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Investment case• Egypt's sole fixed-line telecommunication operator.• Capitalizing on Egypt’s mobile sector growth through its wide network (infrastructure

leasing) and 45% stake in Vodafone Egypt (VFE).• Capitalizing on the rapid growth of internet sector through its ISP subsidiary, TE

Data.

Upside Catalysts• Exploiting its high net cash position (EGP4bn) by providing value-added services

(VAS).• New growth opportunities by offering mobile-phone services through the Mobile

Virtual Network Operator (MVNO).• Triple-play services, considered value added services, will stimulate subs growth.• TE North to generate USD500mn during the next 15-year period.

Downside Risks• Intensified pressure from wireless competition.• Fixed-mobile substitution (FMS) threatens the growth of active telephone lines.• Investment in VFE may be undermined as mobile growth cools off. • Interconnection dispute with mobile operators could hit ETEL’s profitability.

Telecom Egypt

Company ProfileETEL is a provider of retail services including access, voice, and internet & data. It is also the sole provider of wholesale services (including broadband capacity leasing to ISPs) and both national and international interconnection services. ETEL is one of the largest fixed-line providers in Middle East & Africa, with more than 9.3mn subscribers by end of 2010. ETEL competes in Egypt’s fast-growing mobile market through its 45% stake in Vodafone Egypt (VFE), Egypt’s largest mobile operator

Shareholder Structure•Government of Egypt 80%•Free Float 20%

52-Week Performance & Share Data (*EGX suspended 27th Jan – 23rd Mar 2011)

ETEL.CA/ETEL EY | Buy Recommendation | Moderate Risk | LTFV EGP21.9 | Target Price EGP21.0 | Analyst: Mohamed Hamdy

Key Performance Indicators

EGP mn/ FY End:December 2007a 2008a 2009a 2010a 2011e 2012e

Revenue 9,993.1 10,116.9 9,960.7 10,317.9 10,071.3 10,161.2 Growth Rate (%) 5.0 1.2 -1.5 3.6 -2.4 0.9EBITDA 5,389.1 5,163.3 5,021.9 4,864.9 4,228.2 4,216.9 Growth Rate (%) 2.1 -4.2 -2.7 -3.1 -13.1 -0.3EBITDA margin (%) 53.9 51.0 50.4 47.1 42.0 41.5Net Income 2,534.3 2,789.5 3,000.1 3,309.3 2,890.3 3,076.4 Growth Rate (%) 4.4 10.1 7.5 10.3 -12.7 6.4Net margin (%) 25.4% 27.6% 30.1% 32.1% 28.7% 30.3%

P ER 10.8x 9.8x 9.1x 8.2x 9.4x 8.9xP /BV 1.1x 1.0x 1.0x 1.0x 1.0x 0.9xEV/EBITDA 2.9x 2.4x 2.1x 1.6x 1.5x 1.1xNet debt/EBITDA 0.7x 0.1x -0.3x -0.8x -1.3x -1.7xDividend Yield 6.3% 8.1% 8.1% 8.1% 7.9% 8.5%

Source: CICR Database

Sector: Telecom ServicesISIN: EGS48031C016Last P rice (EGP ) 15.9952 Week High 19.5152 Week Low 12.99100-day Av. Volume 875 (000' shares per day)

No. of Shares (mn) 1,707.1 Market Cap (EGP mn) 27,296 *P rices as at close on 30th May 2011

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Shrs (mn)EGP Volume ETEL EGX 30 rebased