue 28,262,056 6,099,179 4,844,349 4,718,538 5,822,804 (980,051) 48,766,875Segment result 13,234,681 2,114,237 834,616 126,922 (769,192) - 15,541,264Federal royalty (5,333,084)Finance and other income 2,653,494Finance and other costs (1,736,511)Profit before tax 11,125,163Taxation (1,153,576)Profit for the year from continuing operations 9,971,587

Total assets 54,041,272 34,685,813 13,907,277 20,868,347 17,022,290 (10,940,441) 129,584,558Depreciation and amortisation 1,767,218 2,254,830 926,980 1,079,446 829,744 - 6,858,218Impairment - - - - 931,963 - 931,963Additions to non-current assets 2,598,158 1,631,061 1,028,923 2,965,269 690,147 - 8,913,558

31 December 2013RevenueExternal sales 25,453,493 - 4,715,665 4,425,863 3,969,160 - 38,564,181Inter-segment sales 510,041 - 25,855 335,065 107,661 (978,622) -Total revenue 25,963,534 - 4,741,520 4,760,928 4,076,821 (978,622) 38,564,181Segment result 11,543,769 - 581,998 697,448 1,723,926 - 14,547,141Federal royalty (6,115,016)Finance and other income 468,558Finance and other costs (437,572)Profit before tax 8,463,111Taxation (648,647)Profit for the period 7,814,464Total assets 48,787,000 - 13,766,144 18,117,964 16,717,794 (11,673,368) 85,715,534Depreciation and amortisation 1,889,102 - 992,416 967,020 759,010 - 4,607,548Impairment - - - 16,293 1,357,883 - 1,374,176Additions to non-current assets 2,063,453 - 1,228,969 1,391,760 1,649,704 - 6,333,886

UAE Segment revenue breakup:

2014AED million

2013AED million

UAE Revenue - TRA regulated 23,741 22,758UAE Revenue - Non-regulated 4,521 3,206

28,262 25,964

Impairment detail 2014AED million

2013AED million

of which relating to goodwill 540,328 43,063of which relating to property, plant and equipment (Note 10) 6,818 40,620of which relating to other financial assets 384,817 4,325of which relating to loans to related party - 515,875of which relating to available-for-sale financial assets (quoted equity instruments) (Note 29) - 264,309of which other losses - 505,984

931,963 1,374,176

There are no comparative amounts disclosed for Morocco segment as Maroc Telecom was acquired during the period. The comparative figures for total assets for 2013 have been reclassified to conform with current period’s presentation.

Financials




7. Finance and other costs

2014AED’000

2013AED’000

Interest on bank overdrafts, loans and other financial liabilities 431,990 293,569

Interest on other borrowings 662,292 96,091

Other costs (Note 30) 620,964 -

Unwinding of discount 21,265 47,912

1,736,511 437,572

Total borrowing costs 1,763,011 461,898

Less: amounts included in the cost of qualifying assets (Note 10) (26,500) (24,326)

1,736,511 437,572

5. Operating expenses and federal royalty

a) Operating expenses (before federal royalty) 2014AED’000

2013AED’000

Direct cost of sales 10,453,322 8,613,096

Staff costs 6,156,004 5,095,467

Depreciation (Notes 10,11) 5,111,162 3,732,211

Network and other related costs 2,813,011 2,136,261

Amortisation (Note 9) 1,685,022 807,181

Marketing expenses 1,278,317 876,933

Regulatory expenses 721,214 661,795

Operating lease rentals 120,443 255,373

Foreign exchange (losses)/gains (365,664) 193,450

Other operating expenses 3,859,752 2,025,438

Operating expenses (before federal royalty) 31,832,583 24,397,205

b) Federal Royalty

In accordance with the Cabinet decision No. 558/1 for the year 1991, the Corporation was required to pay a federal royalty, equivalent to 40% of its annual net profit before such federal royalty, to the UAE Government for use of federal facilities. With effect from 1 June 1998, Cabinet decision No. 325/28M for 1998 increased the federal royalty payable to 50%.

On 9 December 2012, the Cabinet of Ministers of UAE issued decision no. 320/15/23 of 2012 in respect of a new royalty mechanism applicable to Etisalat.

Under the new mechanism a distinction is made between revenue earned from services regulated by Telecommunications Regulatory Authority (“TRA”) and non-regulated services as well as between foreign and local profits.

Etisalat is required to pay 15 % royalty fee on the UAE regulated revenues and 35 % of net profit after deduction of the 15 % royalty fee on the UAE regulated revenues. In respect of foreign profit, the 35 % royalty is reduced by the amount that the foreign profit has already been subject to foreign taxes.

Ministry of Finance have confirmed via their letter dated 29 January 2014 that the mechanism of calculating the royalty fee for the year ended 31 December 2013 was to follow the same principles that were applicable for the calculation of royalty fees for the year ended 31 December 2012. The mechanism for computation of federal royalty for the period ended 31 December 2014 is consistent with the mechanism followed for the computation of the federal royalty for the year ended 31 December 2013.

In addition, during the year, certain clarifications have been received from Ministry of Finance on the mechanism of computation of federal royalty for the prior years. These clarifications have been considered for the computation of federal royalty for the year ended 31 December 2014. The Corporation is engaged in discussions with Ministry of finance on items which it considers as not subject to Royalty.

The federal royalty has been treated as an operating expense in the consolidated statement of profit or loss on the basis that the expenses the Corporation would otherwise have had to incur for the use of the federal facilities would have been classified as operating expenses.

6. Finance and other income2014

AED’0002013

AED’000

Interest on bank deposits and held-to-maturity investment 388,899 315,416

Other income 2,264,595 153,142

2,653,494 468,558

All interest charges are generated on the Group’s financial liabilities measured at amortised cost. Borrowing costs included in the cost of qualifying assets during

the year arose on specific and general borrowing pools. Borrowing costs attributable to general borrowing pools are calculated by applying a capitalisation rate

of 9.28% (2013: 10.0%) to expenditure on such assets. Borrowing costs have been capitalised in relation to loans by certain of the Group’s subsidiaries.

8. Taxation2014

AED’0002013

AED’000

Current tax expense 1,506,816 496,907

Deferred tax (credit) / expense (353,240) 151,740

1,153,576 648,647

a) Current tax

Corporate income tax is not levied in the UAE for telecommunication companies and

accordingly the effective tax rate for the Corporation is 0% (2013: 0%). The table below reconciles the difference between

the expected tax expense, (based on the UAE effective tax rate) and the Group’s tax charge for the year.

2014AED’000

2013AED’000

Profit before tax 11,125,163 8,463,111

Tax at the UAE corporation tax rate of 0% (2013: 0%) - -

Effect of different tax rates of subsidiaries operating in other jurisdictions 1,506,816 496,907

Current tax expense for the year 1,506,816 496,907

b) Current income tax assets and liabilities

The current income tax assets represent refunds receivable from tax authorities and current income tax liabilities represent income tax payable.

c) Deferred tax

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when these relate to the

same income tax authority. The amounts recognised in the consolidated statement of financial position after such offset are as follows:

Financials




8. Taxation (continued) 9. Goodwill, other intangible assets, impairment and other losses

GoodwillAED’000

Other intangible assets

AED’000Total

AED’000

Cost

At 1 January 2013 7,507,405 16,024,057 23,531,462

Additions - 766,638 766,638

Exchange differences (332,498) (944,227) (1,276,725)

At 31 December 2013 7,174,907 15,846,468 23,021,375

Amortisation and impairment

At 1 January 2013 1,578,318 5,797,949 7,376,267

Charge for the year - 809,093 809,093

Impairment losses 43,063 - 43,063

Exchange differences 1,260 (207,855) (206,595)

At 31 December 2013 1,622,641 6,399,187 8,021,828

Carrying amount

At 31 December 2013 5,552,266 9,447,281 14,999,547

Cost

At 1 January 2014 7,174,907 15,846,468 23,021,375

Additions - 2,038,764 2,038,764

Acquisition of Maroc Telecom (Note 30) 11,761,694 10,729,232 22,490,926

Reclassified as held for sale (Note 36) (44,896) (114,539) (159,435)

Disposals - (25,660) (25,660)

Exchange differences (1,047,116) (2,054,310) (3,101,426)

At 31 December 2014 17,844,589 26,419,955 44,264,544

Amortisation and impairment

At 1 January 2014 1,622,641 6,399,187 8,021,828

Charge for the year - 1,694,716 1,694,716

Impairment losses 540,328 - 540,328

Elimination on items reclassified as held for sale (Note 36) - (40,464) (40,464)

Disposals - (25,635) (25,635)

Exchange differences (8,762) (702,625) (711,387)

At 31 December 2014 2,154,207 7,325,179 9,479,386

Carrying amount

At 31 December 2014 15,690,382 19,094,776 34,785,158

2014AED’000

2013AED’000

Deferred tax assets 317,383 243,042

Deferred tax liabilities (4,740,292) (1,749,839)

(4,422,909) (1,506,797)

The following represent the major deferred tax liabilities and deferred tax assets recognised by the Group and movements thereon without taking into consideration the offsetting of balances within the same tax jurisdiction.

