Investor Presentation

Q4 2018

2

Disclaimer

This document has been prepared by Telecom Egypt (the “Company”) solely for the use at the analyst/investor presentation, held in connection with the Company. The information

contained in this document has not been independently verified. This document contains statements related to our future business and financial performance and future events or

developments involving Telecom Egypt that may constitute forward-looking statements. Such statements are based on the current expectations and certain assumptions of

Telecom Egypt's management, of which many are beyond Telecom Egypt's control. Such assumptions are subject to a number of risks and uncertainties. Should any of these risks or

uncertainties materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results may (negatively or positively) vary materially from those

described explicitly or implicitly in the relevant forward-looking statement. Telecom Egypt neither intends, nor assumes any obligation, to update or revise these forward-looking

statements in light of developments, which differ from those anticipated.

This document does not constitute an offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares of the Company and neither it nor any

part of it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. This presentation has been made to you solely for information

purposes and is subject to amendment. This presentation (or any part of it) may not be reproduced or redistributed, passed on, or the contents otherwise divulged, directly or

indirectly, to any other person or published in whole or in part for any purpose without the prior written consent of the Company.

3

FY 2018 results highlights

Closing the year in line with our full year guidance

22.8bn+23% YoY

6.1bn+18% YoY

3.5bn+14% YoY

Revenue

(EGP bn)

EBITDA

(EGP bn)

Customers

(mn)

Net profit

(EGP bn)

Full year revenue hit 22.8bn with a 23% growth

YoY. Fixed and mobile data services represented

46% of the topline growth.

Our customer base broadly increased whereas

mobile subscribers closed at 3.9mn, fixed voice

and data subscribers noted a YoY growth of 10%

and 29% respectively.

EBITDA margin came in at 27% as high

margin revenues and the lower call & employee

costs-to-revenue offset the c4.7x increase in

advertising & marketing expenses.

Operating profit grew 76% YoY. Normalizing

Etisalat Misr provisions in 2017, operating profit grew

by +14% YoY.

Net profit rose 14% YoY. Normalizing for dispute

settlement impact on 2017, net profit for 2018

would have declined by 15% on the 2x higher net

interest and finance cost and the 6% decline in our

share in Vodafone’s income. EBITDA margin of 27% Net profit margin of 15%

FY 2018: Data growth and large projects boost

the bottom line

Fixed

Mobile

Voice Data

7.9+10% YoY

5.2+29% YoY

3.9+1.6 million net additions ytd

4

Q4 2018 results highlights

Retail upside softened the volatility of some wholesale streams

5.4bn-0.5% YoY / -25% QoQ

0.8bn-36% YoY / -61% QoQ

0.02bnVs 0.43bn in Q4 2017

Revenue

(EGP bn)

EBITDA

(EGP bn)

Customers

( mn)

Net Loss

(EGP bn)

Fixed

Mobile

Voice Data

Q4 2018 topline was stable YoY :

Retail revenue grew 20% on the continuous

growth of both fixed & mobile data services

+37%YoY.

Wholesale reported a 19% YoY decline due to

the absence of cable projects and the lower

capacity sales.

We note that some cable projects and

complimentary access services (part of

enterprise revenue) were pushed to Q1 2019.

EBITDA came in at a margin of 15%, with a

decline of 36%YoY. We note that Q4 2018 EBITDA is

traditionally lower due to the seasonality of some

costs. This quarter, the decline is sharper mainly due

to lower high-margin revenue and one-off costs

mentioned earlier.

Net profit and operating profit barely

breakeven, again, due to the projects’ revenue

pushed to Q1 2019 and the 2x higher net interest

expense.EBITDA margin of 15%, -837bps YoY, -1,334bps QoQ Net profit margin of -0.4%, 751bps YoY, -2,043 bps QoQ

