Booz & Company

1. Beirut, April 16, 2009 Conference Presentation Booz & Company Growth in the Recession Challenges and Opportunities for the Telecom Sector This document is confidential and is intended solely for the use and information of the client to whom it is addressed.

2. . The world is experiencing a far-reaching recession Comparative Growth Rates Real GDP Change p.a. (%) % North Africa Asia & Australasia Gulf Eastern Europe Latin America G10 EU15 Note: Gulf includes GCC countries and Yemen

3. However, emerging markets, including the Middle East, continue to promise sustained economic growth GDP Growth Projections, 2009-2010 % Note: “Advanced Economies” includes US, Euro Area, Japan, UK, Canada and Other Advanced Economies “Developing Asia” includes China, India and the five ASEAN countries “Western Hemisphere” includes Brazil and Mexico Source: World Economic Outlook Update, January 2009

4. 3 Developed Markets • Essential service for users • Relatively small percentage of disposable income Emerging Markets • Nascent market stage with continued exponential growth momentum • Coverage expansion in under- penetrated regions Telecom services growth has proven resilient in economic downturns, especially in growing emerging markets… Global Telecom Service Revenues (1997 - 2003) (USD Billion) Telecom Resilience Drivers 2001 downturn 1997 1998 1999 2000 2001 2002 2003 Source: ITU

5. … as telecom services are becoming essential for consumers Expected Cut in Consumer Spending during an Economic Downturn (2008) (%) Rationale and Evidence • Voice remains an essential service • Broadband access is increasingly becoming important for consumers • E.g. European Commission is considering a universal service obligation (USO) on broadband access • Telecommunications services become more critical during a recessions; e.g.: • Less travel and face-to-face meetings • Less social activities leading to more calls and home entertainment (IPTV, internet browsing, etc.) Luxury goods Travel Entertainment Electronics Household goods Clothing Essential Basics Source: Business Week, Booz & Company Survey 2008, Booz & Company analysis

6. S Telecom plays a key role in enabling other sectors and is thus important for driving overall GDP growth during this recession Telecom Industry Enabling Role Contributions to GDP Growth Average Annual Growth in %, 1985-2006 Sector Applications - Examples Labor Input % ICT Capital Healthcare • Telemedicine • Health services research • Online monitoring 3,5 Non-ICT Capital Multi-Factor Productivity 3,0 Government • e-Public services • National backbone ICT infrastructure 2,5 2,0 Aviation • Ticketing systems • Routing systems • Aerospace research 1,5 1,0 Logistics • RFID and NFC apps • Broadcasting • Logistics IT applications 0,5 0,0 Education • e-Learning • Virtual university • Content management -0,5 Germany Australia Canada Japan UK US Defense • Simulation systems • Remote intel gathering • GPS • ICT accounts for majority of capital's contribution to GDP growth Note: ICT related capital includes hardware, communication and software Source: OECD Factbook 2008, Booz & Company analysis

7. Governments see the national broadband infrastructure and a key driver for growth out of the recession National Broadband Networks - Government Investments “[We] need action – and action now. That is why I have asked my economic team to develop an economic recovery plan… that will help save or create at least two and a half million jobs, while rebuilding our infrastructure… As we renew our schools and highways, we’ll also renew our information superhighway… because that’s how we’ll strengthen America’s competitiveness in the world.” Rationale • Policymakers in the US, UK, Korea, Germany, Spain, and Portugal are looking at channeling investments in Next Generation Broadband Networks to • create new jobs • support new businesses • stimulate investment Barack Obama, Radio Address on the Economy1) “When we talk about the roads and the bridges and the railways that were built in previous times - and those were anti-recession measures taken to help people through difficult times - you could [by comparison] talk about the digital infrastructure and that form of communications revolution at a period when we want to stimulate the economy. It's a very important thing” Gordon Brown, The Observer Interview2) 1) http://change.gov/newsroom/entry/the_key_parts_of_the_jobs_plan/ 2) http://www.guardian.co.uk/politics/2009/jan/04/gordon-brown-employment-new-deal

8. However, Government ownership in national incumbents may create inefficiencies in operations Government Ownership - Impact Impact of Ownership on Efficiency (2006) Regional Incumbents (2008) Other Drivers • As the telecom sector develops, there is a lower need for the government to remain directly involved • Changing demographic structure drive governments to free up funds to invest in social welfare projects • Reducing ownership increases private investment attractiveness • Reducing ownership eases pressure international trade commitments * Jordan Telecom excluded due to its recent rapid privatization and accompanying restrictions on labor cut-backs Source: ITU 2005. Epsicom, Operator Annual Reports

9. MENA telecom liberalization has led to a rapid increase in the number of operators, particularly in the mobile sector … Number of Mobile Operators in the MENA Region (2000 - 2008) 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Global Insight, Booz & Company analysis