Deferred tax liabilities Accelerated tax depreciation

AED’000

Deferred tax on overseas earnings

AED’000Others

AED’000Total

AED’000

At 1 January 2013 1,976,983 159,582 41,194 2,177,759

(Credit)/charge to the consolidated statement of profit or loss 6,121 21,661 (6,223) 21,559

(Credit)/charge to other comprehensive income - - (53) (53)

Exchange differences (173,723) - 14,838 (158,885)

At 31 December 2013 1,809,381 181,243 49,756 2,040,380

(Credit)/charge to the consolidated statement of profit or loss 70,150 (22,882) (205,012) (157,744)

(Credit)/charge to other comprehensive income - - 3,494 3,494

Acquisition of Maroc Telecom (Note 30) - - 3,637,635 3,637,635

Exchange differences 85,296 - (381,403) (296,107)

At 31 December 2014 1,964,827 158,361 3,104,470 5,227,658

Deferred tax assets Retirement benefit obligations

AED’000Tax losses

AED’000Others

AED’000Total

AED’000

At 1 January 2013 167,821 331,522 146,970 646,313

Charge/(Credit) to the consolidated statement of profit or loss (44,107) (73,906) (12,168) (130,181)

(Credit)/charge to other comprehensive income 62,913 2,407 165 65,485

Exchange differences (13,160) (25,566) (9,308) (48,034)

At 31 December 2013 173,467 234,457 125,659 533,583

(Credit)/charge to the consolidated statement of profit or loss 1,262 66,869 79,572 147,703

(Credit)/charge to other comprehensive income 74,497 - 1,572 76,069

Acquisition of Maroc Telecom (Note 30) - - 46,955 46,955

Exchange differences 8,596 (7,860) (298) 438

At 31 December 2014 257,822 293,466 253,461 804,749

Unused tax losses 2014AED million

2013AED million

Total unused tax losses 1,554 1,642

of which deferred tax assets recognised for 1,272 1,153

of which no deferred tax asset recognised, due to unpredictability of future taxable profit streams 251 489

of the unrecognized tax losses, losses that will expire in the next three years are 30 71

Financials




9. Goodwill, other intangible assets, impairment and other losses (continued) 9. Goodwill, other intangible assets, impairment and other losses (continued)

Other intangible assets - net book values 2014AED’000

2013AED’000

Licenses 14,066,257 8,046,956

IRU 564,917 387,804

Computer software 890,352 231,933

Customer relationships 1,099,868 405,005

Trade names 2,155,596 221,206

Others 317,786 154,377

19,094,776 9,447,281

a) Impairment and other losses

The net impairment losses recognised in the consolidated statement of profit or loss in respect of the carrying amounts of investments, goodwill, licenses and property, plant and equipment are as follows:

2014AED’000

2013AED’000

Pakistan Telecommunication Company Limited (PTCL) - 16,293

of which relating to carrying amount of investment in associate (Note 14b) - -

of which relating to property, plant and equipment (Note 10) - 16,293

Atlantique Telecom S.A (AT) 923,339 71,715

of which relating to goodwill 540,328 43,063

of which relating to property, plant and equipment (Note 10) - 24,327

of which relating to other financial assets 383,011 4,325

Others 8,624 1,286,168

of which relating to loans to related party - 515,875

of which relating to available-for-sale financial assets (quoted equity instruments) (Note 29) - 264,309

of which relating to property, plant and equipment (Note 10) 6,818 -

of which relating to other financial assets 1,806 -

of which other losses - 505,984

Total impairment and other losses for the year 931,963 1,374,176

Impairment losses were primarily driven by increased discount rates as a result of increases in inflation in the operating countries and challenging economic and political conditions, as well as negative local currency fluctuation. Impairment losses of Group›s investment in available-for-sale financial assets was triggered by a

significant decline in the fair value of the quoted investment.

b) Cash generating units

Goodwill acquired in a business combination is allocated, at acquisition, to the CGUs that are expected to benefit from that business combination. The Group

tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. The carrying amount of goodwill (all relating to operations within the Group’s International reportable segment) is allocated to the following CGUs:

Cash generating units (CGU) to which goodwill is allocated 2014AED’000

2013AED’000

Maroc Telecom 9,246,613 -

Maroc Telecom International Subsidiaries 1,291,211 -

Pakistan Telecommunication Company Limited (PTCL) 4,252,905 4,055,239

Atlantique Telecom, S.A. (AT) 667,224 1,218,897

Etisalat Misr (Etisalat) S.A.E. 26,306 27,111

Zanzibar Telecom Limited (Zantel) - 44,896

Etisalat Lanka (Pvt) Limited (Etisalat Lanka) 206,123 206,123

15,690,382 5,552,266

c) Key assumptions for the value in use calculations

The key assumptions for the value in use calculations are those regarding the long term forecast cash flows, discount rates and capital expenditure.

Long term cash flows

The Group prepares cash flow forecasts derived from the most recent annual business plan approved by management for each location for the next five years. The business plans take into account local market considerations such as the revenues and costs associated with future customer growth, the impact of local market

competition and consideration of the local macro-economic and political trading environment. This rate does not exceed the average long-term growth rate for the relevant markets and it ranges between 3.09% to 6.7% (2013: 2.6% to 6.3%).

Discount rates

The discount rates applied to the cash flows of each of the Group’s operations are based on an internal study conducted by the management. The study utilized market data and information from comparable listed mobile telecommunications companies and where available and appropriate, across a specific territory. The pre-tax discount rates use a forward

looking equity market risk premium and ranges between 11.0% to 18.1% (2013: 13.9% to 19.3%).

Capital expenditure

The cash flow forecasts for capital expenditure are based on past experience and include the ongoing capital expenditure required to continue rolling out networks in emerging markets, providing enhanced voice and data products and services, and meeting the population coverage requirements of certain licenses of the Group. Capital expenditure includes cash outflows for the purchase of property, plant and equipment and other intangible assets.

Financials




The carrying amount of the Group’s land and buildings includes a nominal amount of AED 1 (2013: AED 1) in relation to land granted to the Group by the Government. There are no contingencies attached to this grant and as such no additional amounts have been included in the

consolidated statement of profit or loss or the consolidated statement of financial position in relation to this.

An amount of AED 26.5 million (2013: AED 24.3 million) is included in property, plant and equipment on account of capitalisation of borrowing costs for the year.

Borrowings are secured against property, plant and equipment with a net book value of AED 3,195 million (2013: AED 2,781 million).

Assets under construction include building, multiplex equipment, line plant, exchange and network equipment.

11. Investment property

Investment property, which is property held to earn rentals and/or for capital

The fair values of the Group’s investment property has been arrived at on the basis of

a valuation carried out by internal valuers. The valuation technique is considered as “Cost

approach” based on “market corroborated inputs” and is classified as “Level-2” fair value.

10. Property, plant and equipment (continued)

appreciation, is stated at depreciated cost and included separately under non-current

assets in the consolidated statement of financial position.

2014AED’000

2013AED’000

Cost

At 1 January 56,771 54,210

Additions 2,654 2,561

At 31 December 59,425 56,771

Depreciation

At 1 January 15,560 12,529

Additions 2,487 3,031

At 31 December 18,047 15,560

Carrying amount at 31 December 41,378 41,211

Fair value at 31 December 70,450 65,842

Investment property rental income and direct operating expenses 2014AED million

2013AED million

Property rental income 10.9 12.0

Direct operating expenses 1.3 1.0

10. Property, plant and equipmentLand and buildingsAED’000

Plant and equipment

AED’000

Motor vehicles, computer, furniture

AED’000

Assets under construction

AED’000Total

AED’000

Cost

At 1 January 2013 8,566,580 44,833,427 3,421,778 6,073,394 62,895,179

Additions 17,576 1,178,689 104,735 4,263,687 5,564,687

Transfers 187,069 4,007,140 1,052,034 (5,246,243) -

Disposals (239) (158,289) (29,351) (44,430) (232,309)

Exchange differences (393,731) (1,609,659) (180,586) (111,091) (2,295,067)

At 31 December 2013 8,377,255 48,251,308 4,368,610 4,935,317 65,932,490

Depreciation and impairment

At 1 January 2013 2,597,893 26,761,597 2,435,245 59,767 31,854,502

Charge for the year 109,735 2,962,777 722,912 - 3,795,424

Impairment losses - 40,620 - - 40,620

Disposals (27) (134,902) (23,791) - (158,720)

Exchange differences (20,264) (799,800) (98,433) - (918,497)

At 31 December 2013 2,687,337 28,830,292 3,035,933 59,767 34,613,329

Carrying amount

At 31 December 2013 5,689,918 19,421,016 1,332,677 4,875,550 31,319,161

Cost

At 1 January 2014 8,377,255 48,251,308 4,368,610 4,935,317 65,932,490

Additions 195,113 1,267,828 118,640 5,290,561 6,872,142

Acquisition of Maroc Telecom (Note 30) 2,092,884 12,325,579 393,038 75,457 14,886,958

Transfers 154,711 4,591,962 790,718 (5,537,391) -

Disposals (95,811) (739,352) (186,530) (28,258) (1,049,951)

Reclassified as held for sale (Note 36) (14,032) (499,415) (55,271) (78,138) (646,856)

Exchange differences (241,164) (3,046,779) (276,947) (79,127) (3,644,017)

At 31 December 2014 10,468,956 62,151,131 5,152,257 4,578,421 82,350,766

Depreciation and impairment

At 1 January 2014 2,687,337 28,830,292 3,035,933 59,767 34,613,329

Charge for the year 186,961 4,195,564 778,490 - 5,161,015

Impairment losses - - 6,818 - 6,818

Disposals (63,626) (607,979) (139,206) - (810,811)

Elimination on items reclassified as held for sale (Note 36)

(11,850) (328,525) (51,236) - (391,611)

Exchange differences (227,978) (1,748,506) (224,102) - (2,200,586)

At 31 December 2014 2,570,844 30,340,846 3,406,697 59,767 36,378,154

Carrying amount

At 31 December 2014 7,898,112 31,810,285 1,745,559 4,518,654 45,972,612

Financials




12. Subsidiaries (continued)12. Subsidiaries

a) The Group’s principal subsidiaries are as follows:

NameCountry of incorporation Principal activity

Percentage shareholding

2014 2013

Emirates Telecommunications and Marine Services FZE

UAE Telecommunications services 100% 100%

Emirates Cable TV and Multimedia LLC UAE Cable television services 100% 100%

Etisalat International Pakistan LLC UAEHolds investment in Pakistan Telecommunication Co. Ltd

90% 90%

E-Marine PJSC UAE Submarine cable activities 100% 100%

Etisalat Services Holding LLC UAE Infrastructure services 100% 100%

Etisalat Software Solutions (Private) Limited India Technology solutions 100% 100%

