Full Year 2011 Consolidated Results

Cairo, 23 February 2012: Telecom Egypt (TE) (Ticker: ETEL.CA; TEEG.LN), today announced its audited consolidated financial results for the full year ending 31 December 2011. Financial statements have been prepared in accordance with Egyptian Accounting Standards.

Highlights for the Full Year 2011 include:

§ Total Consolidated Revenues were EGP 9,895 million down from EGP 10,218 million in FY 2010.

§ EBITDA was EGP 4,551 million, delivering a margin of 46%.

§ Positive contribution of share of profits from Vodafone Egypt of EGP 900 million.

§ Net Profit After Tax was EGP 2,929 million, representing a net profit margin of 30%, in spite of an increase in the corporate tax rate.

§ Earnings Per Share (EPS) for the period were EGP 1.49.

§ As at 31 December 2011, total fixed line subscribers stood at 8.0 million, of which 1.8 million are double- play subscribers.1

§ Retail ADSL subscribers reached 1.1 million, resulting in an ADSL market share of 62%.

§ Capex related cash-flows for the period of EGP 689 million.

§ Net cash position of EGP 4,854 million, as at 31 December 2011.

Chief Executive Officer's Statement

Commenting on the full year results of 2011, Tarek Aboualam, Chief Executive Officer and Managing Director of Telecom Egypt (TE), said:

"After what has been a momentous year for Egypt, I am very proud to report that we have delivered on management targets to report a full year result for 2011 which is within market expectations. This achievement has only been made possible by the foresight of our management team and the commitment of our employees.

"TE's revenue diversification strategy has provided resilience during an unprecedented period in our domestic market. With the growth in Broadband demand, TE Data, our fully owned broadband subsidiary, had a record year in 2011. It surpassed one million subscribers and recorded a revenue contribution of more than EGP 1 billion for the first time. Our retail business may have faced the challenges immediately following the January revolution, but it has tackled these head on, increasing the number of double-play subscribers and ensuring that promotional activity is directed to the more profitable business lines.

"Our wholesale business has also reached record levels. During its first full year of commercial operations, our newest business line, selling infrastructure for submarine cables and international capacity sales to international customers, has accounted for EGP 841 million in revenues in 2011.

"We are positioned strongly for the future and TE will undoubtedly play a central role in Egypt's economic development. Our network now enables more than 80 million mobile subscribers and more than 1.8 million ADSL subscribers in Egypt, while our investments in TE Data and VFE are proving to be investments in the market leaders.

"2011 has been an unprecedented and turbulent time for Egypt, which has impacted many of its finest companies. In spite of a higher corporate tax rate of 25% and the effect of the unprecedented events which took place in 2011 on business, TE has delivered a net profit margin of 29.6%. We ended the year having accumulated the highest net cash position in our history. As a result of this progress, the Board of Directors will be recommending a final dividend distribution of EGP 1.1 per share at the annual shareholders' meeting in March, making total dividends per share EGP 1.4, thus increasing dividend payout ratio from 80% in 2010 to 94% in 2011; which is a strong signal of our confidence for the future."

1 Subscribers who use both voice and broadband services

Financial Review

Revenues

Total consolidated revenues reached EGP 9,895 million, a decline of 3.2% when compared to the same period in 2010. The fourth quarter contribution to total consolidated operating revenues totaled EGP 2,534 million, a 7.7% increase, versus EGP 2,352 million recorded in the third quarter of the year. This resulted from strong performance during the final quarter, despite continued disruption to the wider operating environment across Egypt. A record year in international wholesale revenues was primarily attributable to the significant contribution from international capacity sales and a strong increase in incoming international call revenues.

Retail Services

Total retail revenues reached EGP 4,737 million for the full year 2011 a decline of 11.9%. During the fourth quarter of 2011, retail revenues stood at EGP 1,129 million compared to EGP 1,159 million in the third quarter of 2011. This decline in retail revenues was primarily attributable to lower subscriber numbers and the resultant effect on local call traffic from fixed-to-mobile substitution, as well as continued retail services disruption from copper cable thefts.

Total access revenues, comprising connections and subscriptions, stood at EGP 1,549 million for the full year 2011, versus EGP 1,809 million in 2010. This decline is directly linked to the decline in our customer base and our promotional activity, running since October 2011 and now extended to March 2012, which offers a reduced connection fee and has resulted in an average of 50 thousand new subscribers coming on-line each month.

Since the January revolution and the resulting economic slowdown in Egypt, the local call revenues category, the largest component of retail voices revenues, has experienced particular pressure. Furthermore, business activity, including tourism, has yet to normalize, which has acted as a short-term drag on fixed-to-international calls in particular. As a result, total voice revenues were EGP 1,720 million for the full year to 31 December 2011 and EGP 396 million for the fourth quarter 2011.

Conversely total internet and data revenues stood at EGP 1,040 million for the full year versus EGP 810 million for the same period in 2010, an increase of 28.5%.

In particular, 2011 was a record year for TE Data. Having passed the milestone of one million subscribers, TE Data revenues also exceeded the one billion Egyptian pound milestone for the first time in the company's history. TE Data remains Egypt's most successful Broadband provider with a 61.8% market share, representing some 1.1 million ADSL subscribers.

Wholesale Services

TE's wholesale business is made up of revenue from domestic and international services to operators who use TE's international gateway and extensive digital infrastructure, principally for co-location and transmission services and infrastructure leasing.

TE's wholesales services business also performed strongly in 2011, recording record revenues of EGP 5,158 million versus EGP 4,839 million in 2010, a rise of 6.6%. During the fourth quarter 2011, total wholesale revenues reached EGP 1,405 million, accounting for 55.4% of TE's total revenues.

