Eye on 2017

Investor Presentation

2

FY 2017 financial highlights

18.6bn+ 33.1% YoY

5.2bn+ 36.4% YoY

3.2bn+ 18.0% YoY

Revenue (EGP bn)

EBITDA (EGP mn)

Customers ( In mn )

Net profit (EGP bn)

Fixed

Mobile

Voice Data

7.1 4.1

2.3

Revenue growth on higher wholesale revenue

(+50% yoy) due to the currency floatation and

higher home services revenue.

On a normalized basis revenue grew by 12.5% yoy

mainly on the growth of the home segment (+34%

yoy) driven by growth in data services as customers

grew by 21% and ARPU by 19%.

EBITDA grew 36% recording a margin of 28%

+(67bps yoy) within our guidance. Excluding one-

offs the EBITDA margin declined c116bps yoy on

higher international interconnection costs, where

call costs increased by 61% yoy to represent 22%

of revenue up from 19% in FY 16.

Although this year was the kick off of our mobile

services, there is no material impact on FY 17

EBITDA or its margin.

Operating profit margin declined c200 bps

( Excluding Provisions ) on a 31% rise in D&A as a

result of the mobile license amortization and our

increased network investments.

Net profit grew 18% yoy aided by a hike in

investment income from Vodafone, yet it was

weighed on by the settlements impact. Excluding

one-offs net profit would have reached 4.8bn

reflecting a growth of 31% YoY.

EBITDA margin of 27.9% (+67bps)

*Excl. one-offs margin of 28.9% (-116bps YoY)

Net profit margin of 17% (-217bps)

*Excl. one-offs net profit of EGP 4.8bn with

a margin of 26% (-39bps YoY)

FY 17: Double digit growth across the P&L

3

Operational highlights

Mobile service

launch in September

2017

Reaching

2.3m mobile

customers

Increasing

minimum speed

for FBB to 4 Mbps

for 60% of

customers

4 wholesale agreements with

the 3 local mobile operators

to secure long-term revenue

Sealed a site

sharing

agreement

with Etisalat

Completed a national

roaming agreement

with Etisalat and MoU

with Orange

Customer care focus yielding

results: mobile NPS above int’l

benchmark & significant

improvement in fixed

broadband NPS

Fixed broadband

customers grew

20%

reaching 4m & a

market share of

78% Fixed voice revenue

resuming growth on

11% increase in

customers

Fixed

data

revenue

grew

42%

Home

data ARPU

growth of

19%

Enterprise

data ARPU

growth of

11%

Launching “WE”

complete mobile

recharge

platform

Int ’l capacity

mega deals

with PCCW and

STC

4

No more legal overhangs

To clean its balance sheet Telecom Egypt took the hit of a 10 year

conflict settlement in one quarter

Dispute duration:

Services under

dispute:

Cash flow impact:

