2008 First half financial report

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2008 First half financial report

Preliminary remarks:

This selection report and the unaudited condensed financial statements for the half year ended June 30, 2008 were approved by the Management Board on July 23, 2008. On July 29, 2008, they were reviewed by

the Supervisory Board, after their review by the Audit Committee on July 28, 2008. This report should be read in conjunction with the Management Board’s report for the year ended

Decem-ber 31, 2007 as published in Registration Document filed with the Securities Regulator (AMF) on April 28, 2008 (“the 2007 Registration Document”).

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TABLE OF

HIGHLIGHTS & KEY

FIGURES

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January

• Maroc Telecom launched video-telephony in the main cities of the Kingdom for both postpaid and pre-paid customers and “Optimis”, a new tariff plan for business customers.

• The monthly telephone subscription for residential customers and telestores was reviewed.

• The management committee of Universal Service of the ANRT approved the “Pacte” program for an amount of MAD1.2 billion, and gives to Maroc Telecom the coverage of almost 80% of the 9,263 concer-ned localities .

• Completion of the merger between Mauritel SA and Mauritel Mobiles and significant price cuts have been made on Mobile tariffs.

February

• Launch of unlimited numbers for international calls and “Phony International”, a new unlimited rate plan for calls to international Fixed-line numbers and price reductions for calls from Fixed-line to other inter-national Fixed-line and Mobile numbers

.

• Mauritel launched the service AMI Mobile (news by SMS) and reduced price for ADSL clients.

• A tariff rebalancing has been made by Onatel, with price cuts going up to 78% for international calls, and reinforcement of its distribution network by the opening of 75 kiosks, particularly in rural area.

March

• Maroc Telecom launched two new unlimited Mobile broadband Internet offers “Internet Mobile 1.8” and “Internet Mobile 512”, and adds new contents (Disney) to Mobile Zone portal. For prepaid customers, launch of the Call return service.

• Mauritel cut its prices for CDMA Internet access, CDMA subscriptions tariffs and raised its Mobile subs-cription tariffs.

• Onatel put in operation its new IN (Mobile and Fixed-line) and launched new low value Fixed prepaid cards (Phone Cash) for low income customers.

April

• As part of the universal service, Maroc Telecom launched «Internet CDMA 1MB/s», a new unlimited bandwidth Internet, for rural areas covered by the CDMA network.

• A new Ministerial decree set up new rules for telecommunication services promotion in Morocco and Maroc Telecom will have to notify ANRT of promotional offers that it intends to set up.

• The ANRT approved the technical and pricing offers for the interconnection by capacity to Maroc Tele-com Fixed-line network, and set Wana Mobile termination tariffs for 2008 and 2009, which is different from that of Maroc Telecom and Meditel.

• Signature of a convention between Maroc Telecom and ANRT related to “Pacte” program for 2008: Ma-roc Telecom have to equip 1,500 localities for an estimated amount of MAD762 million.

• Mauritel rebalanced its tariffs Mobile on-net calls.

1. HIGHLIGHTS & KEY FIGURES

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1

May

• Maroc Telecom decreased its international postpaid mobiles prices (Area 1), as well as Internet leased lines tariffs.

• Signature of an agreement between Mohammed VI foundation (constitute by teachers), and various partners of which Maroc Telecom, allowing its members to have access to Internet with subsidized ta-riffs

• Gabon Telecom launched a social plan relating to 752 persons, in agreement with the Gabonese go-vernment and signature with a local bank (BGFI) of a mandate to arrange a financing of FCFA47 billion . • Onatel launched the Internet via CDMA (postpaid and prepaid) and the fixed-line and mobile electronic

recharging, and extend its distribution network with the signature of a convention with Sonapost, allo-wing the distribution of fixed-line and mobile products in nearly 70 sales outlets.

June

• The Mobile Zone portal added new Vivendi Games contents.

• Onatel launched unlimited Mobile offers, with a free of charge communication, preferential tariffs in intra, and new offer for young people (preferential tariffs and SMS rate plan at off-peak time). In order to fi-nance its development, Onatel takes a €7.5 million loan from SFI.

• Gabon Telecom rebalanced its subscription and communication tariffs.

July

• Maroc Telecom launched new unlimited options for business customers: Mobile Business Control and Mobile Business Class rate plan.

• Maroc Telecom launched summer operations with promotions on the Fixed-line packs tariffs, TV/ADSL, Internet ADSL, as well as ADSL clients, and set a new tariff for the « Canal+ Essentiel » option.