10. % … resulting in strong market growth MENA Telecom Market Overview MENA Telecom Subscribers (Million) (2004 - 2008) MENA Telecom Revenues (USD Billion) (2004 - 2008) 227.0 +16% 217.2 Broadband +27% 21% Fixed 24% 168.5 28% 128.7 35% 87.4 79% Mobile 76% 43% 71% 64% 57% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Note: Telecom revenues are estimates Source: Informa, Global Insight, Booz & Company analysis

11. 10 The MENA region can be divided into three sub-regional clusters, each with its unique characteristics Overview of Sub-Regional Clusters in the MENA Region North Africa Levant and Egypt Gulf 28.496 8.755 4.644 GDP/Capita (USD) Population (Million) Mobile Penetration ARPU (USD/Month) Number of Mobile Players Note: All numbers are 2008 Source: Informa, EIU, CIA World Fact book, Booz & Company analysis

12. s Market level competition is intensifying in most markets, but lags in others… Competitive Activity of Sub-Regional Clusters in the MENA Region (2008) Legend: < 3 Mobile Players 3 Mobile Players > 3 Mobile Players Source: Informa, Booz & Company analysis

13. l … while cross border competition is becoming increasingly dominant International Footprints and Revenues of Selected Regional Players (2008) Zain International Footprint Qtel International Footprint Etisalat International Footprint 81% of revenues from international Operations 12% of revenues from international Operations 73% of revenues from international Operations Orascom International Footprint STC International Footprint Batelco International Footprint 22% of revenues from international Operations 30% of revenues from international Operations 83% of revenues from international Operations

14. This is leading to the emergence of true global players in the MENA region Number of MENA Telecom Service Providers by Class 8 7 7 Local Incumbents MVNO Emerging Global Operators 4 3 Expatriate Operators 2 Niche Operators Regional Operators Description • Operators that don’t own physical network • Emerging global telecoms with assets spanning multiple clusters • Mainly state-owned operators that have not expanded their footprint • Operators with several assets within the MENA region • Operators with one telecom asset • Typically part of large Western European group Source: Global Insight, Booz & Company analysis

15. % Lessons from advanced markets indicate that local incumbents tend to disappear in time and global/regional players dominate MENA and Europe Subscriber Market Share by Class MENA Market Share By Service Provider Class (%) (2009) Europe Market Share by Service Provider Class (%) (2009) MVNO MVNO Niche Niche 2% Local Incumbent 2% 0% Regional 17% 7% Regional 71% 77% Global Global Source: Global Insight, Merrill Lynch Matrix, Booz & Company analysis

16. Capacity Building and Know-how Transfer Roaming Management Synergy Sources Corporate Strategy Unification Procurement Consolidation Shared Services Consolidation Being part of a global or regional network helps operators success against competition and serve their customers appropriately Non-Exhaustive Potential Sources of Synergies • Leverage best practices and knowledge sharing across the organization • Leverage intensity of traffic across the footprint • Align corporate strategy across operations and unify corporate brand image • Consolidate and streamline purchasing activities across operations • Consolidate other shared services with the organization and streamline processes across operations

17. As a result, the CEO agenda in the MENA region today is beginning to resemble that of emerging markets three years ago CEO Agenda - Advanced Markets (2005) CEO Agenda - Middle East (Today) International Expansion "This purchase (Vodafone Sweden) will improve our economic scale in the Nordic region,“ EVP, Telenor, 2005 “This transaction… will help us achieve our ambition to become the undisputed leader in the region." Chairman, STC, 2008 1 Service Sophistication “Continued portfolio extension through tariff and product innovation” CEO, Telefonica, 2005 “Each package has its own unique advantage in terms of pricing and services" CEO, Omantel, 2008 2 Roaming Agreements “The partnership with Vodafone will enable du to join the world’s largest international mobile network CEO, du, 2009 “Our strategic partnership with America Movil significantly increases our roaming footprint CEO, Vodafone, 2005 3 Infrastructure Investment “We intend toseed 3G among the masses…look forward to more content and services.” CEO, SingTel, 2005 “The launch of 3.5G rounds off the year in spectacular fashion” CEO, Batelco, 2008 4 Horizontal Integration “The partnership between Microsoft and FT promises customers a New Experience in Telecommunications” CEO, France Telecom, 2005 Establishing a company for content reflects STC’s quest to launch value-added services CEO, STC, 2008 5

18. In summary… • The telecom sector is less vulnerable to the global recession than other sectors • The sector is seen as a driver of the economy and therefore policy makers are driving investments and reform more than ever before • Support broadband infrastructure deployment • Encourage investments • Reduce Government ownership while increasing government support • The region continues to experience growth as liberalization advances, however lags behind in some countries where liberalization is necessary • We will see single market operators being subject to failure as globalization pcks up pace • Being part of a global or regional group is a must for long term success • The gap between the Middle East region and Europe is narrowing, however some countries need to play significant catch up in order to reach this level