Local interconnection, transmission

and international services

Orange to pay EGP 74m

Sep. 2008 to Dec. 2015

Interconnection rates International services

Vodafone to distribute

cash of which telecom

Egypt received EGP1.5bn

Sep. 2008 to 2017

Litigation started June 2015 for

claims dated back from 2007

to 2017

TE to pay USD 47m

Orange financial Impact

Income statement Balance Sheet Cash flows

Revenues 49

Provisions 250

NPBT 201

Receivables 670

Impairments 648

Revenue 49

Orange payment 25

Income statement

Provisions EGP 1,020mn

NPBT EGP 1,020mn

Etisalat financial Impact

Receivables EGP 95mn

Provisions EGP 1,020mn

Balance Sheet Cash flows 2018

TE payment USD 48mn

TE avoids a USD 92m

court case

5

Rebirth of the customer care

Our new brand identity & values revolves around customer focus

5

HistoryOrganization driven by technicians

April 2017

Adoption of customer centric approach

July 2017New mobile centre creation

Sep. 2017New brand with new customer focus

Ongoing

Extending transformation strategy to fixed

segments

Operational

excellence

Human Capital

New era of

customer focus

Digital Support

boost

Sep-17 Oct-17 Nov-17 Dec-17

Mobile NPS

Global benchmark

Customer care strategic pillars

Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

Fixed broadband NPS

Global benchmark

NPS = % of Promoters - % of Detractors

6

Remodeling our CAPEX spending

Access

&

Core

2016 2017

US$ 469 million US$ 415 million 5%

- MSANs Expansion: 2,916

- IP Core Upgrade: 16 Terabyte

- IPT Upgrade : 1.2 Terabyte

- RAN Deployment: 927 nodes

- Mobile Core & VAS: 5 million customers

US$ 271 million US$ 303 million

- MSANs Expansion: 4,512

- IP Core Upgrade: 9.6 Terabyte

- IPT Upgrade: 900 Gigabyte

Transmission

NetworkUpgrade the Network Capacity by 10

Terabyte

US$ 97 million US$ 42 million

Upgrade the Network Capacity by 16 Terabyte

International

Network SMW4 Upgrade 5, AAE 1, IRU capacitiesMesh Network, AAE1, EIG Upgrade 3, TE north,

SMW5, IRU capacities

US$ 37 million` US$ 19 million

IT & Customer

Care- KAM Solution

- Outlets Renovation (37 outlets)

- Mobile Pre Paid & Post Paid Services (BSS)

- Outlets Renovation (150 outlets)

- Fixed Billing Upgrade

- Enterprise CRM for Data services

- Call Center & IVR Expansion

US$ 55 million US$ 45 million

7

Revenue

(EGP mn)

EBITDA

(EGP mn)

Net profit (LOSS)

(EGP mn )

Operating Profit (LOSS)

(EGP mn)

7

4,431 4,389

5,442

13,950

18,567

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+22.8%

24.0%

+33.1%

-511

1,008

-396

2,670

3,150

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

-22.4%

-139.3%

+18.0%

758

1,1451,261

3,801

5,184

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+66.5%

+10.1%

+36.4%

-187

680

-558

1,9912,122

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+198.9%

-182.1%

+6.6%

Key FY 2017 highlights

Double digit growth across the P&L

8

8

Revenue by business unit

Retail leading normalized growth

36%

18%

20%

18%

8%

Normalized

31%

15%

18%

26%

10%

Actual

FY 2017

Home DomesticEnterprise

International

Carriers Affairs

International

Customers & Networks

1,1401,418

1,654

4,228

5,662

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+45.1%

+16.6%

+33.9%

772

579

944

2,389

2,791

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+22.3%

+63.0%

+16.9%

827 776855

3,004

3,304

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+3.3%

10.2%

+10.0%

1,1291,283

1,073

3,203

4,868

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

-4.9%

-16.3%

+52.0%

563333

916

1,126

1,942

Q4 2016 Q3 2017 Q4 2017 FY 2016 FY 2017

+62.8%

+174.8%

+72.4%

Home revenue growth in FY 17 supported by higher data services, customers grew 21% yoy &

ARPU 19%.

Enterprise revenue growth in FY 17across all segments but mainly due to growth in managed

access services. On a quarterly basis, the jump in Q4 17 relates to the completion of infrastructure

projects in new urban communities.

Domestic wholesale continues to grow on increased demand for infrastructure leasing services.

ICA in FY 17 grew on the currency floatation, on a normalized basis it declined by 13% yoy. On a

quarterly basis, ICA declined 16% qoq, which is attributable to the continuation of traffic decline

relating to illegal bypass and the increase of the impact of OTT players.

ICN in the year grew by 72% on the currency floatation and the recognition of a cable project in

Q4 2017. On a quarterly basis, in addition to the cable project, there was a hike in capacity sales.

9

In EGP mn FY 2017 FY 2016 FY 2017 FY 2016 FY 2017 FY 2016

 S&D -1,763 -1,384 -1,627 -1,201 136 183

EBITDA 5,184 3,801 5,184 3,801 - -

Margin 27.72% 26.90% 27.92% 27.25% 20 bps 35 bps

International Customers & Networks 1,126 1,942 - -1,1261,942

Domestic Wholesale 3,168 3,304 -122 -1633,0043,426

International Carriers Affairs 3,203 4,868 - -3,2034,868

Home Services 4,240 5,662 -9 -134,2285,671

Enterprise Solutions 2,395 2,791 -5 -72,3892,796

VarianceBefore Restatement After Restatement

Revenue 14,133 18,567 13,950 -136 -18318,703

Accounting restatement

to discounts implemented in Q4 2017

Re

ve

nue

S&

DEBIT

DA

Revenue is now recorded net of discounts, the segment that is most

affected is domestic wholesale.