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June 30, 2007 December 31, 2007 June 30, 2008 Change yoy in thousands

Number of Mobile customer 13,171 15,342 16,561 26%

Maroc Telecom 11,713 13,327 14,211 21% Mauritel 767 905 1,015 32% Onatel 363 564 756 108% Gabon Telecom 263 386 424 61% Mobisud 41 160 155 ns Number of Fixed-line 1,490 1,518 1,536 3% Maroc Telecom* 1,325 1,336 1,329 0% Mauritel 36 36 46 28% Onatel 107 122 130 22% Gabon Telecom 22 24 31 41%

Number of Internet customer 466 503 534 15%

Maroc Telecom** 444 477 501 13%

Mauritel 5 5 7 40%

Onatel 8 12 15 81%

Gabon Telecom 9 10 11 22%

* equivalent base for whatever type of access ** including Internet 3G+

In IFRS (in millions of Moroccan dirhams) H1-2007 H1-2008 Change

Published Comparable basis

Consolidated revenues 13,007 14,308 10.0% 8.2%

Mobile (gross) 8,889 10,161 14.3% 13.0% Fixed-line and Internet (gross) 5,532 5,544 0.2% (2.0%)

Consolidated earnings from operations before amortization 7,548 8,504 12.7% 12.7%

Mobile 5,399 6,161 14.1% 13.9%

Fixed-line and Internet 2,149 2,343 9.0% 9.9%

Consolidated earnings from operations 5,999 6,666 11.1% 12.4%

Mobile 4,588 5,132 11.9% 12.2%

Fixed-line and Internet 1,411 1,534 8.7% 13.1%

Earnings (group share) 3,850 4,526 17.6%

Capital expenditure 2,143 1,964 (8.4%)

Mobile 1,184 1,028 (13.2%)

Fixed-line and Internet 959 902 (5.9%)

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Mr. Abdeslam Ahizoune. Chairman of the Management Board

I attest, to my knowledge, that the condensed accounts for the past half year are established in accordance with the applicable accounting standards and give a faithful image of the financial statement and results of the company and all of the consolidated companies, and the joined half year management report gives a faithful presentation of the evolution of the businesses during the first half of 2008, and their incidence on the accounts, the main related party transactions as well as a description of the principal risks and uncer-tainties for the remaining months of the year.

Mr. Abdeslam Ahizoune

Chairman of the Management Board

2.2 CERTIFICATION OF THE FIRST HALF REPORT

2.3 PERSONS RESPONSIBLE FOR THE AUDIT OF THE FINANCIAL

STATEMENTS

2.3.1 Statutory Auditors

• KPMG Maroc, represented by Mr. Fouad Lahgazi 11, avenue Bir Kacem, Souissi - 10000 Rabat, Maroc

First appointed in April 12, 2007 for a three year term by the general Shareholders’ Meeting. This mandate will expire at the end of the general shareholders’ meeting to approve the financial statements for the fiscal year ended December 31, 2009.

• Mr. Abdelaziz Almechatt

83 avenue Hassan II - 20100 Casablanca, Maroc

First appointed in 1998 by the bylaws, renewed in 2005, the current mandate, of a three year term, was renewed by the shareholders’ meeting held April 17, 2008 and will expire at the end of the shareholders’ meeting held to approve the financial statements for the fiscal year ended December 31, 2010.

2.1 PERSON RESPONSIBLE FOR THE FIRST HALF REPORT

In this Report, "Maroc Telecom" or “the Company” refers to the company Itissalat Al-Maghrib, and “the group” refers to the group constituted by the Company and all direct and indirect subsidiaries.

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2

2.3.2 Report of the statutory auditors on the consolidated financial statements for

2008 first half

From January 1, to June 30, 2008

As Statutory Auditors of the company, and pursuant to the assignment which was trusted to us by the Su-pervisory Board we proceeded to:

• Limited examination of the accompanying summarized half year consolidated financial statements of Maroc Telecom, for the period from January 1, to June 30, 2008.

• Checking the information given in the half year report.

The summarized consolidated financial statements have been approved by the Management Board. It is our responsibility, based on our audit, to express an opinion on these financial statements.

We conducted our limited examination in accordance with international auditing standards. A limited exami-nation primarily consists in discussing with the members of direction in charge of the countable and finan-cial aspects, and implementing analytical procedures. This work less extended than those necessary for an audit prepared according the international auditing standards. Consequently, the insurance that the all ac-counts, do not comprise any significant anomalies, obtained within the framework of a limited examination is a moderated insurance, less high than that obtained within the framework of audit.

On the basis of our limited examination, we didn’t found any significant anomalies which could prejudice the conformity, in all their significant aspects, of the summarized consolidated accounts with IAS 34 - standard of IFRS referential such as adopted by the European Union relating to the intermediate financial informa-tion.

Without prejudice to the opinion above, we draw your attention to the estimated character of segment data (expressed in the joined note and which refers to notes to consolidated financial statements as closed at December 31, 2007, and such exposed in Notes 1 (§ 2.5) and 28 from the note relating to 2007 consolida-ted financial statements.

In compliance with the international auditing standards, we also, performed the verifications of information contained in the half year report commenting the summarized half year consolidated financial statements subject of our limited examination. We ensured that it was consistent with the Company’s half year summa-rized financial statements.

July 29, 2008 Statutory Auditors KPMG Fouad LAHGAZI Partner Abdelaziz ALMECHATT Abdelaziz ALMECHATT Partner

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2.4 INFORMATION POLICY

2.4.1 Person responsible for information

Mr. Arnaud Castille

Chief Financial Officer Maroc Telecom

Avenue Annakhil - Hay Riad Rabat, Maroc

Telephone : 00 212 (0) 37 71 67 67 E-mail : [email protected]

2.4.2 Shareholders’ information

The social accounting and legal documents, whose communication is governed by the Moroccan and French laws and the bylaws in favor of the shareholders and third parties can be consulted at the Head Of-fice of the Company.