Q4 2018: shift of project revenue to Q1 2019

weighs on margins

7.9+10% YoY

5.2+29% YoY

3.9+1.6 million net additions ytd

5

Vodafone Egypt infrastructure agreements and

dividends distribution

International Services 12bn

Transmission Services 1.5bn 10.85bn

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2028

EGP 4.8bn EGP 0.7bn

June 2020March 2019

EGP 5.5bn in dividends

Deleveraging EGP debt

Cost cutting initiatives

Usa

ge

o

f p

roc

ee

ds

1

2

Investments for expansion3

Interest savings of EGP 490mn in 2019

Reactivating early retirement program

Enabling 2019 CapEx intensity guidance of 30%

12.9

9.2

2.11.5

Current Post dividends

Net debt (bn) Net debt/ EBITDA (x)

18 February 2019

6

Q3 strategic partnership with Airtel & schools project

showcase our ability to rapidly monetize our investments

One time revenue of

USD90mn

USD54mn

Securing recurring revenue

through ancillary services

over the IRUs life time.

Granting IRUs (indefeasible right of use)

along with capacities on long term basis

to Bharti Airtel on some of Telecom Egypt

cables(MENA,TE North,SMW4,&AAE1).

Schools connectivity project stems out from Telecom Egypt ’s national

played role in the initiative of reforming the education system in

Egypt.

Bharti Airtel deal Schools connectivity project

(EGP 1.6bn)

EBITDA margin in early 30s

2,550 schools connected

Initial revenue of

EGP482mn for infrastructure connectivity

Remaining capacity of MENA Cable at higher

margins

FBB subscriptions Further

monetization

High margin as the corresponding

costs is mainly CapEx

7

Highlights of the main events of the quarter

Strategic moves, paving the way for the future

Events in the quarter Subsequent to the quarter

8 Dec: TE and Liquid Telecom, the leading pan-African telecoms

group, announce the signing of a Memorandum of Understanding

(MoU) whereby both parties will explore collaboration opportunities in

three fields: data centre deployment, financial investment in

infrastructure and the development of financial inclusion applications.

12 Feb: TE and Orange Data announce the signing of a new

agreement on bitstream access services enabling Orange Data as

the first operator to sign this agreement to provide its customers with

higher speed internet services.

18 Oct: TE signed a USD 500mn medium-term syndicated loan,

which will be used to support its capital and operational expenditure,

and refinance existing short-term facilities. First Abu Dhabi Bank PJSC

(FAB) and Mashreq Bank PSC (Mashreq) were the Joint Bookrunners

and Mandated Lead Arrangers of the facility.

31 Jan: The government of Egypt, being TE’s major shareholder with

an ownership of 80%, has announced changing some of its

representatives in TE’s Board of Directors by a decree from the

Egyptian Prime Minister with immediate effect and for the remaining

period of Board of Directors.

18 Feb: TE and Vodafone Egypt announce the signing of two ten-

year transmission and infrastructure agreements with a total value of

EGP 10.85bn. Additionally, Vodafone Egypt has proposed a dividend

of EGP12.2bn, of which Telecom Egypt’s share is the equivalent of EGP

5.5bn

8

Revenue

(EGP mn)

EBITDA

(EGP mn)

Net profit

(EGP mn)

Operating Profit

(EGP mn)

Financial highlights

Double digit EBITDA growth helps maintain net profit in spite of heavy investment

1,261

2,036

802

5,184

6,130

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

-36.5%

-60.6%

+18.3%

-431

1,448

-22

3,052

3,484

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

+94.9%

-101.5%

+14.2%

-593

1,395

-32

2,023

3,560

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

+94.5%

-102.3%

+76.0%

5,442

7,233

5,413

18,567

22,771

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

-0.5%

-25.2%

+22.6%

9

41%

16%

15%

20%

8%

Q4 2018

Revenue by business unit

Retail services & specifically data drive revenue growth

Home &

Consumer DomesticEnterprise

International

Carriers Affairs

International

Customers & Networks

1,073 1,111 1,077

4,868

4,424

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

+0.4%

-3.0%

-9.1%

1,654

2,085 2,215

5,662

8,064

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

+33.9%

+6.2%

+42.4%

903

1,151

852

2,627

3,215

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

-5.7%

-25.9%

+22.4%

855 788 818

3,304

3,571

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

-4.3%

+3.9%

+8.1%

956

2,099

450

2,106

3,496

Q4 2017 Q3 2018 Q4 2018 FY 2017 FY 2018

-52.9%

-78.6%

+66.0%

35%

14%16%

20%

15%

FY 2018

FY 2018 performance:

Retail revenue grew 36% YoY relying heavily on strong data performance and higher ARPU.