Domestic wholesale revenues increased 11.9% year-on-year to reach EGP 1,278 million as at 31 December 2011. Revenues in the final quarter of the year were particularly strong at EGP 315 million versus EGP 303 million in the third quarter, as mobile usage remained resilient.

The advance of TE's international wholesale business during 2011 has been significant. The revenue contribution from international wholesale activity reached EGP 3,879 million for the full year 2011, an increase of 5.0% on 2010. Overall, theinternational services have progressed strongly throughout a challenging year, but were also substantially enhanced by the addition of new projects becoming operational in the final quarter, resulting in revenues from international capacity sales of EGP 345 million in the fourth quarter 2011.   

EBITDA/EBIT

EBITDA for the full year period ended 31 December 2011 reached EGP 4,551 million versus EGP 4,663 million for the same period in 2010. For the full year this delivers a 46.0% margin, which stands within management expectations. EBITDA for the fourth quarter 2011 reached EGP 1,006 million, representing an EBITDA margin of 39.7%.

The positive effects of TE's cost optimization programme have been offset by additional repair and maintenance costs, in part resulting from the ongoing copper cable theft that TE has reported; an increase in interconnection costs, as a result of higher mobile traffic; and increases in employee salaries and benefits.

EBIT for the full year period ended 31 December 2011 reached EGP 3,079 million versus EGP 3,411 million for the full year 2010, delivering a 31.1% margin for the year. EBIT for Q4 2011 stood at EGP 580 million, delivering an EBIT margin of 22.9%.

Income from Investments

Total Income from Telecom Egypt's investments for the period ending 31 December 2011 was some EGP 900 million, representing income from Vodafone Egypt (VFE).

As at 31 December 2011, VFE closing customers stood at 36.8 million. This represented net new additions of more than 4.6 million for the period. Total voice minutes were 57.5 billion, representing a 33.2% increase on the same period in 2010.

VFE generated revenues of EGP 9,261 million for the nine months ended 31 December 2011, a 0.8% increase on the same period in 2010, reflecting the effects of the instability across Egypt, impacting levels of tourism while experiencing an overall contraction in business usage of roaming and international calls. Net profit for the nine months ended 31 December 2011 reached EGP 1,514 million, in spite of the challenging operating conditions.

(Note: Vodafone Egypt's financial year is from 1 April to 31 March).

Net Profit

TE's Consolidated Net Profit for the full year period ended 31 December 2011 reached EGP 2,929 million versus EGP 3,143 million in 2010. Net Profit Margin for the full year ended 31 December 2011 was 29.6% down from 30.8% in December 2010. Notably, a higher corporate tax rate of 25% was brought into effect in 2011, versus a 20% rate which was applied in 2010. This translates an EPS of EGP 1.49 in 2011.

Investments in Infrastructure

Capital expenditure in 2011 reached EGP 689 million, versus EGP 1,086 million in 2010. 2011 capital expenditure was lower than anticipated because of a tighter negotiation of long term supplier contracts and delays in spending resulting from the January revolution.

Debt

TE boasts an exceptionally healthy balance sheet and an enviable net cash position. For the year ended 31 December 2011, TE recorded a net cash position of EGP 4,854 million the highest in its history.

TE Financial Highlights

Vodafone Egypt Financial Highlights

Vodafone Egypt Operational Highlights

To download a complete copy of Telecom Egypt's FY 2011 Consolidated Financial Results Statements and notes to these statements, please refer to the attached pdf:

http://www.rns-pdf.londonstockexchange.com/rns/9661X_-2012-2-23.pdf

To download a complete copy of Telecom Egypt's FY 2011 Standalone Financial Results Statements and notes to these statements, please refer to the attached pdf:

http://www.rns-pdf.londonstockexchange.com/rns/9661X_1-2012-2-23.pdf

- Ends -

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Notes to Editors:

Within this statement, we may make forward-looking statements regarding future events or the future performance of the Company. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. You should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. When relying on forward-looking statements, you should carefully consider the political, economic, social and legal environment in which Telecom Egypt operates. Such forward-looking statements speak only as of the time of this release today. Accordingly, Telecom Egypt does not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise other than as required by applicable laws, the Listing Rules or Prospectus Rules of the United Kingdom Listing Authority, the Egyptian Financial Supervisory Authority or The Egyptian Exchange. The documents filed from time to time with these authorities may identify important factors that could cause actual results to differ materially from those contained in any forward-looking statements.

About Telecom Egypt

Telecom Egypt (TE), Egypt's incumbent telecommunications operator, started its operations in 1854 with the first telegraph line in Egypt. Then it was corporatized in 1998 to replace the former Arab Republic of Egypt National Telecommunication Organization (ARENTO). The Company is the largest provider of fixed-line services in the Middle East and Africa with 8.0 million subscribers as at 31 December 2011.

TE provides retail telecommunication services including access, local, long distance and international voice, Internet and data, and other services. The company also provides wholesale services including bandwidth capacity leasing to ISPs, and national and international interconnection services. Telecom Egypt's services also include the provision of narrowband and broadband internet access through its subsidiary TE Data. TE Data has active operations in Egypt and Jordan.

TE currently participates in the mobile segment in Egypt by providing mobile interconnectivity through its current, increased 44.95% holding in Vodafone Egypt, one of the three existing Egyptian mobile operators. TE's shares and GDRs (Ticker: ETEL.CA; TEEG.LN) are traded on the Egyptian Exchange and the London Stock Exchange.