Registration Documents, updates of Registration Documents filed with the French Securities Regulator (AMF), presentations for investors and financial analysis made by the Company, as well as the various press releases are available on Maroc Telecom’s website: www.iam.ma.

In accordance with the provisions of the Transparency Directive, which has been applicable since January 20, 2007, all regulated information is available on Maroc Telecom’s website: www.iam.ma/information-reglementee.aspx.

2. CERTIFICATIONS

Information policy

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GENERAL

INFORMATION

REGARDING THE

COMPANY AND ITS

SHARE CAPITAL

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*: Through its 100% subsidiary (Société de Participation dans les Télécommunications) **: Share detained directly or indirectly by the company

3.1.1 Share capital

The share capital of Itissalat Al-Maghrib is MAD5,274,572,040 divided into 879,095,340 shares with a par value of MAD6 each, in a single class and fully paid in.

3.1.2 Ownership of share capital and voting rights in the Company

As at June 30, 2008, the share capital and voting rights of the Company were held as follows:

On July 2, 2007, the Moroccan State sold 4% of Maroc Telecom’s share capital on the Casablanca Stock Exchange at MAD130/share. This sale of shares was reserved to Moroccan and international institutional investors via a book order between June 26 and June 28, 2007.

During the first half of 2008, under the terms of an agreement between Vivendi and the group CDG, Vivendi acquired 2% of the capital of Morocco Telecom, thus increasing its stake from 51% to 53%. At the end of this transaction, the Moroccan State held 30% of share capital and voting rights of the company. The free float was increased to 17% of the share capital. In addition, CDG group acquired 0.6% of Vivendi’s share capital

3.1.3 The share buyback program

The share buyback program with a view to stabilizing the share price, into force currently was approved by the General meeting of May 28, 2008, after the Company obtained the visa of the CDVM on May 9, 2008 under reference VI/EM/017/2008 for the Note of relative information to that program.

The main features of this program are as follows: • Duration: until November 29, 2009

• Price range for share purchase or sale: MAD [150-250];

• Maximum share capital to be held: 1.82% (equivalent to 16 million shares)

From October 16, 2007, for a period of one year, tacitly renewable, Maroc Telecom has contracted with Rothschild & Cie Banque to implement:

• in Casablanca a share stabilization contract for an amount of MAD55 million.

• in Paris, a liquidity contract in compliance with the Ethical Charter drafted by the French Association of Investment Companies and approved by the AMF in a decision dated March 22, 2005, published in the Bulletin of Mandatory Legal Notices (BALO) dated April 1, 2005. For the purposes of this contract €5 million was allocated to a liquidity account.

Shareholders Number of shares % of capital / Voting rights

Vivendi group * 465,920,477 53.00%

Kingdom of Morocco 263,728,575 30.00%

Members of Supervisory and Management Board 155,980 0.02%

Employees 1,258,681 0.14%

Public 147,853,477 16.82%

Maroc Telecom** 178,150 0.02%

Total 879,095,340 100%

3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL

General information relating to the company’s share capital

3.1 GENERAL INFORMATION RELATING TO THE COMPANY’S

SHARE CAPITAL

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Appraisal of the share buyback program at June 30, 2008:

3.2.1 Stock exchange listings

Since December 13, 2004, Maroc Telecom has been listed on both the Casablanca Stock Exchange and Euronext.

3.2.2 Maroc Telecom share price

Casablanca Stock Exchange Main market, Code 8001.

Changes in Maroc Telecom’s share price on the Casablanca stock exchange since December 2004 In May 2008, 89% of free float was traded on the Casablanca Stock Exchange.

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Average price* High Low Transactions**

(in MAD) number of shares (in thousands)

trade value (in millions MAD)

January 2008 162.62 169.95 146.00 6,527.1 1,061.5 February 2008 182.35 193.50 168.05 7,134.8 1,301.1 March 2008 194.67 208.00 184.20 5,251.7 1,022.3 April 2008 199.03 202.00 194.10 7,821.3 1,556.7 May 2008 201.20 213.80 185.50 5,029.0 1,012.0 June 2008 191.16 197.00 186.50 2,262.4 432.5

IAM-Casablanca (dirham) VS MASI

70 85 100 115 130 145 160 175 190 205 220 235 250 265

déc/04 mars /05 juin/05 s ept/05 déc/05 mars /06 juin/06 s ept/06 déc/06 mars /07 juin/07 s ept/07 déc/07 mars /08 juin/08 IAM

MASI

3.2 TRADING OF THE COMPANY’S SHARES

* The average price is calculated by dividing trade value by number of shares ** Not including block market transactions

Casablanca Paris Total

Number of shares acquired 58,517 199,281 262,798

Number of shares sold 1,467 78,181 79,967

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Euronext Paris

Eurolist-Foreign securities, Code MA0000011488, Eligible for SRD

Changes in Maroc Telecom’s share price on Euronext Paris since December 2004 In May 2008, 11% of free float was traded on Euronext Paris.