The discounts were previously recorded in Selling and distribution

expenses under discount allowed, which have now be removed.

As such EBITDA in absolute terms was not affected, however the margin

slightly improved.

10

Q4 2017 results highlights

5.4bn+ 23% YoY/ +24% QoQ

1.3bn+ 66% YoY/ +10% QoQ

0.4bnvs. 0.5bn in Q4 16

Revenue (EGP bn)

EBITDA (EGP mn)

Customers ( In mn )

Net loss(EGP bn)

Fixed

Mobile

Voice Data

7.1 4.1

2.3

Revenue growth on 1) higher home services

revenue (+45% yoy) and 2) higher wholesale

revenue wholesale revenue (+50% yoy).

Wholesale is driven by the recognition of an

additional c250m in cable projects.

On a normalized basis revenue grew by 16% yoy.

EBITDA grew 66% recording a margin of 23%.

Excluding one-offs the EBITDA margin would have

increased slightly by c60bps yoy to record 26.5%.

One-offs in the quarter include 1) EGP 150m in

salaries related to a bonus for the mobile launch

and 2) EGP 260m related to the employee pension

fund, the latter compares to EGP 400m in Q4 2016.

Total employee costs as % of revenue declined to

32.6% from 35.4% last year.

Total call costs including national & international

interconnection and national roaming increased

4% yoy, yet declined 4% qoq declining as a % of

revenue from 23% last year and 24% last quarter to

19% this quarter.

This is the first quarter where the full impact of the

amortization is visible on the P&L.

Net loss narrowed compared to Q4 16. Excluding

one-offs related to fx and the settlements net profit

would have grown 42% yoy.

EBITDA margin of 23.2% (+292bps)

*Excl. one-offs margin of 29.7% (+357bps YoY)

Net loss margin of 7%

*Excl. one-offs net profit of EGP 1.4bn with

a margin of 25% (+321bps YoY)

Q4 2017: Profitability weighed on by one-offs

11

• Investment income from VFE rose given that FY 16 included fx losses, but also

because VFE’s operating profit expanded by 28% in FY 17.

• Finance costs include fx gain (losses) and the adjustment of the present value

related to the license renewal. FY 16 included an fx gain of 888m vs. 136m in

losses in FY 17.

• Interest expense rose as a result of the higher net debt level, Q4 17 witnessed the

first full impact of interest expense, which prior to that was capitalized.

• Other expenses include the impairments and provisions relating to the settlements

amounting to EGP 1.27bn in total.

• Depreciation rose as a result of our increased investments and amortization on

the back of the mobile license. Q4 is the first quarter with the full amortization

impact.

• In spite of the rising costs EBITDA margin improved yoy by 67bps thanks to the

revenue growth. On a qoq basis EBITDA margin was pressured due to the one-off

bonus related to the mobile launch, the contribution to the pension fund and the

annual bonus, adjusting for the first two Q4 EBITDA would have reached 30%

boosted by high margin enterprise and cable revenue.

Income statement

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

Re

ve

nue

EBITD

AO

the

r

Op

ex

Ne

t

pro

fit

• Revenue growth on across all business units, especially in home services mainly

on fixed data, enterprise solutions and ICN.