Zanzibar Telecom Limited Tanzania Telecommunications services 85% 65%

Canar Telecommunications Co. LimitedRepublic of Sudan

Telecommunications services 90% 90%

Etisalat International Nigeria Limited UAEHolds investment in Emerging Market Telecommunications Services B.V. (Netherlands)

100% 100%

Etisalat Afghanistan Afghanistan Telecommunications services 100% 100%

Etisalat Misr S.A.E. Egypt Telecommunications services 66% 66%

Atlantique Telecom S.A. Cote d’Ivoire Telecommunications services 100% 100%

Etisalat Benin Benin Telecommunications services 100% 100%

Etisalat Lanka (Pvt.) Limited Sri Lanka Telecommunications services 100% 100%

Pakistan Telecommunication Company Limited Pakistan Telecommunications services 23% 23%

Etisalat Investment North Africa LLC UAEHolds investment Société de Participation dans les Télécommunications (SPT)

91.3% 0%

Société de Participation dans les Télécommunications (SPT)

Kingdom of Morocco

Holds investment in Maroc Telecom 100% -

Etisalat Al Maghrib S.A (Maroc Telecom)Kingdom of Morocco

Telecommunications services 48% -

Etisalat Mauritius Private Limited MauritiusHolds investment in Etisalat DB Telecom Private Limited

100% 100%

On 14 May 2014, the Group completed the acquisition at a net adjusted price of EUR 4.1 billion (AED 20.9 billion), which was primarily financed through external borrowings under the facilities agreements noted above. This amount includes the cash value of the 2012 dividend, amounting to EUR 0.3 billion (AED 1.5 billion).

In July 2014, the Group acquired additional 17% equity in Zantel from non-controlling interests («NCI»). In September 2014, the Group acquired an additional 3% in Zantel which was issued through right shares.

On 4 May 2014, the Group announced the signing of an agreement with Maroc Telecom for the sale of the Group›s shareholdings in its operations in Benin, CAR, Gabon, Cote d’Ivoire, Niger and Togo to Maroc Telecom, for a total consideration of EUR 474 million.

The transaction was closed on 26 January 2015 (Note 37) and will be accounted for by the Group as a transaction under common control.

During the year ended 31 December 2013,

Atlantique Telecom S.A. (AT), a 100% subsidiary of the Group, disposed 15% shares of its subsidiary (Moov CDI) in Ivory Coast for a consideration of AED 371 million.

AT transferred 3.98% of its shareholding in another subsidiary (Moov Gabon) to comply with the local regulations to increase the shareholding of local shareholder to 10%.

During the year ended 31 December 2013, the Group also acquired additional shareholding in Canar Telecommunications Co. Limited and consequently Group’s shareholding increased from 89% to 90%.

b) Disclosures relating to subsidiaries

Information relating to subsidiaries that have non-controlling interests that are material to the group are provided below:

Maroc Telecom PTCL Etisalat Misr

AED’000 2014

Information relating to non-controlling interest:

Non-controlling interest (shareholding %) 51.6% 76.6% 34%

Profit 828,140 88,622 162,138

Dividends (1,215,766) (291,237) -

Non-controlling interests as at 31 December 3,839,633 4,977,393 2,716,757

Summarized information relating to subsidiary:

Current assets 4,270,395 2,761,353 1,561,629

Non-current assets 16,968,960 11,066,726 12,345,648

Current liabilities 10,082,959 2,849,027 4,177,413

Non-current liabilities 3,714,540 4,481,150 1,581,349

AED’000 2013

Information relating to non-controlling interest:

Non-controlling interest (shareholding %) n/a* 76.6% 34%

Profit n/a* 618,382 95,504

Total comprehensive income/(loss) n/a* (265,036) (134,873)

Dividends n/a* (141,106) -

Non-controlling interests as at 31 December n/a* 4,820,564 2,635,964

Summarized information relating to subsidiary:

Current assets n/a* 2,546,468 1,093,194

Non-current assets n/a* 8,578,638 12,672,950

Current liabilities n/a* 2,051,623 3,675,356

Non-current liabilities n/a* 2,780,319 2,169,319

* Etisalat Group acquired Maroc Telecom on 14th May 2014

Financials




c) Movement in non-controlling interests

The movement in non-controlling interests is provided below:

2014AED’000

2013AED’000

As at 1 January 9,060,552 9,398,260

Total comprehensive income:

Profit for the year 961,461 672,560

Remeasurement of defined benefit obligations - net of tax (108,642) (96,989)

Exchange differences on translation of foreign operations 37,759 (859,520)

Loss on revaluation of available-for-sale financial assets 6,936 1,032

Other movement in equity 362 -

Acquition of a subsidiary 8,159,944 -


Disposal of partial interest in subsidiaries - 87,233

Acquisition of non-controlling interests 132,563 (5,782)

Equity contribution from non-controlling interests for acquisition of a subsidiary 1,791,831 16,835

Dividends (1,392,078) (153,077)

As at 31 December 18,650,688 9,060,552

13. Share of results of associates and joint ventures2014

AED’0002013

AED’000

Associates excluding EMTS (Note 14 b) (473,001) 1,743,379

Joint ventures (Note 14 f) 11,936 10,962

Total (461,065) 1,754,341

12. Subsidiaries (continued)

During the previous year, the Group has reassessed its accounting treatment for share of results of one of its associates. Consequently, the Group has discontinued the recognition of the share of results of that associate with effect from 1 January 2013. Accordingly, no share of losses have been offset against loans due from associates as the investment in associate has already been fully written down by prior year losses. The amount receivable towards interest on loan to the associate

of AED 718 million (2013: AED 633 million) has been impaired during the year. The net unrecognised share of losses in the associate for the year ended 31 December 2014 amounts to AED 1,636 million (2013: AED 630 million). The cumulative net unrecognised share of losses as at 31 December 2014 amounts to AED 2,266 million (2013: AED 630 million).

During the year, Etihad Etisalat Company (Mobily) has restated it›s prior year

financial statements as a result of an error in the timing of revenue recognition resulting from a promotional program. The resulting impact of the restatement to the consolidated financial statements of the Group before federal royalty amounted to AED 200 million which is considered as immaterial and has been accounted for in the current year share of results.

14. Investment in associates and joint ventures

a) Associates

Name Country of incorporation

Principal activity Percentage shareholding

Etihad Etisalat Company (“Mobily”) Saudi Arabia Telecommunications services 27%

Thuraya Telecommunications Company PJSC (“Thuraya”) UAE Satellite communication services 28%

Emerging Markets Telecommunications Services Limited (“EMTS Nigeria”)

Nigeria Telecommunications services 40%

b) Movement in investments in associates

Mobily All Associates

2014AED’000

2013AED’000

2014AED’000

2013AED’000

Carrying amount at 1 January 6,795,949 5,961,612 7,001,701 6,231,988

Share of results (Note 13) (445,846) 1,807,648 (473,001) 1,743,379

Other movements - - 40 (356)

Dividends (776,531) (973,311) (776,531) (973,311)

Carrying amount at 31 December 5,573,572 6,795,949 5,752,209 7,001,701

c) Aggregated amounts relating to associates

Mobily All Associates

2014AED’000

2013AED’000

2014AED’000

2013AED’000

Current assets 12,262,830 14,383,036 13,134,348 15,204,318

Non-current assets 34,220,161 31,102,917 41,015,802 38,766,386

Current liabilities (27,276,983) (12,285,770) (31,272,340) (14,638,751)

Non-current liabilities (195,663) (10,455,078) (15,724,817) (25,117,047)

Net assets 19,010,346 22,745,106 7,152,993 14,214,906

Revenue 15,422,108 18,911,033 20,284,080 22,758,961

(Loss) / Profit (894,481) 5,853,620 (6,008,153) 1,205,629

Total comprehensive (loss) / income (894,481) 5,853,620 (6,008,153) 1,205,629

Dividends received 776,531 973,311 776,531 973,311

d) Market value of an associate

The shares of one of the Group’s associates are quoted on public stock markets and it is classified as “Level-1” fair value. The market value of the Group’s shareholding based on the quoted prices is as follows:

2014AED’000

2013AED’000

Etihad Etisalat Company (“Mobily”) 9,082,335 17,654,107

Financials




14. Investment in associates and joint ventures (continued)

e) Joint ventures

Name Country of incorporation

Principal activity Percentage shareholding

Ubiquitous Telecommunications Technology LLC UAEInstallation and management of

network systems50%

Smart Technology Services DWC – LLC UAE ICT Services 50%

f) Movement in investment in joint ventures

2014AED’000

2013AED’000

Carrying amount at 1 January 60,309 93,347

Share of results 11,936 10,962

Capital reduction - (40,000)

Dividends (2,000) (4,000)

Carrying amount at 31 December 70,245 60,309

g) Aggregated amounts relating to joint ventures

2014AED’000

2013AED’000

Current assets 165,252 93,176

Non-current assets 83,112 77,549

Current liabilities (107,877) (50,107)

Net assets 140,487 120,618

Revenue 157,277 99,282

Profit or loss 27,157 21,924

The Group has not identified any contingent liabilities or capital commitments in relation to its interest in joint ventures.

15. Other investments

Other investments comprise of the following, all of which are classified as available-for-sale, with the exception of the Sukuk, which are classified as held-to-maturity investments.