IAM-Paris (euro) VS Euronext 100

7,0 8,0 9,0 10,0 11,0 12,0 13,0 14,0 15,0 16,0 17,0 18,0

déc/04 mars/05 juin/05 sept/05 déc/05 mars/06 juin/06 sept/06 déc/06 mars/07 juin/07 sept/07 déc/07

IAM

Euronext 100

3. GENERAL INFORMATION REGARDING THE COMPANY AND ITS SHARE CAPITAL

Trading of the company’s shares

Average price* High Low Transactions**

(in euro) number of shares (in thousands)

trade value (in millions euro)

January 2008 14.15 14.75 13.00 4,430.5 62.7 February 2008 15.88 16.65 14.88 3,855.8 61.2 March 2008 16.88 18.03 15.94 2,419.5 40.8 April 2008 17.20 17.45 15.70 1,161.6 20.0 May 2008 17.38 19.10 15.52 2,771.0 48.2 June 2008 16.51 17.00 15.34 1,258.3 20.8

* The average price is calculated by dividing trade value by number of shares ** Not including off-system transactions

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INFORMATION

CONCERNING

COMPANY

BUSINESS

ACTIVITIES

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4.1 Description of activities

4.1.1 Activities in Morocco

The information provided in this paraghraph, only concerns the business in Morocco.

In the first half of 2008, Maroc Telecom consolidated its positions and net revenues of all business activi-ties in Morocco amounted to MAD12,511 million, up 9.8%. For the same period, earnings from operations amounted to MAD6,649 million, up 15,5%, allowing to enhance the operating margin to 52.8%, up 2.3 points compared to the first half of 2007.

Mobile

The table below shows the breakdown of Maroc Telecom’ Mobile revenues for the first halves of the past two years:

During the first half of 2008, Mobile gross revenues in Morocco increased by 12.9% to MAD8,923 million, with the combined effect of the customer base significant growth and the limited decrease of ARPU, in spite of a highly competitive context. The first half of 2008 was marked by the launch by Maroc Telecom of 3G+ Voice and Internet offers.

Despite of the competing pressures, the Mobile activity EFO amounted to MAD4,982 million, up 14.8% compared to 2007 first half, thanks to the activity growth and the control of costs, enabling to improve the operating margin by 0.9 points to 55.8%.

4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES

Description of activities

in millions of Moroccan dirhams – in IFRS

As of June 30 2007 2008

Gross revenues 7,900 8,923

• Revenues from sale of services 7,520 8,360

• Revenues from sale of handsets 380 563 Earnings from operations before amortization 4,999 5,776

Earnings from operations 4,341 4,982

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*: Postpaid subscribers and prepaid cards

**: Including 'no commitment rate plans’

The following table shows the main data relating to prepaid and postpaid services

The customer base maintained a steady growth and reached 14.2 million at the end of June 2008, up 21.3% compared to end of June 2007, which corresponds to a net increase of nearly 0.9 million since the beginning of the year. Due to the strong increase of the customer base and the low level of access fees, the churn rate reached 27.6%, up 3.7 points compared to the first half of 2007.

In improvement compared to the previous quarter, the first half blended ARPU amounted to MAD98.6, down by 8.2% compared to the first half of 2007, due mainly to the customer base strong increase. The average outgoing usage was maintained at the same level as 2007 with the similar level of promotional of-fers. Consequently, the average price by minute is slightly down by 1.6% at approximately MAD1.3 exclu-ding tax.

Among the main events of the first half of 2008, the lauch of the 3G+ service based on HSDPA (High Speed Downlink Packet Access) technology, which the capacity may culminate to 3,6Mbit/sec, allowing Maroc Telecom postpaid and prepaid customers to access to the Video-telephony and the broadband Inter-net.

In addition, and following the signature of convention with the ANRT (Pacte), Maroc Telecom startes the deployment of its mobile network in the white areas, and continues to reinforce the coverage and the net-work capacity in the other areas.

H1-2007 2007 H1-2008

Number of Mobile customers *_{(in thousands)}

11,713 13,327 14,211

Prepaid 11,250 12,822 13,658

Postpaid** 463 505 553

Churn rate (« churn ») (%)

Prepaid _24.2% 25.7% 28.0%

Postpaid** 16.0% 17.9% 17.2%

Average churn rate 23.9% 25.4% 27.6%

ARPU (in MAD/customer /month)

Prepaid 83 85 77

Postpaid** 716 701 666

Blended ARPU 107 108 99

Incoming usage (minutes/customer/month)

Prepaid 22 22 19

Postpaid** ₇₇ 73 66

Average incoming usage 21 24 21

Average outgoing usage (minutes/customer/month)

Prepaid 29 29 28

Postpaid** 642 620 677

Average outgoing usage 54 52 53

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* including commitment service contract, except intercompanies ** including revenues generated by TV/ADSL

Mobile competition

As of March 31, 2008, the number of mobile customers (all operators) rise to MAD20.616 million, corres-ponding to a penetration rate of 66.85% (Source: ANRT), 96% of which is prepaid customers.

At the end of the first quarter 2008, Maroc Telecom maintained its leadership in the Moroccan Mobile mar-ket, with a market share of 66.4%. Over the same period, the market share of prepaid and postpaid rea-ched respectively 66.6% and 63.4% (Source: ANRT/Maroc Telecom calculation). The remaining of the mar-ket is held by Meditel, but it should be noted that since the beginning of June 2008, Wana launched its 3G Mobile.

Fixed-line and Internet

The table below shows the breakdown of Maroc Telecom’ Fixed-line and Internet revenues for the specified periods.