Home & Consumer noted a growth of 42% YoY driven by the 45% higher data revenue.

Mobile revenue preserved almost the same pace across the year contributing a low single digit to the top line and a

high single digit to the retail revenue.

Enterprise Solutions witnessed a 22% increase driven by the inflow of EGP 482mn in revenues from the schools’

connectivity project and the stable growth of fixed services of 13%YoY.

Wholesale increased 12%. The Bharti Airtel agreement that contributed EGP 1.6bn into our financials and the growth in

infrastructure revenues were the key drivers.

Domestic wholesale rose 8% YoY on the continuing demand for infrastructure leasing by the domestic mobile

operators.

ICA declined 9% YoY in line with the global trend on lower international voice traffic.

IC&N revenue grew 66% on the completion of the Bharti deal in Q3 2018.

10

• Total call & employee costs to the normalized revenue declined by 2.1% and 2.6%

respectively, offsetting the 4.7x higher advertising expenses. The decrease in call cost to

revenue was driven by the revision of the national roaming agreement and the

wholesale team efforts in Q4 2017 to decrease illegal bypass. The decline in employee

costs is a result of the absence of the employee loyalty fund in 2018.

Income statement (FY 2018)

Re

ve

nue

EBITD

AO

the

r

OPEX

Ne

t p

rofit

• Total 2018 revenue reported a 23% YoY increase.

• Fixed and mobile data services grew 43% YoY contributing 46% of overall growth with

the Bharti Airtel agreement (EGP 1.6bn) and the schools’ connectivity project (c0.5bn)

contributing almost the remaining growth.

• Normalized revenue excluding the Bharti Airtel deal grew by 14% YoY.

Exp

ense

s

No

n-o

pe

ratio

na

l

Note: All financial figures reported are based on the consolidated financials under The Egyptian Accounting Standards

* EPS includes employees & BOD profit share

• EBITDA margin recorded 27% (-100bps YoY) mainly as a result of higher advertising

expenses.

• D&A increased 29% YoY due to the full year impact of the 4G license amortization in

2018 versus only one quarter in 2017 and the continued investment in our fixed and

mobile networks.

• Our full year income from direct investments reported a 6% decline based on the

one-offs taken by Vodafone in Q1 2018.

• Net interest rose c3.9x YoY. Our effective interest rate, excluding the syndicated

loan administrative fees, reached 9.1% due to the successful restructuring of a

large portion of our debt into a lower interest USD facilities.

• NPAT closed at EGP 3.5bn, higher 14% YoY, and reported a net profit margin of

15%. Normalizing for dispute settlement impact on 2017, net profit for 2018 would

have declined by 15% on the higher interest and finance cost.

In EGP mn FY 2018 FY 2017 YoY Q4 2018 Q3 2018 Q4 2017 QoQ YoY

Revenue 22,771 18,567 23% 5,413 7,233 5,442 -25% -1%Home & Consumer 8,064 5,662 42% 2,215 2,085 1,654 6% 34%Enterprise Solutions 3,215 2,627 22% 852 1,151 903 -26% -6%Domestic Wholesale 3,571 3,304 8% 818 788 855 4% -4%International Carriers Affairs 4,424 4,868 -9% 1,077 1,111 1,073 -3% 0%International Customers & Networks 3,496 2,106 66% 450 2,099 956 -79% -53%

Total employee cost (5,216) (5,061) 3% (1,578) (1,263) (1,772) 25% -11%Call costs (4,295) (4,152) 3% (1,123) (1,079) (1,039) 4% 8%CoGS (excl. above expenses) (5,116) (3,138) 63% (1,309) (2,226) (972) -41% 35%S&D (excl. salaries, D&A) (1,388) (533) 161% (370) (455) (238) -19% 56%G&A (excl. salaries, D&A) (624) (499) 25% (230) (174) (159) 32% 45%