Fair value through Profit

and lossAED’000

Quoted equity investments

AED’000

Un-quoted equity

investmentsAED’000

SukuksAED’000

TotalAED’000

At 1 January 2013 - 1,213,264 92,707 145,524 1,451,495

Additions - - 19,117 53,495 72,612

Transfer to other receivables - - (65,286) - (65,286)

Investment revaluation - (138,909) - - (138,909)

Sukuk redemption - - - (1,856) (1,856)

Unwinding of discount - - - (1,578) (1,578)

Exchange differences - - (1,046) - (1,046)

At 31 December 2013 - 1,074,355 45,492 195,585 1,315,432

Additions 937 44,595 29,529 - 75,061

Acquisition of Maroc Telecom (Note 30) 49,271 46,562 33,509 - 129,342

Disposal - (453,731) (561) - (454,292)

Investment revaluation - (56,588) - - (56,588)

Impairment - - (3,061) - (3,061)

Reclassified as held for sale (Note 36) - - (3,570) - (3,570)

Exchange differences (5,583) (7,158) (1,992) (3,594) (18,327)

At 31 December 2014 44,625 648,035 99,346 191,991 983,997

Quoted equity investments represent investments in listed equity securities that present the Group with opportunity for return through dividend income and capital growth. These shares are not held for trading. The fair values of these equity securities are derived from quoted prices in active markets for identical assets, which, in accordance with the fair value hierarchy

within IFRS 7 Financial Instruments: Disclosure, represent Level 1 fair values.

Non-quoted equity investments are carried at cost as they are unquoted equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured.

The Sukuk is a bond structured to conform with the principles of Islamic Sharia law. At 31 December 2014, the market value of the investment in Sukuk was AED 194.0 million (2013: AED 196.8 million) which in accordance with the fair value hierarchy within IFRS 7 Financial Instruments: Disclosure, represents Level 1 fair values.

16. Related party transactions

Transactions between the Corporation and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates are disclosed below.

a) Federal Government and state controlled entities

As stated in Note 1, in accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE transferred its 60% holding in the Corporation to the Emirates

Investment Authority with effect from 1 January 2008, which is ultimately controlled by the UAE Federal Government. The Group provides telecommunication services to the Federal Government (including Ministries and local bodies). These transactions are at normal commercial terms. The credit period allowed to Government customers ranges from 90 to 120 days. Trade receivables include an amount of AED 1,073 million (2013: AED 1,041 million), which are net of allowance for doubtful debts of AED 101 million (2013: AED 82 million), receivable from Federal Ministries and local bodies. See

Note 5 for disclosure of the royalty payable to the Federal Government of the UAE.

In accordance with IAS 24 (revised 2009) Related Party Disclosures the Group has elected not to disclose transactions with the UAE Federal Government and other entities over which the Federal Government exerts control, joint control or significant influence. The nature of the transactions that the Group has with such related parties is the provision of telecommunication services.

Financials




16. Related party transactions (continued)

b) Joint ventures and associates

Associates Joint Ventures

2014AED millions

2013AED millions

2014AED millions

2013AED millions

Trading transactions

Telecommunication services – sales 136.8 123.0 - -

Telecommunication services – purchases 99.6 105.0 - -

Management and other services 272.9 234.5 7.3 -

Net amount due from related parties as at 31 December 451.5 670.2 8.4 13.6

Loans to related party

Loans due from related party as at 31 December 2,390.2 2,390.2 - -

Sales to related parties comprise management fees and the provision of telecommunication products and services (primarily voice traffic and leased circuits) by the Group. Purchases relate exclusively to the provision of telecommunication products and services by associates to the Group. The loans due from related party is subordinated to external borrowings.

The principal management and other services provided to the Group’s associates are set out below:

i. Etihad Etisalat Company

Pursuant to the Communications and Information Technology Commission’s (CITC) licensing requirements, Mobily (then under incorporation) entered into a

management agreement (“the Agreement”) with the Corporation as its operator from 23 December 2004. Amounts invoiced by the Corporation relate to annual management fees, fees for staff secondments and other services provided under the Agreement. The term of the Agreement is for a period of seven years and can be automatically renewed for successive periods of five years unless the Corporation serves a 12 month notice of termination or Mobily serves a 6 month notice of termination prior to the expiry of the applicable period.

ii. Thuraya Telecommunications Company PJSC

The Corporation provides a primary gateway facility to Thuraya including

maintenance and support services. The Corporation receives annual income from Thuraya in respect of these services.

iii. Emerging Markets Telecommunications Services B.V.

Amounts invoiced by the Corporation relate to annual management fees, fees for staff secondments, interest on loan and other services.

c) Remuneration of key management personnel

The remuneration of the Board of Directors, who are the key management personnel of the Group, is set out below in aggregate for the category specified in IAS 24 Related Party Disclosures.

2014AED’000

2013AED’000

Short-term benefits 17,272 35,141

17. Inventories2014

AED’0002013

AED’000

Subscriber equipment 400,464 263,536

Maintenance and consumables 224,188 234,696

624,652 498,232

18. Trade and other receivables2014

AED’0002013

AED’000

Amount receivable for services rendered 12,069,550 6,623,754

Allowance for doubtful debts (4,333,450) (1,550,560)

Net trade receivables 7,736,100 5,073,194

Amounts due from other telecommunication operators/carriers 5,310,370 2,984,878

Prepayments 666,822 506,203

Accrued income 954,840 499,734

Other receivables 3,512,245 2,145,220

At 31 December 18,180,377 11,209,229

Total trade and other receivables 18,180,377 11,209,229

of which current trade and other receivables 17,376,549 10,613,248

of which non-current other receivables 803,828 595,981

The Group’s normal credit terms ranges between 30 and 120 days (2013: 30 and 120 days).

Ageing of net trade receivables, including amounts due from other telecommunication operators/carriers

2014AED’000

2013AED’000

Upto 60 days 8,905,884 4,640,536

61-90 days 622,006 538,219

90-365 days 1,492,935 1,400,590

Over one year 2,025,645 1,478,727

Net trade receivables 13,046,470 8,058,072

Movement in allowance for doubtful debts 2014AED’000

2013AED’000

At 1 January 1,550,560 1,555,738

Net increase/ (decrease) in allowance for doubtful debts 109,513 (5,178)

Acquisition of Maroc Telecom (Note 30) 2,687,329 -

Reclassified as held for sale (Note 36) (13,952) -

At 31 December 4,333,450 1,550,560

No interest is charged on the trade receivable balances. With respect to the amounts receivable from the services rendered the

Group holds AED 299 million (2013: AED 266 million) of collateral in the form of cash deposits from customers. Amounts due from

other telecommunication operators/carriers include interconnect balances with related parties.

Financials




19. Cash and cash equivalents2014

AED’0002013

AED’000

Maintained locally 15,924,323 13,834,412

Maintained overseas, unrestricted in use 2,335,947 1,448,825

Maintained overseas, restricted in use 291,504 167,011

Cash and cash equivalents 18,551,774 15,450,248


Cash and cash equivalents from continued operations 18,542,859 15,450,248

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.

These are denominated primarily in UAE Dirham, with financial institutions and banks. Interest is earned on these deposits

at prevailing market rates. The carrying amount of these assets approximates to their fair value.

20. Trade and other payables2014

AED’0002013

AED’000

Current

Federal royalty 5,661,415 6,129,150

Trade payables 12,890,068 4,955,221

Amounts due to other telecommunication administrations 3,558,866 2,472,950

Deferred revenue 1,810,399 1,487,470

Other payables and accruals 7,067,500 6,119,620

At 31 December 30,988,248 21,164,411

Non-current

Other payables and accruals 1,075,480 828,565

At 31 December 1,075,480 828,565

Amounts due to other telecommunication administrations include interconnect balances with related parties.

Federal royalty for the year ended 31 December 2014 is to be paid as soon as the consolidated financial statements have

been approved but not later than 4 months from the year ended 31 December 2014.

21. Borrowings

The carrying value of the Group’s bank and other borrowings are as follows: Fair Value Carrying Value

2014AED’000

2013AED’000

2014AED’000

2013AED’000

Bank borrowings

Bank overdrafts 2,416,452 105,895 2,416,452 105,895

Bank loans 4,966,465 4,579,854 4,909,289 4,576,106

Other borrowings

Bonds 14,901,901 - 14,164,803 -

Loans from non controlling interest 52,705 60,382 56,562 60,382

Vendor financing 389,831 541,676 366,057 541,676

Others 8,189 8,420 8,671 8,420

22,735,543 5,296,227 21,921,834 5,292,479

Advances from non controlling interest 570,715 579,186

Total Borrowings 22,492,549 5,871,665


Borrowings from continuing operations 22,229,170 5,871,665

of which due within 12 months 3,609,711 1,404,543

of which due after 12 months 18,619,459 4,467,122

The fair values of the Group’s borrowings excluding bonds and advances from investment partners are calculated using present value techniques and represents Level 2 fair values. Fair values of bonds are calculated using quoted market prices which represent Level 1 fair values.

Advances from non-controlling interests represent advances paid by the minority shareholder of Etisalat International Pakistan LLC (EIP) towards the Group›s acquisition of its 26% stake in PTCL, net of repayments. The amount is interest free and is not repayable within 12 months of the statement of financial position date and accordingly the full amount is carried in non-current liabilities. The fair value of advances is not equivalent to its carrying

value as it is interest-free. However, as the repayment dates are variable, a fair value cannot be reasonably determined.

External borrowings of AED 4,274 million (2013: AED 4,563 million) are secured by property, plant and equipment. During the current year, one of the Group’s subsidiaries has breached the covenants on the external borrowings facility of CFA 42,637 million (AED 290 million) . The carrying value of the above facility as at 31 December 2014 amounted to CFA 7,954 million (AED 54 million). The lender has been notified regarding the breach. The lender did not request for accelerated repayment of the loan and the terms of the loan were not rescheduled. The loan is repayable within 12 months.

On 28 April 2014, the Group entered into multi-currency facilities agreement for EUR 3.15 billion (AED 15.9 billion) with a syndicate of local and international banks for the purpose of financing the Maroc Telecom›s acquisition. Financing consisted of two facilities: Tranche A was a twelve months bridge loan amounting to EUR 2.1 billion (AED 10.6 billion) at a price of Euribor plus 45 basis points for the first six months increased by 15 basis points in each of the following three months. Tranche B was a three years term loan amounting to EUR 1.05 billion (AED 5.3 billion) at a price of Euribor plus 87 basis points. Both these tranches have been settled in June 2014 following issuance of bonds as mentioned in the next page.