In EGP mn FY 2017 FY 2016 YoY Q4 2017 Q3 2017 Q4 2016 QoQ YoY

Revenue 18,567 13,950 33% 5,442 4,389 4,431 24% 23%

Home Services 5,662 4,228 34% 1,654 1,418 1,140 17% 45%

Enterprise Solutions 2,791 2,389 17% 944 579 772 63% 22%

Domestic Wholesale 3,304 3,004 10% 855 776 827 10% 3%

International Carriers Affairs 4,868 3,203 52% 1,073 1,283 1,129 -16% -5%

International Customers & Networks 1,942 1,126 72% 916 333 563 175% 63%

Total employee cost (5,061) (4,629) 9% (1,772) (1,121) (1,570) 58% 13%

Call costs (4,152) (2,587) 60% (1,039) (1,082) (998) -4% 4%

CoGS (excl. above expenses) (3,138) (2,229) 41% (972) (809) (821) 20% 18%

S&D (excl. salaries, D&A) (533) (300) 77% (238) (133) (121) 79% 97%

G&A (excl. salaries, D&A) (499) (403) 24% (159) (98) (163) 62% -3%

EBITDA 5,184 3,801 36% 1,261 1,145 758 10% 66%

Margin 28% 27% 67 bps 23% 26% 17% (292 bps) 608 bps

Other (expense) / income (1,056) (275) 284% (1,066) (12) (397) 8637% 169%

Depreciation (1,743) (1,458) 20% (591) (407) (525) 45% 13%

Amortization (264) (77) 243% (162) (46) (23) 253% 618%

Operating profit 2,122 1,991 7% (558) 680 (187) -182% 199%

Margin 11% 14% (285 bps) -10% 16% -4% n/m (605 bps)

Income from investments 2,337 668 250% 561 602 (469) -7% n/m

Net finance (cost) / income (350) 665 -153% (183) (39) 190 374% -196%

Net interest (expense) / income (296) 28 -1157% (222) (85) (0) 162% n/m

Tax (659) (680) -3% 8 (150) (45) n/m n/m

Net Profit 3,150 2,670 18% (396) 1,008 (511) n/m 22%

Margin 17% 19% (217 bps) -7% 23% -12% n/m 424 bps

EPS 1.43 1.20 19% (0.34) 0.49 (0.39) n/m 22%

Exp

ense

s

• Employee expenses are higher on a qoq basis as a result of a one-off bonus

related to the mobile launch (c150m), the contribution to the employee

pension fund (c260m), in addition to the annual bonus.

• Call costs increased y-o-y on the currency floatation, Q4 witnessed a change in

trend where outgoing international call costs were significantly reduced.

• The increase in CoGs relates to higher cost of devices plus higher fuel & power

costs and the rise in S&D is a function of advertising costs.

No

n-o

pe

ratio

na

l

• Net profit grew 18% yoy to reach 3.15bn, excluding the one-offs net profit would

have reached EGP 4.8bn.

12

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.12

FCFF

(EGP mn)

In-service capex

(EGP mn)

2,083

1,796

1,597

4,338

4,649

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

1,682

(500)

147

(2,603)(2,456)

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

756

1,584

2,609

3,312

6,088

5,294

1,420

7%

13%

21%

62%

40%

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

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Capex License Capex/sales

756

2,523

3,159

4,731

7,376

- - -

5,294

3,340

7%

21%

26%

72%

58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

-

1,00 0

2,00 0

3,00 0

4,00 0

5,00 0

6,00 0

7,00 0

8,00 0

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Capex License Capex/sales

13

Balance sheet highlights

13

FCFE

(EGP mn)

Net debt

(EGP mn)

Net debt/ EBITDA

(EGP mn)

Breakdown of capex in-service

1,541

(591)

62

(97)

1,191

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

73%

10%

5%

11%1%

FY 2017

Access Network Transmission International cable Customer care Others

5,762

3,810

2,587

1,180 638

-582 -466 -389

-3,342

-7,293

-5,179 -3,344 -2,197 2,161 6,656

FY 2013 FY 2014 FY 2015 FY 2016 9M 2017

Net debt

Total debt Cash

-1.4x

-0.9x

-0.6x

0.6x

1.3x

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

14

Our performance in context

Delivering on guidance, normalized double digit growth

Revenue Growth y/y

EBITDA margin (%)

CAPEX / sales (%)

FY 2017

actual

FY 2017

guidance

33% High 20s

28%High 20s to early

30s

In-service: 40%

Cash: 32%40%

FY 2017

normalized

%13

27%

In service: 26%

Cash: 22%

2018

guidance

high single to

low double digit

Mid to high 20s

30-35%

Thank you

Investor relations team

investor.relations@te.eg

Check our newly revamped website

www.ir.te.eg