Fixed-line and Internet activities in Morocco achieved in the first half of 2008 gross revenues of-MAD4,750 million, slightly up by 0.5%. Despite the decrease by 3.9% of the average monthly invoice, mainly impacted by the competition on the “phone shop” segment, the Fixed-line revenues are stable due to the data and Internet performances of which revenues are in net increase.

Fixed-line and Internet EFO amounted to MAD1,667 million, up 17.6% compared to 2007. This perfor-mance is explained by the decrease of interconnection charges of national outgoing traffic, due to the com-bined effect of tariff and consumption decrease.

4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES

Description of activities

Maroc Telecom market share June 30, ₂₀₀₇ December _{31, 2007} March 31, ₂₀₀₈

Total Mobile market 66.4% 66.5% 66.4%

Prepaid 66.6% 66.7% 66.6%

Postpaid 61.7% 63.1% 63.4%

* (Source ANRT)

in millions of Moroccan dirhams - in IFRS— as of June 30 2007 2008

Gross revenues 4,727 4,750

Voice* 3,143 3,040

Interconnection 329 291

Data 758 876

Internet** 497 543

Earnings from operations before amortization 1,984 2,284

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*: as from January 1, 2008, the Maroc Telecom Fixed-line customers are communicated by equivalence taking into account the number of lines of each access. 2007 figures have been adjusted.

**: Combines the lines of Maroc Telecom telestores and public booths. Telecommunication services

The table below describes the development of the number of fixed lines by segment:

The Fixed-line customer base reached 1.329 million lines, slightly increasing by 0.3% compared to June 2007. The moderate fall of the residential customer, of which 2/3 are “Phony” customer, the unlimited offer, mainly related to the growth of the MAD10 subscription from January 1, 2008, was largely compensated by the growth of 2% and 4% of Public Telephony and Corporate customers.

During the first half of 2008, Maroc Telecom endeavoured to consolidate its market shares by launching many promotions for its residential and corporate customers.

Fixed-line competition

The Fixed-line penetration rate was 8.79% as at March 31, 2008, compared with 6.36% as at June 30, 2007 (source ANRT). This increase is particularly due to the introduction by competitors of prepaid restric-ted mobility offers. Excluding these offers, the penetration rate is 4.35%.

Two fixed-line licenses were awarded in July and September 2005 to Meditel and Wana. These licenses are currently operational.

Internet

The number of Internet customers reached 487,000 lines, up 9.7% compared to the end of June 2007, the number of ADSL lines totaled 482,000 lines, up 10.1% compared to June 2007, accounting for approxima-tely 43% of the fixed lines (excluding public telephony).

Besides this customer base using fixed lines, customers using the broadband Internet via Maroc Telecom 3G Mobile Network and which reached 14,000 subscribers.

It should be noted that Maroc Telecom takes part in the offer “Nafid@” launched mid-May 2008 enabling teachers to acquire computer material and to subscribe to Internet with tariffs subsidized jointly by the ANRT, the Mohammed VI Foundation and operators, including Maroc Telecom.

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Numbers of lines– in thousands * June 30, ₂₀₀₇ December 31, ₂₀₀₇ June 30, ₂₀₀₈

Residential 820 825 806

Public telephony** 159 160 162

Corporate 346 352 361

Customer base** 1,325 1,336 1,329

Maroc Telecom market share Competitors June 30,

2007

December 31, 2007

March 31, 2008

Fixed-line Meditel / Wana 100% 99.7% 99.6%

Fixed-line, including restricted mobility Meditel / Wana 100% 66.0% 49.3%

Fixed-line – corporate Meditel 100% 98.7% 98.5%

Public telephony Meditel 90.8% 90.3% 91.0%

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Internet competition

Competitors on the market for Internet access services are Meditel and Wana, present on the wireless In-ternet segment, with a total market share of 16.3% as of March 31, 2008 (Source: ANRT). Maroc Telecom has a very strong position on the ADSL market, which accounts 96% of total access, with a market share of almost 99% (Source: ANRT).

4.1.2 Subsidiaries’ business

Mauritel

Mobile

As of June 30, 2008, the mobile customer base of Mauritel reached 1.015 million, up 32.3% compared to the end of June 30, 2007.

Mauritel operates in a liberalized market alongside the Compagnie Mauritano-Tunisienne de Telecommuni-cations (Mattel) and Chinguitel (since August 2007). In 2006, the ARE granted new licenses, including a 3G license for Mauritel and 2G and 3G licenses for Chinguitel. As of December 31, 2007, according to the avai-lable data (ITU and Mauritel), the market share of Mauritel is 70%.

Fixed-line, Data and Internet

As of June 30, 2008, Mauritel’s total number of fixed-lines amounted to almost 46,000, up 27.8% compared to the end of June 2007, thanks to the success of CDMA offers. The Internet customer base reached al-most 7,000 accesses at June 30, 2008.

Mauritel SA operates in a liberalized market since the awarding by the Mauritanian regulator in 2006 of fixed-line licenses in Chinguitel . The Fixed-line and Internet market is shared between 2 operators: Mauri-tel and ChinguiMauri-tel (since August 2007). The Internet market share for MauriMauri-tel is 90% (source: MauriMauri-tel esti-mates).