Financials




21. Borrowings (continued) 21. Borrowings (continued)

The terms and conditions of the Group’s bank and other borrowings are as follows:

Carrying Value

Year of maturity

Currency Nominal interest rate

2014 AED’000

2013 AED’000

Variable interest borrowings

Secured bank loan 2014-2016 EGP Mid Corridor +1.4% 1,207,849 1,345,355

Secured bank loan 2014-2017 EURO EURIBOR +0.8% 334,650 504,520

Secured bank loan 2014-2015 USD LIBOR +2.9% - 367,798

Secured bank loan 2014 USD LIBOR +4.8% 263,379 351,002

Unsecured bank loan 2016-2018 USD LIBOR +1.3% 29,316 33,155

Secured bank loan 2014-2020 USD LIBOR + 1.6% 206,176 -

Secured bank loan 2014-2015 EURO EURIBOR +4.9% 54,107 137,189

Secured bank loan 2014-2019 PKR KIBOR + 70 BP 109,800 -


Secured bank loan 2014-2019 USD 6 month LIBOR +.1.52% 720,972 -


Secured bank loan 2014-2019 EUR6 month

EURIBOR+.1.4% 545,749 685,669

Secured bank loan 2014-2016 USD 3 months LIBOR+3.5% 19,099 -

Secured bank loan 2014-2019 LKR 3 months SLIBOR+4% 64,256 -

Secured bank loan 2015-2020 USD KIBOR+0.2% - 661,232

Secured bank loan 2014-2019 USD KIBOR+0.2% - 271,273

Fixed interest borrowings

Secured vendor financing 2014-2014 USD 5.0% - 74,795

Unsecured bank overdrafts 2014-2015 MAD 3.8% 2,080,295 -

Secured bank loan 2014-2017 CFA 8.0% 44,791 65,803

Unsecured loans from non-controlling interests 2014-2015 EGP 10.0% 56,562 60,382

Other borrowings

Advances from non-controlling interests N/A USD Interest free 570,715 579,186

Unsecured vendor financing 2014-2015 PKR Interest free - 296,375

Bonds 2019 USD 2.5% 1,824,285 -

Bonds 2024 USD 3.7% 1,812,710 -

Bonds 2021 EUR 2.0% 5,283,174 -

Bonds 2016 EUR 2.8% 5,244,633 -

Others Various Various Various 1,580,831 437,931

Total Borrowings 22,492,549 5,871,665


Borrowings from continuing operations 22,229,170 5,871,665

Nominal Value Fair Value

Carrying Value

2014AED’000

2014AED’000

2014AED’000

Bonds

2.375% US dollar 500 million notes due 2019 1,837,000 1,841,225 1,824,285

3.500% US dollar 500 million notes due 2024 1,837,000 1,879,618 1,812,709

Bonds in net investment hedge relationship

1.750% Euro 1,200 million notes due 2021 5,354,400 5,495,221 5,283,174

2.750% Euro 1,200 million notes due 2026 5,354,400 5,685,837 5,244,635

At 31 December 2014 14,382,800 14,901,901 14,164,803

of which due within 12 months -

of which due after 12 months 14,164,803

On 22 May 2014, the Group has completed the listing of USD 7 billion (AED 25.7 billion) Global medium term note programme which will be used to meet medium to long-term funding requirements on the Irish Stock Exchange (“ISE”). Under the programme, Etisalat can issue one or more series of conventional bonds in any currency and amount up to USD 7 billion. The listed programme was rated Aa3 by Moody›s, AA- by Standard & Poor›s and A+ by Fitch.

On 11 June 2014, the Group issued the inaugural bonds under the GMTN

programme. The issued bonds were denominated in US Dollars and Euros and consisted of four tranches:

a. 5 years tranche: USD 500 million with coupon rate of 2.375% per annum

b. 7 years tranche: EUR 1,200 million with coupon rate of 1.750% per annum

c. 10 years tranche: USD 500 million with coupon rate of 3.500% per annum

d. 12 years tranche: EUR 1,200 million with coupon rate of 2.750% per annum

The effective date for the bonds term was 18 June 2014. Net proceeds from the issuance of the bonds were used for repayment of outstanding facilities of EUR 3.15 billion, as above, utilized for the acquisition of Maroc Telecom.

As at 31 December 2014, the total amounts in issue under this programme split by currency are USD 1.0 billion (AED 3.674 billion) and Euro 2.4 billion (AED 10.7 billion) as follows:

Financials

101100



EtisalatAnnual Report 2014

21. Borrowings (continued)

a) Interest rates

The weighted average interest rate paid during the year on bank and other borrowings is set out below:

2014 2013

Bank borrowings 5.1% 5.4%

Other borrowings 2.9% 4.9%

b) Available facilities

At 31 December 2014, the Group had AED 2,000 million (2013: AED 1,966 million) of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

22. Net investment hedge relationships

During the year, Euro bonds issued (refer to note 21) and cross currency swaps have been designated as net investment hedges. There was no material ineffectiveness of these hedges recorded as of the reporting date.

2014AED’000

Effective part directly recognised in other comprehensive income 1,301,869

During the year, the Group has entered into cross currency USD-EUR swaps which are designated as hedges of net investment. The fair value of the cross currency swaps are calculated by discounting the future cash flows to net present value using appropriate market interest and prevailing foreign currency rates. The fair value of swaps is as follows:

2014AED’000

Fair value of swaps designated as net investment hedge 293,584

The fair value of bonds designated as hedge is disclosed in note 21.

23. Payables related to investments and licensesCurrent

AED’000Non-current

AED’000Total

AED’000

At 31 December 2014

Investments

Etisalat International Pakistan LLC 2,936,653 - 2,936,653

Atlantique Telecom S.A. 11,022 - 11,022

Licenses

Republic of Benin 24,828 - 24,828

Pakistan Telecommunication Company Limited 161,291 936,699 1,097,990

3,133,794 936,699 4,070,493

At 31 December 2013

Investments

Etisalat International Pakistan LLC 2,936,653 - 2,936,653

Atlantique Telecom S.A. 11,022 - 11,022

Licenses

Republic of Benin 14,179 65,476 79,655

Pakistan Telecommunication Company Limited 1,769 3,275 5,044

2,963,623 68,751 3,032,374

According to the terms of the share purchase agreement between Etisalat International Pakistan LLC and the Government of Pakistan (“GOP”) payments of AED 6,612 million (2013: AED 6,612 million) have been made to GOP with the balance of AED

2,937 million (2013: AED 2,937 million) to be paid. The amounts payable are being withheld pending completion of certain conditions in the share purchase agreement related to the transfer of certain assets to PTCL.

All amounts payable on acquisitions are financial liabilities measured at amortised cost and are mostly denominated in either USD, AED or PKR.

24. Finance lease obligationsMinimum lease payments Present value of minimum lease

payments

2014AED’000

2013AED’000

2014AED’000

2013AED’000

Amounts payable under finance lease

Within one year 7,150 2,724 6,983 2,564

Between 2 and 5 years 18,182 4,012 17,283 2,460

25,332 6,736 24,266 5,024

Less: future finance charges (1,066) (1,711) - -

Present value of lease obligations 24,266 5,025 24,266 5,024

of which due within 12 months 6,983 2,565 6,983 2,564

of which due after 12 months 17,283 2,460 17,283 2,460

It is the Group policy to lease certain of its plant and machinery under finance leases. For the year ended 31

December 2014, the average effective borrowing rate was 25% (2013: 20.8%). The fair value of the Group’s

lease obligations is approximately equal to their carrying value.

Financials

103102



Annual Report 2014 Etisalat

25. ProvisionsAsset retirement

obligationsAED’000

OtherAED’000

TotalAED’000

At 1 January 2013 33,677 779,863 813,540

Additional provision during the year 2,719 1,001,252 1,003,971

Utilization of provision - (208,067) (208,067)

Release of provision (16,167) (184,150) (200,317)

Reclassification - (5,890) (5,890)

Unwinding of discount (162) - (162)

Exchange differences (346) (29,354) (29,700)

At 31 December 2013 19,721 1,353,654 1,373,375

Included in current liabilities 1,172,286

Included in non-current liabilities 201,089

At 31 December 2013 19,721 1,353,654 1,373,375

Additional provision during the year 20,718 737,070 757,788

Acquisition of Maroc Telecom (Note 30) - 197,061 197,061

Utilization of provision (6) (46,511) (46,517)

Release of provision (6,025) (243,774) (249,799)

Adjustment for change in discount rate (549) (1,188) (1,737)

Unwinding of discount 673 - 673

Exchange differences (426) (41,116) (41,542)

At 31 December 2014 34,106 1,955,196 1,989,302

Included in current liabilities - - 1,862,566

Included in non-current liabilities - - 126,736

At 31 December 2014 34,106 1,955,196 1,989,302

Asset retirement obligations relate to certain assets held by certain Group’s overseas subsidiaries that will require restoration at a future date that has been approximated to be equal to the end of the

useful economic life of the assets. There are no expected reimbursements for these amounts.

“Other” includes provisions relating to

certain indirect tax liabilities and other regulatory related items, including provisions relating to certain Group’s overseas subsidiaries.

26. Financial instruments

Details of the significant accounting policies and methods adopted (including the criteria for recognition,

the basis of measurement and the bases of recognition of income and expenses) for each class of financial

asset and financial liability are disclosed in Note 2.

Capital management

The Group’s capital structure is as follows: 2014AED’000

2013AED’000

Bank borrowings (7,325,741) (4,682,001)

Bonds (14,164,803) -

Other borrowings (1,002,005) (1,189,664)

Finance lease obligations (24,266) (5,024)


Net funds (3,973,956) 9,573,559

Total equity 60,926,871 49,592,696

Net equity 64,900,827 40,019,137

The capital structure of the Group consists of bonds, bank and other borrowings, finance lease obligations, cash and cash equivalents and total equity comprising share capital, reserves and retained earnings.