EBITDA 6,130 5,184 18% 802 2,036 1,261 -61% -36%Margin 27% 28% (100 bps) 15% 28% 23% (1,334 bps) (837 bps)

Other (expense) / income 147 (1,056) -114% (79) 84 (1,066) -194% 93%

Depreciation (2,096) (1,841) 14% (582) (578) (626) 1% -7%Amortization (620) (264) 135% (174) (146) (162) 19% 7%

Operating profit 3,560 2,023 76% (32) 1,395 (593) -102% 95%Margin 16% 11% 474 bps -1% 19% -11% (1,989 bps) 1,029 bps

Income from investments 2,201 2,337 -6% 650 677 561 -4% 16%

Net finance (cost) / income (288) (382) 25% 2 (132) (190) 102% 101%Net interest (expense) / income (1,024) (264) -288% (439) (181) (216) -143% -104%

Tax (958) (659) 45% (200) (311) 8 -36% -2506%

Net Profit 3,484 3,052 14% (22) 1,448 (431) -102% 95%Margin 15% 16% (114 bps) 0% 20% -8% (2,043 bps) 751 bps

EPS 1.61 1.38 17% -0.12 0.74 -0.36 -116% 66.2%

11

• Employee costs declined 11% YoY as Q4 2017 included the annual pension fund

contribution (EGP 260mn), which was absent in 2018. Pension fund contribution will

be resumed on a quarterly basis in 2019.

• Call costs increased by 8% proportionate to the increase in mobile revenues.

Income statement (Q4 2018)

Re

ve

nue

EBITD

AO

the

r

OPEX

Ne

t p

rofit

• Retail revenue growth + 20% YoY, driven by the rise in data revenue +37% YoY,

was offset by the drop in IC&N revenues -53%, the latter declined as a result of the

absence of cable projects and lower capacity sales.

Exp

ense

s

No

n-o

pe

ratio

na

l

• EBITDA came in at EGP 0.8bn, declining 36%YoY, recording a margin of 15%. Q4

margin is traditionally lower due to the expenses seasonality. Nevertheless, this

quarter saw less high-margin revenue and higher advertising costs.

• Amortization and depreciation slightly declined 4% YoY as a result of revising the

useful life of fixed assets..

• Net interest increased c2x, mainly due to the payment of EGP 135mn

administrative fees related to the USD 500mn syndicated loan and the expenses

associated with financing our network expansion.

• Normalized effective interest rate for Q4 2018 reached 9.3%, improving from

13.4% in Q4 2017.

• Operating and net profit barely broke even. Our 16% higher share in Vodafone's

income was weighed down on by the hike in interest cost.

In EGP mn FY 2018 FY 2017 YoY Q4 2018 Q3 2018 Q4 2017 QoQ YoY

Revenue 22,771 18,567 23% 5,413 7,233 5,442 -25% -1%Home & Consumer 8,064 5,662 42% 2,215 2,085 1,654 6% 34%Enterprise Solutions 3,215 2,627 22% 852 1,151 903 -26% -6%Domestic Wholesale 3,571 3,304 8% 818 788 855 4% -4%International Carriers Affairs 4,424 4,868 -9% 1,077 1,111 1,073 -3% 0%International Customers & Networks 3,496 2,106 66% 450 2,099 956 -79% -53%

Total employee cost (5,216) (5,061) 3% (1,578) (1,263) (1,772) 25% -11%Call costs (4,295) (4,152) 3% (1,123) (1,079) (1,039) 4% 8%CoGS (excl. above expenses) (5,116) (3,138) 63% (1,309) (2,226) (972) -41% 35%S&D (excl. salaries, D&A) (1,388) (533) 161% (370) (455) (238) -19% 56%G&A (excl. salaries, D&A) (624) (499) 25% (230) (174) (159) 32% 45%

EBITDA 6,130 5,184 18% 802 2,036 1,261 -61% -36%Margin 27% 28% (100 bps) 15% 28% 23% (1,334 bps) (837 bps)

Other (expense) / income 147 (1,056) -114% (79) 84 (1,066) -194% -93%

Depreciation (2,096) (1,841) 14% (582) (578) (626) 1% -7%Amortization (620) (264) 135% (174) (146) (162) 19% 7%

