ITU Strategic Management Workshop 20 December 2005

1. ITU Strategic Management Workshop 20 December 2005 TE Marketing Strategy www.telecomegypt.com.eg Sanaa Soliman Marketing Director

2. Agenda • Overview of Telecom Egypt • History and Strategy of Telecom Egypt • Marketing Strategy • Conclusion

3. Overview of Telecom Egypt Fast Growing Economy in the Middle East • Selected Statistics (December 2004) • Population: 70m • Nominal GDP: $77bn • GDP per Capita: $1,094 • Fixed Line Penetration: 13.6% • Fixed Line Subscribers: 10.3m • Mobile Penetration: 10.8% • Mobile Subscribers: 7.6m GDP Growth 2004-08 Real GDP CAGR Source: Global Insight, Q2 2005. Fixed Line Penetration Note: Data as of 2004 Year End. Source: Telecom Egypt, Global Insight, Mobinil, Vodafone Egypt. Source: Analysis, International Telecommunications Union.

4. Overview of Telecom Egypt Sole Fixed Line Operator in Egypt Players Recent Developments • Telecom Egypt is the sole operator in the voice segment • 200+ ISPs in the internet segment • TE sole network operator • Liberalised, but no alternative network operators to date Domestic Fixed Line • Telecom Egypt sole provider international access • To be liberalised in January 2006 • 2 new international gateway licenses to be offered International • Mobinil • Vodafone Egypt • Third mobile license to be issued in 2006 Mobile Source: Telecom Egypt.

5. History and Strategy 150 Years of History 1854 1881 1957 1998 2003 2003-05 2005 • First telegraph line established between Cairo and Alexandria • First telephone line between Cairo and Alexandria • The Arab Republic of Egypt Telecommunications Organisation (ARETO) established as the exclusive provider of all telecommunications services in Egypt • Transformed into a joint stock company and renamed Telecom Egypt • Telecom Regulatory Agency (TRA) established, later renamed National Telecom Regulatory Agency (NTRA) • Law 10 mandated the liberalisation of international access by 1 January 2006 • Acquired and increased minority stake (currently at 25.5%) in Vodafone Egypt • Telecom Egypt issued the largest corporate bond in Egypt to date, raising EGP 2 billion Source: Telecom Egypt.

6. Marketing Strategy • Key strategic goal is to grow revenues and maintain or improve profitability • Telecom Egypt has segmented its customer base in order to align its sales and marketing efforts more closely to the products and services appropriate to each segment • Migrate customers from less profitable segments to more profitable ones through bundling strategy and other marketing incentives • Telecom Egypt aims to achieve its strategic goals by focusing on three main areas: • Pricing • New and improved & products & services (including bundled offerings) • Enhanced customer experience

7. Marketing Strategy Strategy Programme • Pricing Strategy • Rebalanced tariffs to reflect cost of service • Maintain competitive long-distance and fixed to mobile tariffs relative to mobile tariffs • Evolve toward flatter pricing for volume customers • Win back traffic from mobile substitution • Managed IP-Voice flat tariff schemes • Volume tariffs • Post Liberalisation • Introduce bundled offerings of subscription and inclusive minutes • Contract commitments for volume & lines with reconciliation at period end • New and Improved Products and Services • Align TDM and NGN IP services platform to ensure consistent product definition, price and profitability • Develop Value Added Service bundles to stimulate voice traffic • Develop a single branded portfolio of bundled voice and data services leveraging common distribution, customer care and billing Segment driven Ongoing • Large and medium enterprises – multi-site managed voice and data solutions with dedicated or shared business solutions • All subscribers – develop Value Added Services bundles which stimulate voice traffic • All subscribers – Development of a single branded portfolio of bundled voice and data services leveraging common POS, Customer Care and Billing

8. Marketing Strategy Strategy Programme • Enhance Customer Experience • Build the technical capability, process and training to retain customers • Segment driven • Ongoing • Develop segment specific customer care • Enterprises – Appointment of skilled Key Account managers to deal with all requirements, including business sector specialisation • Individual subscribers - offer enhanced web-site segmented by subscriber typewith improved facilities including ordering and activation of VAS • More Customer Service outlets in better locations • 24 x 7 Customer Contact Centre offering service ordering, fault reporting, information services • Adopt Customer Service Assurance Programme for all customers with eventual shift to compensation backed Service Level Agreements for large customers

9. TE Data Strategy • Short term • Aggressively acquire ADSL customers and grow market share to capitalise on the current growth in the market • Provide service differentiation through cutting edge customer service, support and high speed connections • Medium term • Retain Existing subscribers, reduce churn and increase ARPU by increasing customer stickiness through VAS (e.g., IPTV, VoIP, broadband gaming) • Long term • Single billing • Postpaid / prepaid billing • Metered / limited bandwidth services Source: TE Data.

10. CAT Strategy • Target high value residential and corporate customers • No teledensity obligations or targets • Focus on high value customer segments with higher ARPU rather than on market share • Compete on quality rather than price by offering superior customer care, innovative packaging and rapid response time • Begin by targeting business customers’ requests (new as well as from existing waiting list) and offer attractive packages for business customers • Serve corporate customers through a direct sales force. Serve residential customers through an indirect distribution network of 3,000 shops nationwide (distributors of prepaid cards, CPE’s, etc.) Source: Telecom Egypt.

11. Conclusion • Key elements of value creation strategy • Increasing ARPL • Tariff rebalancing • Addressing competitive threats • New services (broadband and IP services) • Exploit TE’s position as only fixed line network operator in Egypt • Optimise asset base • Disciplined capex strategy • Targeting profitable new customers • Exploit growth opportunities in new geographic markets (Algeria) and new product offerings (triple-play) • Cultural shift from supply-based to demand-oriented organisation • Transitioning Telecom Egypt to face the challenges of a progressively more liberalised market Source: Telecom Egypt.