The Group monitors the balance between equity and debt financing and establishes internal limits on the maximum amount of debt relative to earnings. The limits are assessed, and revised as deemed appropriate, based on various considerations including

the anticipated funding requirements of the Group and the weighted average cost of capital. The overall objective is to maximise returns to its shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Categories of financial instruments

The Group’s financial assets and liabilities consist of the following: 2014AED’000

2013AED’000

Financial assets

Loans and receivables, held at amortised cost:

Loans to/due from associates and joint ventures 2,850,049 3,074,027

Trade and other receivables, excluding prepayments 17,513,554 10,703,026

20,363,603 13,777,053

Available-for-sale financial assets (including other investments held for sale) 747,381 1,119,847

Fair value through Profit or loss 44,625 -

Held-to-maturity investments 191,991 195,585


Derivative financial instruments 293,584 -

40,184,043 30,542,733

Financial liabilities

Other financial liabilities held at amortised cost:

Trade and other payables, excluding deferred revenue 30,253,329 20,505,506

Borrowings 22,492,549 5,871,665

Payables related to investments and licenses 4,070,493 3,032,374

Finance lease obligations 24,266 5,024

56,840,637 29,414,569

Financials

105104




26. Financial instruments (continued) 26. Financial instruments (continued)

Financial risk management objectives

The Group’s corporate finance function monitors the domestic and international financial markets relevant to managing the financial risks relating to the operations of the Group. Any significant decisions about whether to invest, borrow funds or purchase derivative financial instruments are approved by either the Board of Directors or the relevant authority of either the Corporation or of the individual subsidiary. The Group’s risk includes market risk, credit risk and liquidity risk.

The Group takes into consideration several factors when determining its capital structure, with the aim of ensuring sustainability of the business and maximizing the value to shareholders. The Group monitors its cost of capital with a goal of optimizing its capital structure. In order to do this, the Group monitors the financial markets and updates to standard industry approaches for calculating weighted average cost of capital, or WACC. The Group also monitors a net financial debt ratio to obtain and maintain the desired credit rating over the medium term, and with which the Group can match the potential cash flow generation with the alternative uses that could arise at all times. These general principles are refined by other considerations and the application of specific variables, such as country risk in the broadest sense, or the volatility in cash flow generation, or the applicable tax rules, when determining the Group’s financial structure.

a) Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and price risks on equity investments. From time to time, the Group will use derivative financial instruments to hedge its exposure to currency risk. There has been no material change to the Group’s exposure to market

risks or the manner in which it manages and measures the risk during the year.

Foreign currency risk

The Group’s presentation/functional currency is United Arab Emirates Dirham (“AED”). Foreign currency risk arises from transactions denominated in foreign currencies and net investments in foreign operations.

The Group has foreign currency transactional exposure to exchange rate risk as it enters into contracts in other than the functional currency of the entity (mainly USD and Euro). The Group entities also enter into contract in the functional currencies including Nigerian Naira, Egyptian Pounds, Pakistani Rupee, Sri Lankan Rupee, Afghani, Tanzanian Shilling CFA Francs and Moroccan Dirham. Etisalat UAE also enters into contracts in USD which is pegged to AED. Atlantique Telecom Group enters into Euros contracts as CFA is pegged to Euro and Maroc Telecom also enters into Euro contracts as Moroccan Dirham is 80% pegged to Euro. The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risk, including forward foreign exchange contracts, interest rate swaps and cross currency swaps.

In addition to transactional foreign currency exposure, a foreign currency exposure arises from net investments in Group entities whose functional currency differs from the Group’s presentation currency (AED). The risk is defined as the risk of fluctuation in spot exchange rates between the functional currency of the net investments and the Group’s presentation currency. This will cause the amount of the net investment to vary. Such a risk may have a significant impact on the Group’s consolidated financial statements.

This translation risk does not give rise to a cash flow exposure. Its impact arises only from the translation of the net investment into the group’s presentation currency. This procedure is required in preparing the Group’s consolidated financial statements as per the applicable IFRS.

The cross currency swaps involve the exchange of principal and floating or fixed interest receipts in the foreign currency in which the issued bonds are denominated, for principal and floating or fixed interest payments in the Group’s functional currency. The fair value of a cross currency is determined using standard methods to value cross currency swaps and is the estimated amount that the swap contract can be exchanged for or settled with under normal market conditions. The key inputs are the yield curves, basis curves and foreign exchange rates. In accordance with the fair value hierarchy within IFRS 7 Financial Instruments: Disclosure, the fair value of cross currency swaps represent Level 2 fair values.

Foreign currency sensitivity

The following table presents the Group’s sensitivity to a 10 per cent change in the Dirham against the Egyptian Pound, the Euro, the Pakistani Rupees and Marccon dirham. These four currencies account for a significant portion of the impact of net profit, which is considered to materially occur through cash and borrowings within the Group’s financial statements in respect of subsidiaries and associates whose functional currency is not the Dirham. The impact has been determined by assuming a weakening in the foreign currency exchange of 10% upon closing foreign exchange rates. A positive number indicates an increase in the net cash and borrowings balance if the AED/USD were to strengthen against the foreign currency.

2014AED’000

2013AED’000

Increase in profit/(loss) and increase/(decrease) in equity

Egyptian pounds 112,074 108,489

Euros 1,164,144 52,808

Pakistani rupees 12,187 7,569

MAD 156,556 -

Interest rate risk

The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The Group monitors the market interest rates in comparison to its current borrowing rates and determines whether or not it believes it should take action related to the current interest rates. This includes a consideration of the current cost of borrowing, the projected future interest rates, the cost and availability of derivate financial instruments that could be used to alter the nature of the interest and the term of the debt and, if applicable, the period for which the interest rate is currently fixed.

Interest rate sensitivity

Based on the borrowings outstanding at 31 December 2014, if interest rates had been 2% higher or lower during the year and all other variables were held constant, the Group’s net profit and equity would have decreased or increased by AED 87 million (2013: AED 91 million). This impact is primarily attributable to the Group’s exposure to interest rates on its variable rate borrowings.

The Group’s sensitivity to interest rate has reduced significantly during the year due to the fixed coupon bonds issued in June 2014.

Other price risk

The Group is exposed to equity price risks arising from its equity investments. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments. See Note 15 for further details on the carrying value of these investments.

If equity price had been 5% higher or lower:

• profitfortheyearended31December2014 would increase/decrease by AED 15 million (2013: nil) due to profit realised on disposal of investments in available-for-sale shares

• othercomprehensiveincomefortheyear ended 31 December 2014 would increase/decrease by AED 28 million (2013: increase/decrease by AED 67 million) as a result of the changes in fair value of available-for-sale shares.

b) Credit risk management

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and arises principally from the Group’s bank balances and trade and other receivables. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

For its surplus cash investments, the Group considers various factors in determining with which banks and /corporate to invest its money including but not limited to the financial health, Government ownership (if any), the rating of the bank by rating agencies The assessment of the banks and the amount to be invested in each bank is assessed annually or when there are significant changes in the marketplace.

Group’s bank balance 2014 2013

Investment in UAE 86% 99%

Investment outside of the UAE 14% 1%

Bank rating for Investment in UAE2014 2013

AED Rating AED Rating

By Fitch 7.0 billion A+ 5.9 billion A+

1.7 billion A 1.6 billion A

By Standard and Poor›s - NA 1.5 billion A

The Group’s trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, collateral is received from customers usually in the form of a cash deposit.

The carrying amount of financial assets recorded in the consolidated financial statements, net of any allowances for losses, represents the Group’s maximum exposure

to credit risk without taking account of the value of any collateral obtained.

c) Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining

adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The details of the available undrawn facilities that the Group has at its disposal at 31 December 2014 to further reduce liquidity risk is included in Note 21. The majority of the Group’s financial liabilities as detailed in the consolidated statement of financial position are due within one year.

Financials

107106




27. Provision for end of service benefits (continued)

Financial liabilities are repayable as follows:

AED’000

Trade and other payables,

excluding deferred revenue Borrowings

Payables related to

investments and licenses

Finance lease

obligations Total

On demand or within one year 29,389,497 3,952,158 3,133,794 6,983 36,482,432

In the second year 1,075,533 1,034,817 936,699 17,283 3,064,332

In the third to fifth years inclusive 12,451 4,881,624 - - 4,894,075

After the fifth year 336 12,623,950 - - 12,624,286

As At 31 December 2014 30,477,817 22,492,549 4,070,493 24,266 57,065,125

On demand or within one year 19,663,755 1,404,543 2,963,623 2,564 24,034,485

In the second year 1,012,431 1,112,335 68,751 2,460 2,195,977

In the third to fifth years inclusive 15,520 2,999,402 3,014,922

After the fifth year 33,799 355,385 389,184

As At 31 December 2013 20,725,505 5,871,665 3,032,374 5,024 29,634,568

The above table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

Fair value of financial instruments

Borrowings are measured and recorded in the consolidated statement of financial position at amortised cost and their fair

values are disclosed in Note 21. The carrying amounts of the other financial assets and liabilities recorded in the consolidated financial statements approximate their fair values.