Operating profit 3,560 2,023 76% (32) 1,395 (593) -102% 95%Margin 16% 11% 474 bps -1% 19% -11% (1,989 bps) 1,029 bps

Income from investments 2,201 2,337 -6% 650 677 561 -4% 16%

Net finance (cost) / income (288) (382) 25% 2 (132) (190) 102% 101%Net interest (expense) / income (1,024) (264) -288% (439) (181) (216) -143% -104%

Tax (958) (659) 45% (200) (311) 8 -36% -2506%

Net Profit 3,484 3,052 14% (22) 1,448 (431) -102% 95%Margin 15% 16% (114 bps) 0% 20% -8% (2,043 bps) 751 bps

EPS 1.61 1.38 17% -0.12 0.74 -0.36 -116% 66.2%

Note: All financial figures reported are based on the consolidated financials under The Egyptian Accounting Standards

* EPS includes employees & BOD profit share

12

Operating Profit

Variance Analysis FY 2018 (YoY)

2,023

3,560

4,203

2,121

981 1,113

612

Employee

Costs

FY 17

Opearting

Profit

Revenue COGS Provisions

155

SG&A Depr & Amort.

90

Other

Income/Expense

FY 18

Operating

Profit

+76%

Note: All financial figures are in EGP million

13

Operating Profit

Variance Analysis Q4 2018 (YoY)

COGS

420

593

Q4 17

Opearting

Profit

Depr & Amort.

194

29

Revenue Employee

Costs

204

SG&A

1,085

Provisions

33

Other

Income/Expense

Q4 18

Operating

Profit

3298

+95%

Note: All financial figures are in EGP million

14

1,584

2,609

3,312

6,088

8,028

-

5,294

1,420

780

13%

21%

24%

33%35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

-

1,00 0

2,00 0

3,00 0

4,00 0

5,00 0

6,00 0

7,00 0

8,00 0

9,00 0

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Capex License Capex/sales

2,523

3,159

4,731

7,376

8,499

- -

5,294

3,340

-

21%

26%

34%

40%

37%

10%

15%

20%

25%

30%

35%

40%

45%

-

1,00 0

2,00 0

3,00 0

4,00 0

5,00 0

6,00 0

7,00 0

8,00 0

9,00 0

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Capex License Capex/sales

Cash flow analysis

Cash capex

(EGP mn)

Net cash from operating activities

(EGP mn)

Note: All financial figures reported are based on Consolidated financials under The Egyptian Accounting Standards.

FCFF

(EGP mn)

In-service capex

(EGP mn)

* Normalizing for one-off settlement payment to Etisalat of EGP 919mn * Normalizing for one-off settlement payment to Etisalat of EGP 919mn

(500)

147

(2,603)(2,456)

(5,075)

(4,156)

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Nor FY 2018

1,796 1,597

4,338

4,649

3,496

4,415

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Nor.FY 2018

15

-0.9x

-0.6x

0.6x

1.3x

2.1x

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

(591)

62

(97)

1,191

797

1,716

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Nor FY 2018

Balance sheet highlights

FCFE

(EGP mn)

Net debt

(EGP mn)

Net debt/ EBITDA

(Based on annualized EBITDA)

Breakdown of capex in-service

* Normalizing for one-off settlement payment to Etisalat of EGP 919mn

69%

16%

5%

5%

4%1%Access Network

Transmission

International cable

Customer care

IT

Others

3,810 2,587 1,180 638 998

-466 -389 -3,342

-7,293

-13,854

-3,344 -2,197 2,161 6,656 12,855

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Net debt

Total debt Cash

16

Our performance in context

Healthy operational performance in light of heavy investments

Revenue Growth

YoY

EBITDA margin (%)

CAPEX / sales (%)

FY 2018

Actual

23%

27%

In-service: 37%

Cash: 35%

FY 2018

guidance

High single to low

double digit

Mid to high 20s

In-service: 30-35%

Mid to high

single digit

Mid to high 20s

In-service: 30%

FY 2019

guidance

Thank you

Investor relations team

investor.relations@te.eg

Check our newly revamped website

www.ir.te.eg