The following table summarizes Mauritel Group’s main operating and financial data:

4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES

Description of subsidiaries activities

Maroc Telecom market share June 30, ₂₀₀₇ December _{31, 2007} March 31, ₂₀₀₈

Internet 97.8% 93.1% 83.7% ADSL 98.3% 98.5% 98.8% (Source : ANRT) in thousands June 30, 2007 December 31, 2007 June 30, 2008 Mobile customers 767 905 1,015 Number of Fixed-line 36 36 46

Number of active customers - in thousands June 30,

2007 December 31, 2007 June 30, 2008 Narrowband 6 5 5 ADSL 438 417 482 3G Data - 1 14 Total 444 477 501

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Mauritanian activities generated overall net revenues of MAD519 million in the first half of 2008, down 3.7% with the negative effect of exchange rate. On a comparable basis, revenues decrease by 0.9%, due to the competition intensification with the entry of a third operator that induces strong pressures on tariffs and ad-ditional efforts on promotions.

The Mauritel Mobile business gross revenues amounted to MAD417 million for the first half of 2008, up 2.1% on a comparable basis. The Mauritel Fixed-line and Internet business gross revenues amounted to MAD145 million, down 9.4% on a comparable basis.

For the first half of 2008, the EFO of Mauritel group amounted to MAD201 million, down 4.5% at a constant exchange rate. This evolution is the result of the combined effect of a weak Mobile revenues growth, des-pite a good control of operating and sales costs, and the growth of amortization with the speedup of capital expenditure.

The consolidation method of the Mauritel sub-group, and its contribution to Maroc Telecom’s results are summarized in Notes to the consolidated financial statements. The comparable basis illustrates at Mauritel the maintain of a constant exchange rate.

Onatel

Mobile

At end of June, 2008, Telmob's customer base reached more than 756,000 clients, up 95% compared to the end of June, 2007, due mainly to the coverage enlargement.

Telmob operates in a liberalized market alongside the companies Celtel Burkina and Telecel Faso. Accor-ding to the available data (ITU, Zain and Telmob), the market share of Telmob as of December 31, 2007, is 35%.

Fixed-line, Data and Internet

As of June 30, 2008, the number of fixed-lines amounted to 130,000, up 21.5% and the number of Internet customers reached almost 15,000 compared with 8,000 as of June 30, 2007.

Even though Onatel lost its fixed-line monopoly (national fixed-line telephone, telex and telegraph) as of December 31, 2005, it was still the only fixed-line operator in Burkina Faso at the end of June 2008. How-ever, on the Internet market, other ISPs operate alongside Onatel.

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In millions of Moroccan dirhams – in IFRS

H1-2007 H1-2008 Change at cons-tant exchange rate Net revenues* 539 519 (0.9%) Mobile (gross) 420 417 +2.1% Fixed-line (gross) 165 145 (9.4%) Fixed-line 32 37 21.4% Mobile 212 189 (7.9%) Fixed-line 5 12 145.1%

Earnings from operations 217 201 (4.5%)

Mobile 256 248 (0.5%)

Earnings from operations before amortization 288 285 1.9%

* Net revenues of the incomes between the Fixed-line and Mobile activities of each subsidiary company, but including the incomes generated between the subsidiaries companies (of which contracts of service commitments) which are eliminated in the consolidated revenues.

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The following table summarizes Onatel group’s main operating and financial data:

During the first half of 2008, net revenues of all business in Burkina Faso amounted to MAD715 million, up 6.6% on a comparable basis. Despite the strong increase of the customer base, the revenues growth of Onatel was impacted by the drop in the consumption level, due to the cost of living rise. Onatel Mobile busi-ness gross revenues amounted to MAD421 million for the first half of 2008, up 28.4% (+25.4% on a compa-rable basis). Onatel Fixed-line and Internet business gross revenues amounted to MAD375 million, down 8.5% (- 10.6% on a comparable basis).

In the first half of 2008, the EFO of Onatel group amounted to MAD80 million, down 47.5% compared to 2007 first half, due to the increase of costs sales and amortizations of Mobile capital expenditures. The growth of amortization is due to the speedup of the network deployment.

The consolidation method of the Onatel sub-group, and its contribution to Maroc Telecom’s results are summarized in Notes of the consolidated financial statements. The comparable basis illustrates at Onatel the maintain of a constant exchange rate.

Gabon Telecom

Mobile

The Mobile customer base posted an increase of 61.2% to 424,000 clients at the end of June 2008, driven both by promotional offers and the coverage enlargement.

The market is shared by 3 operators: Libertis, Celtel-Gabon and Moov. According to the available data (ITU, Zain and Libertis ), the Libertis market share is 33% as of December 31, 2007.

Fixed-line, Data and Internet

Even though Gabon Telecom, lost its monopoly of certain services such as Internet since June 2001, it was still the only fixed-line operator in Gabon until 2011.

The telephones lines of Gabon Telecom reached approximately 31,000 lines at the end of June 2008, up 40.9% compared to the end of June 2007.