27. Provision for end of service benefits

The liabilities recognised in the consolidated statement of financial position are: 2014AED’000

2013AED’000

Funded Plans

Present value of defined benefit obligations 3,541,336 3,025,327

Less: Fair value of plan assets (3,089,390) (2,555,736)

451,946 469,591

Unfunded Plans

Present value of defined benefit obligations and other employee benefits 1,592,594 1,442,182

Total 2,044,540 1,911,773

The movement in defined benefit obligations for funded and unfunded plans is as follows: 2014AED’000

2013AED’000

As at 1 January 4,467,509 4,376,946

Acquisition of Maroc Telecom (Note 30) 162,946 -


Service cost 146,761 132,541

Interest cost 447,896 382,308

Actuarial gain 11,754 4,712

Remeasurements 210,071 208,290

Benefits paid (706,363) (344,296)

Gain and loss on settlement 233,420 -

Exchange difference 162,212 (292,992)

As at 31 December 5,133,930 4,467,509

The movement in the fair value of plan assets is as follows: 2014AED’000

2013AED’000

As at 1 January 2,555,736 2,390,283

Return on plan assets 318,868 268,676

Contributions received 458,295 308,449

Benefits paid (371,355) (214,939)

Exchange difference 127,846 (196,733)

As at 31 December 3,089,390 2,555,736

The amount recognised in statement of profit or loss is as follows: 2014AED’000

2013AED’000

Service cost 146,766 132,419

Interest cost 54,911 130,075

Others 10,739 3,715

212,416 266,209

Following are the significant assumptions used relating to the major plans 2014AED’000

2013AED’000

Discount rate

UAE 2.80% 3.07%

Pakistan 11.25%- 12.5% 11% - 12.5%

Morocco 4% -

Average annual rate of salary

UAE 4.0% 4.0%

Pakistan 7% - 11.5% 7% - 11.5%

Morocco 3%-5% -

26. Financial instruments (continued)

Financials

109108




29. Reserves (continued)27. Provision for end of service benefits (continued)

Plan assets for funded plan are comprised as follows: 2014AED’000

2013AED’000

Debt instruments - unquoted 2,469,808 1,922,083

Cash and cash equivalents 477,771 393,635

Investment property 292,957 250,206

Fixed assets 175 170

Other assets 4,555 5,092

less: liabilities (155,876) (15,450)

3,089,390 2,555,736

The expense recognised in profit or loss relating to contribution plan at the rate specified in the rules of the plans amounting to AED 124 million (2013: AED 123 million).

28. Share capital2014

AED’0002013

AED’000

Authorised:

8,000 million (2013: 8,000 million) ordinary shares of AED 1 each 8,000,000 8,000,000

Issued and fully paid up:

7,906.1 million (2013: 7,906.1 million) ordinary shares of AED 1 each 7,906,140 7,906,140

The movement for each type of reserves is provided below: 2014AED’000

2013AED’000

Translation reserve

As at 1 January (2,209,881) (1,100,345)

Total comprehensive income for the year (1,112,621) (1,109,536)

As at 31 December (3,322,502) (2,209,881)

Investment revaluation reserve

As at 1 January 204,477 80,108

Loss on revaluation (34,904) (139,940)

Reclassification adjustment relating to available-for-sale financial assets (disposed)/impaired during the year

(284,991) 264,309

As at 31 December (115,418) 204,477

Development reserve

As at 1 January and 31 December 7,850,000 7,850,000

Asset replacement reserve

As at 1 January 8,166,000 8,108,000

Transfer from retained earnings - 58,000

As at 31 December 8,166,000 8,166,000

Statutory reserve

As at 1 January 165,077 97,561

Transfer from retained earnings 24,580 67,516

As at 31 December 189,657 165,077

General reserve

As at 1 January 14,091,307 14,080,515

Transfer from retained earnings (6,340) 10,792

As at 31 December 14,084,967 14,091,307

29. Reserves

The movement in the Reserves is provided below: 2014AED’000

2013AED’000

As at 1 January 28,266,980 29,115,839

Total comprehensive income for the year (1,432,516) (985,167)

Transfer from retained earnings 18,240 136,308

As at 31 December 26,852,704 28,266,980

The Board of Directors in their meeting held on 25 February 2015 proposed an increase in the authorized share capital of the Corporation to AED 10,000 million. This is subject to the approval of the shareholders

in the extraordinary general assembly meeting to be held on 24 March 2015. The Board of Directors also proposed the issue of bonus shares in the ratio of 1 share for every 10 registered shares held by the

shareholders of the Corporation. This is also subject to the approval of the shareholders in the annual general assembly meeting to be held on 24 March 2015.

Financials

111110




30. Acquisition of Maroc Telecom (continued)29. Reserves (continued)

a) Development reserve, asset replacement reserve and general reserve

These reserves are all distributable reserves and comprise amounts transferred from unappropriated profit at the discretion of the Group to hold reserve amounts for future activities including the issuance of bonus shares.

b) Statutory reserve

In accordance with the UAE Federal

Law No. 8 of 1984, as amended, and the respective Memoranda of Association of some of the Group’s subsidiaries, 10% of their respective annual profits should be transferred to a non- distributable statutory reserve. The Corporation’s share of the reserve has accordingly been disclosed in the consolidated statement of changes in equity.

c) Translation reserve

Cumulative foreign exchange differences arising on the translation of overseas operations are taken to the translation reserve.

d) Investment revaluation reserve

The cumulative difference between the cost and carrying value of available-for-sale financial assets is recorded in the Investment revaluation reserve. The balance at 31 December 2014 includes AED 28 million (2013 AED 259 million) being the cumulative gain recognised in other comprehensive income relating to quoted investment which is classified as held for sale.

30. Acquisition of Maroc Telecom

On 22 July 2013, the Group made a binding offer for Vivendi›s 53 percent stake in Maroc Telecom, amounting to consideration of EUR 3.9 billion (at that time equivalent to AED 19.3 billion). This consideration did not include the dividend received by Vivendi from Maroc Telecom in respect of the 2012 financial year, equivalent to MAD 7.40 per share, which would be for the benefit of the Group. At closing, the Group would pay Vivendi the cash value of 2012 dividend of EUR 0.3 billion (AED 1.5 billion). On 4 November 2013, the Group signed a share purchase agreement for the acquisition of Vivendi›s stake in Maroc Telecom. The acquition is in line with the group›s strategy to reach out to new customers and markets. On 28 April 2014, the Group entered into a multi-currency facilities agreement with a syndicate of local and international banks for the purpose of financing the acquisition.

On 14 May 2014, the Group completed the acquisition at a net adjusted price of EUR 4.1 billion (AED 20.9 billion) which was primarily financed through external borrowings. This amount included the cash value of the 2012 dividend, amounting to EUR 0.3 billion (AED 1.5 billion). The transaction was effected through the acquisition by Etisalat International North Africa LLC (“EINA”) of Vivendi’s 100% shareholding in Société de Participation dans les Télécommunications (“SPT”) established in the Kingdom of Morocco, which directly holds 53% of the shares in Maroc Telecom. The effective interests in the capital of EINA are Etisalat (91.33%) and Abu Dhabi Fund for Development (8.67%).

The application of acquisition accounting under IFRS 3 requires that the total purchase price to be allocated to the fair value of the assets acquired and liabilities assumed based on their fair values at the

acquisition date, with amount exceeding the fair values being recorded as goodwill. Accordingly, on 14th May 2014, the assets and liabilities of Maroc Telecom have been appraised, based on third party valuations, for inclusion in the consolidated statement of financial position.

The purchase price allocation process (PPA) requires an analysis of acquired fixed assets, licenses, customer relationships, brands, contractual commitments and contingencies to identify and record the fair values of all assets acquired and liabilities assumed. In valuing acquired assets and liabilities assumed, fair values were based on but not limited to: future expected discounted cash flows for customer relationships, current replacement cost for similar capacity and obsolescence for certain fixed assets, comparable market rates for real estate and appropriate discount rates and growth rates.

The following table summarises the fair values of the assets acquired, liabilities assumed, related deferred taxes and goodwill as of the acquisition date further to the purchase price allocation process (PPA).

Fair values based on purchase price allocation

AED’000

Intangible assets 10,729,232

Property, plant and equipment 14,886,958

Investments 129,342

Inventory 191,419

Trade and other receivables 4,303,344

Deferred tax assets 46,955

Cash and cash equivalents 2,261,948

Trade and other payables (8,664,357)

Provision for end of service benefits (162,946)

Provision (197,061)

Obligations under finance leases (22,450)

Bank loans (2,543,565)

Deferred tax liabilities (3,637,635)

Net identifiable assets acquired 17,321,184

Non-controlling interests in the acquiree (8,159,944)

Goodwill 11,761,694

Fair value of investment 20,922,933

Net cash inflow arising on acquisition:

Cash and cash equivalents acquired 2,261,948

Included in the profit for the year is AED 796 million attributable to the business generated by Maroc Telecom Group. Revenue for the year includes AED 7,934 million in respect of Maroc Telecom. Had this business combination been effected at 1 January 2014, the revenue of the Group would have been AED 53,084 million and the profit for the year would have been AED 9,965 million.

The receivable acquired in these transaction are treated at their fair value and have a gross contractual amount of AED 5,167 million. Their best estimate at acquition date of the contractual cash flows not expected to be collected are amounting to AED 2,777 million.

Following the acquisition in May 2014, the Group has received a dividend of AED

1,249.1 million (MAD 2,795.6 million) from Maroc Telecom relating to the year 2013.

Goodwill resulting from the acquisition has been assigned to Maroc Telecom and Maroc Telecom›s international subsidiaries as a CGU. Acquisition accounting allows for recognition of deferred tax liabilities on acquired intangibles (other than goodwill) which is expected to be reflected as a tax benefit on Group’s future consolidated statement of profit or loss in proportion to and over the amortization period of the related intangible asset. There is no deferred tax liability recorded for fair value adjustment relating to land as this is not depreciated.

Goodwill arose in the acquisition of Maroc Telecom because the cost of the combination included:

Limited competition of the fixed line business in North and Western Africa; and

Long-term ability to retain mobile customers and maintain market share in its key markets;

Ability to participate in the consolidation of telecommunications industry in North Africa and Western Africa; and

Trained and skilled workforce.

These benefits are not recognised separately from Goodwill because that do not meet recognition criteria for identifiable intangible assets.

Acquisition related costs amounting to AED 621 million (Note 7) have been excluded from the consideration transferred and have been recognised as an expense in profit and loss of the current year.

Financials

113112




31. Significant events

On 22 February 2012, the Supreme Court of India cancelled all of Etisalat DB Telecom Private Limited›s (the Company) licenses, removing the Company›s ability to operate its current mobile telecommunications business. Following the cancellation, the Board of the Company unanimously agreed to shut down its telecommunications network and gave the appropriate notices to the Indian authorities. Furthermore, the resignation of the directors of the Company

appointed by the majority shareholders without replacement adversely affected the ability of the Company›s Board of Directors to take decisions. Subsequently, Etisalat Mauritius Limited (which is wholly owned by Etisalat) filed proceedings on 12 March 2012 for the just and equitable winding up of the Company (the Company Petition). The Company Petition was admitted by the Company Court by its judgment dated 18 November 2013. However, the decision

was appealed to the Appeal Court by one of the Company’s shareholders but dismissed by an order dated 8 April 2014. The decision of the Appeal Court was further appealed to the Supreme Court but finally dismissed by an order dated 14 July 2014.

The final arguments in the Company Petition have been heard by the Company Court and orders remain reserved, at the consolidated statement of financial position date.

32. Commitments

a) Capital commitments

The Group has approved future capital projects and investments commitments to the extent of AED 9,377 million (2013: AED 5,448 million).

b) Lease commitments

i) The Group as lessee2014

AED’0002013

AED’000

Minimum lease payments under operating leases recognised as an expense in the year (Note 5) 227,777 258,458

At the end of the reporting period, the Group had outstanding commitments for future minimum lease payments under non- cancellable operating leases, which fall due as follows:

2014AED’000

2013AED’000

Within one year 272,814 275,839

Between 2 to 5 years 1,040,687 1,330,078

After 5 years 1,159,391 722,640

2,472,892 2,328,557

Operating lease payments represent rentals payable by the Group for certain of its office and retail properties. Leases are negotiated for an average term of two years.

ii) The Group as lessor

Property rental income earned during the year was AED 11 million (2013: AED 12 million). All of the properties held have committed tenants for the next 4 years.

At the reporting date, the Group had contracted with tenants for the following future minimum lease payments:

2014AED’000

2013AED’000

Within one year 8,269 10,207

Between 2 to 5 years 8,224 29,673

16,493 39,880

33. Contingent liabilities

a) Bank guarantees

2014AED million

2013AED million

i) Performance bonds and guarantees in relation to contracts 949.0 527.0

Corporation Overseas investments 771.3 393.0

ii) Promissory notes and letter of credit 39.4 228.0

b) Foreign exchange regulations

On 23 July 2011, Etisalat DB Telecom Pvt Limited (the Company) received a show cause notice from the Enforcement Directorate (the ED) of India alleging certain breaches of the Foreign Exchange Management Act 1999 (FEMA), by the Company and its Directors. The Company and its Directors have filed their response(s) to the notice and the cases of each of the notices have been part heard by the ED. The proceedings of the case have been adjourned, pending the hearing of an appeal to the Supreme Court on procedural matters which has not been

heard as at the consolidated statement of financial position date.

c) Other contingent liabilities

i) The Group is disputing certain charges from the governmental and telecom regulatory agencies in the UAE and certain other jurisdictions but does not expect any material adverse effect on the Group›s financial position and results from resolution of these.

ii) With reference to ongoing litigation at various courts in Pakistan regarding

pension increases and pertinent medical allowance cases, pertaining to the Group›s subsidiary Pakistan Telecommunication Company Limited (PTCL), the Honorable Supreme Court of Pakistan suspended the operation of the related order passed by the divisional bench of Honorable Islamabad High Court. On completion of proceedings, the decision is reserved by the Honorable Supreme Court of Pakistan. Since the subject matter is complex and uncertain in nature, the financial implications cannot presently be ascertained with finality.

34. Dividends

Amounts recognised as distribution to equity holders: AED’000

31 December 2013

Final dividend for the year ended 31 December 2012 of AED 0.45 per share 3,556,224

Interim dividend for the year ended 31 December 2013 of AED 0.35 per share 2,765,952

6,322,176

31 December 2014

Final dividend for the year ended 31 December 2013 of AED 0.35 per share 2,765,953

Interim dividend for the year ended 31 December 2014 of AED 0.35 per share 2,765,952

5,531,905

A final dividend of AED 0.35 per share was declared by the Board of Directors on 4 March 2014, bringing the total dividend to AED 0.70 per share for the year ended 31 December 2013.

An interim dividend of AED 0.35 per share was declared by the Board of Directors on 20 July 2014 for the year ended 31 December 2014.

A final dividend of AED 0.35 per share was declared by the Board of Directors on 25 February 2015, bringing the total dividend to AED 0.70 per share for the year ended 31 December 2014.

35. Earnings per share2014 2013

Earnings (AED’000)

Earnings for the purposes of basic earnings per share being the profit attributable to the equity holders of the Corporation 8,892,019 7,078,388

Number of shares (‘000)

Weighted average number of ordinary shares for the purposes of basic earnings per share 7,906,140 7,906,140

The Group does not have potentially dilutive shares and accordingly, diluted earnings per share equals to basic earnings per share.

Financials

115114




36. Disposal Group held for sale/ Discontinued operations

On 3rd June 2014 the directors approved a plan to dispose of the Group’s interest in one of the subsidiary of the group. The disposal is in line with the Group›s strategy

to optimise its returns on investments in the international segment. The Group is currently in negotiation with some potential buyers.

The results of operations included in the profit for the year from discontinued operations are set out below.

2014AED’000

2013AED’000

Revenue 299,666 297,121

Operating expenses (408,513) (311,243)

Operating profit (108,847) (14,122)

Finance and other income 41,001 (257)

Finance costs (50,262) (49,137)

Loss for the year from a discontinued operation (118,108) (63,516)

At 31 December 2014 the disposal group comprised the following assets and liabilities

Assets classified as held for sale 2014AED’000

Goodwill 44,896

Other intangible assets 74,075

Property, plant and equipment 255,245

Other investments 3,570

Inventories 11,374

Trade and other receivables 134,682

Cash and cash equivalents 8,915

Assets classified as held for sale 532,757

Liabilities classified as held for sale 2014AED’000

Trade and other payables 860,862

Borrowings 263,379

Provision for end of service benefits 2,276

Liabilities associated with assets classified as held for sale 1,126,517

Net liabilities classified as held for sale 593,760

Cash flows from discontinued operations 2014AED’000

Net cash inflows from operating activities 24,861

Net cash outflows from investing activities (309)

Net cash outflows from financing activities (89,055)

Net cash outflows (64,503)

Cumulative income or expense recognised in other comprehensive income

There are no cumulative income or expenses recognised in other comprehensive income relating to the disposal group

37. Subsequent events

On 26 January 2015, Emirates Telecommunications Corporation (“Etisalat”), Atlantique Telecom SA (“AT”) and Etisalat International Benin Limited (“EffiL”) successfully completed the sale of

Etisalat›s shareholdings in its operations in Benin, the Central African Republic, Gabon, the Ivory Coast, Niger, Togo and Prestige Telecom to Etisalat AI Maghrib (“Maroc Telecom”).

The final consideration in return for Etisalat’s equity in and receivables (including shareholder loans) from these seven companies amounted to Euro 474 million.


Notice of Ordinary and Extraordinary General Shareholders Meetings

The Board of Directors of Emirates Telecommunications Corporation “Etisalat” is pleased to invite the Corporation’s esteemed shareholders to attend the Ordinary and Extraordinary General Shareholders’ Meetings to be held consecutively from 4:30 p.m. on Tuesday 24th March 2015 at Etisalat Head Office building in Abu Dhabi, where the following meeting agenda will be discussed:

Agenda of the Ordinary General Assembly

1. To hear and approve the report of the Board of Directors on the Corporation’s activities and its financial position for the financial year ended 31st December 2014.

2. To hear and approve the External Auditors’ report for the financial year ended 31st December 2014.

3. To discuss and approve the Corporation’s consolidated statements of financial position and profit or loss for the year ended 31st December 2014.

4. To consider the Board of Directors’ recommendations on the distribution of dividends in the amount of 35 fils per share for the second half of the year 2014, bringing the full dividend paid out for the financial year ended 31st December 2014 to 70 fils per share, in addition to considering the Board of Directors’ recommendation for issuance of 10% bonus shares.

5. To look into the remunerations of the Members of the Board of Directors.

6. To absolve the Members of the Board of Directors and the External Auditors of liability in respect of the financial year ended 31st December 2014.

7. To appoint External Auditors for the year 2015 and to determine their fees.

Agenda of the Extraordinary General Assembly:

1. To elect four persons to fill the four Board of Directors’ seats allocated for national shareholders who are not appointed by the Government.

2. To look into increasing the Corporation’s capital.

Notes:

1. Each shareholder is entitled to attend or to delegate a proxy to be present at the Ordinary and Extraordinary General Shareholders’ Meetings on his/her behalf by virtue of an authorization made pursuant to the delegation form attached with the invitation dispatched by mail (minors and those who have no legal capacity shall be represented by their legal representatives). All delegation forms shall be submitted to the Securities Department of the National Bank of Abu Dhabi, P.O. Box 6865-Abu Dhabi, at least two days before the meeting date in order to register the same in the respective records. Only original delegations will be accepted.

2. Only the owners of the shares as of Monday, 23rd March 2015 shall be entitled to vote in the Ordinary and Extraordinary General Shareholders’ Meetings.

3. The owners of the shares as of Sunday, 5th April 2015 shall be entitled to shares’ dividends.

4. The shareholders can review the Corporation’s financial statements on the websites of Etisalat and Abu Dhabi Securities Exchange (ADX).

5. To ensure good organization of the Ordinary and Extraordinary General Shareholders’ Meetings, any shareholder who attends after the beginning of the meeting shall neither be counted for the quorum nor entitled to vote.

6 If the quorum for the first Ordinary and Extraordinary General Shareholders’ Meetings have not been met, the second meeting shall be held on 31st March 2015 at the same place and time.

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Documents

Etisalat AnnualReport2014 English