4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES

Description of subsidiaries activities

in thousands June 30, 2007 December 31, 2007 June 30, 2008

Mobile customers (active) 388 564 756

Number of Fixed-line 107 122 130

Internet customer 8 12 15

in millions of Moroccan dirhams – in local standards

H1-2007 H1-2008 Change at cons-tant rate

ex-change

Net revenues* 656 715 +6.6%

Mobile (gross) 328 421 +25.4% Fixed-line (gross) 410 375 (10.6%)

Earnings from operations 150 80 (47.5%)

Mobile 127 119 (7.9%)

Fixed-line 23 (39) ns

Earnings from operations before amortization 329 288 (8.2%)

Fixed-line 120 52 (57.5%)

Mobile 209 236 10.6%

* Net revenues of the incomes between the Fixed-line and Mobile activities of each subsidiary company, but including the incomes generated between the subsidiary companies (of which contracts of service commitments) which are eliminated in the consolidated revenues.

(24)

The following table summarizes Gabon Telecom group’s main operating and financial data:

During the first half of 2008, net revenues of all business activities in Gabon amounted to MAD529 million, down 18.5% on a comparable basis mainly due to substantial price cuts carried out since June 2007. Mobile business gross revenues in Gabon amounted to MAD308 million for the first half of 2008, up 38.1% (-6.7% on a comparable basis). Gabon Telecom Fixed-line and Internet business gross revenues amounted to MAD275 million during the same period, down 22.9% on a comparable basis. In the first half of 2008, the EFO of Gabon Telecom group amounted to MAD(78) million, compared with a loss of MAD(86) million in the first half of 2007 on a comparable basis, i.e. a slight increase. This result is incorporating a provision of MAD7 million, further to the decision of the Gabonese Government to institute a new tax of 10% on Mobile operators revenues.

The consolidation method of the Gabon Telecom sub-group, and its contribution to Maroc Telecom’s results are summarized in Notes to the consolidated financial statements. The comparable basis illustrates the ef-fects of the consolidation of Gabon Telecom like as it had actually occurred with the beginning of the year 2007 and the maintain of a constant exchange rate.

Mobisud (France and Belgium)

Mobisud MVNOs achieved at the end of June 2008 total revenues of MAD91 million, for a customer base of 155,000 customers. The active customer base cleaning process made by Mobisud during the second quar-ter of 2008 mostly explains the customer base decrease compared to March 2008. The total EFO of Mobi-sud amounted to MAD(187) million, and takes into account restructuring costs in France, where the staff has been strongly reduced.

4

in thousands June 30, 2007 December 31, 2007 June 30, 2008 Mobile customers 263 386 424 Number of Fixed-line 22 24 31 Internet customers 9 10 11

in millions of Moroccan dirhams – in local standards

H1-2007 H1-2008 Change on com-parable basis

Revenues 428 529 (18.5%)

Mobile (gross) 223 308 (6.7%) Fixed-line (gross) 230 275 (22.9%)

Earnings from operations (26) (78) (11.9%)

Mobile 8 28 ns

Fixed-line (35) (106) (21.0%)

Earnings from operations before amortization 47 49 3.0%

Mobile 34 80 60.5%

(25)

4.2.1 Regulatory environment in Morocco

Interconnection charges

Since 2007, the interconnection charges to the Maroc Telecom and Medi Telecom Mobile network are sub-ject to the ANRT multiannual framework, defined in its decision no05/07 dated April 24, 2007. Therefore, for 2008, the termination charge in respect of the Maroc Telecom and Medi Telecom network is MAD1.2217 at peak time (-50% off-peak time), and MAD1.1551 at peak time in 2009.

In addition, the ANRT determined the interconnection charges to Wana mobile network as follows: MAD1.5027 at peak time in 2008 and MAD1.4027 at peak time in 2009; Wana benefits thus, as a new en-trant, of an asymmetry charges situation on the mobile termination market.

On January 3, 2008, the ANRT approved Maroc Telecom’s technical and pricing terms for interconnection to fixed-line and mobile networks for 2008. The table below sets out the operators’ domestic interconnec-tion charges to fixed-line networks as applicable on January 1, 2008 (at peak time, whilst a 50% reducinterconnec-tion is applied at off-peak time):

In addition, the ANRT determined a multiannual framing of interconnection charges to the Maroc Telecom fixed-line network which involves a 15% reduction in termination charges between 2007 and 2010.

In April 2008, the ANRT approved Maroc Telecom’s technical and pricing terms for interconnection by ca-pacity: only fixed to fixed traffic (including restricted mobility) is eligible to this kind of interconnection. The tariffs are as follows:

• Intra-CAA : 24,891 MAD/MIC/month • Simple Transit : 71,844 MAD/MIC/month • Double Transit : 105,212 MAD/MIC/month

4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES

Description of subsidiaries activities

4.2 REGULATORY ENVIRONMENT

in MAD (excluding tax/ minute) Maroc Telecom Meditel Wana

2008 Mobile termination 1.2217 1.2217 1.5027

2009 Mobile termination 1.1551 1.1551 1.4027

in MAD (excluding tax/ minute) Maroc Telecom Meditel Wana

Fixed termination Intra CAA : 0.1252 Single tariff : 0.3847 Single tariff : 0.4256

Simple Transit : 0.3346

Double Transit : 0.4410

(26)

Universel service

For 2008-2011, the ANRT launched a consultation for all national operators for a vast universal service pro-gram entitled "Pacte", aiming to provide telephone services and Internet access to all white zones in Moroc-co (9,263 localities). The program proposed by Maroc TeleMoroc-com Moroc-covered all localities. The Universal Service Management committee selected Maroc Telecom for 7,338 localities, for a total amount of MAD1.159 bil-lion, to be deducted from its universal service contribution for 2008-2011.

In April 2008, Maroc Telecom concluded with the ANRT an agreement related to universal service program to be carried out in 2008, for 1,500 localities, for an amount of MAD396 million, to deduct from its universal service contribution for 2008.

4.2.2 Regulatory environment of subsidiaries

In Gabon, the 2008 Finance law introduced an obligatory royalty to the health insurance, applicable to the mobile operators, which the amount is fixed at 10% of net revenues excluding of tax. This royalty was re-corded in the accounts closed at the end of June 2008.

In Burkina Faso, the Government of Burkina Faso currently holds a consultation for the transposition of the statutory texts in order to conform with the directives of the UEMOA (Union Economique et Monétaire Ouest Africaine) and the additional acts of CEDEAO (Communauté Economique des Etats de l’Afrique de l’Ouest).

(27)

The table below shows the changes in the number of employees to date at Maroc Telecom

Maroc Telecom is currently in the process of obtaining formal legal title to sites which historically were ow-ned by the Kingdom of Morocco and were legally transferred to Maroc Telecom at the time of its incorpora-tion in 1998.

As at July 15, 2008, the sites owned by Maroc Telecom broke down as follows: y 52% of the sites are legally owned by Maroc Telecom, which has legal title to them;

y 35% of sites are under requisition. Requisition is a claim to a property right. It is delivered by the land re-gistrar once the application for land registration has been made;

y 13% of sites are in the process of being formally registered.

To the Company’s knowledge, there are no pending or potential government, legal or arbitration procee-dings, including proceedings of which the Company has knowledge, that may have or have had in the past 6 months, a significant effect on the Company and on the group’s financial position, profits, other than men-tionned in the section 4.13 of the 2007 Registration Document. In addition, the proceeding mentioned in the section 7.1 of Registration Document completed as follows:

A formal notice of ANRT relating to the identification of mobile customers

Under the terms of article 10.3 of its contract specifications, Maroc Telecom must identify its customers, subscribers or holders of prepaid cards; the ANRT carried out, during 2007, one operational audit of the mobile management system of Maroc Telecom’ subscribers relating in particular to the identification of the mobile customers.

The audit report, communicate to Maroc Telecom on January 3, 2008, raises that the identification of the postpaid customers is under the total control of the Maroc Telecom commercial agencies, but the prepaid customers have failures, considering 98% of the prepaid cards are delivered by the indirect sale network of Maroc Telecom.

By letter dated January 9, 2008, the ANRT apply Maroc Telecom to urge an action plan, which is currently on deployment, together with a precise calendar in order to relieve this situation.

Maroc Telecom set up a vast campaign of identification of its Jawal customers which the impact should be significant until the end of 2008. This campaign consists primarily to improve the process of information-feedback existing (recovery and keyboarding of the available files), to stop the provisioning of the retailers who do not respect their contractual commitments, in particular that to identify, go up information custo-mers, and to encourage, by SMS sending, the not identified customers coming to identify in agency, against a commercial bonus.

4. INFORMATION CONCERNING COMPANY BUSINESS ACTIVITIES

Human Resources

4.3 HUMAN RESOURCES

Employees June 30, 2007 December 31, 2007 June 30, 2008

Maroc 11,058 10,949 10,983

Subsidiaries 3,123 3,103 3,086

Total 14,181 14,052 14,069

4.4 REAL PROPERTY

(28)

(29)

5.1 CONSOLIDATED FINANCIAL DATA

The selected Maroc Telecom’s consolidated financial data is summarized in the table below. This selected financial data have been breakdown from the Group’s consolidated financial statements which were pre-pared in accordance with International Financial Reporting Standards (IFRS) has been taken from the Group’s consolidated financial statements, which were prepared in accordance with International Financial Reporting Standards (IFRS), are reviewed by the statutory auditors Abdelaziz Almechatt and KPMG Maroc, represented by Fouad Lahgazi

.

5.1.1 Financial data in Moroccan dirhams

Income statement for the first halves of 2007 and 2008

Balance sheet

5. FINANCIAL REPORT

Consolidated financial data

(in millions of Moroccan dirhams) 2008 2007

Revenues 14,308 13,007

Operating expenses 7,642 7,008

Earnings from operations 6,666 5,999

Earnings from continuing operations 6,658 5,989

Earnings 4,489 3,928

Attributable to equity holders of the parent 4,526 3,850 Earnings per share (in Moroccan dirham) 5.1 4.5

ASSETS (in millions of Moroccan dirhams) June 30,

2008 December 31, 2007 Non-current assets 23,095 23,242 Current assets 12,007 14,507 TOTAL ASSETS 35,102 37,749

LIABILITIES AND EQUITY (in millions of Moroccan dirhams)

Share capital 5,275 5,275

Equity attributable to equity holders of the parents 13,799 17,380

Minority interests 1,075 1,254

Total equity 14,874 18,634

Non-current liabilities 1,433 1,436

Current liabilities 18,795 17,679

(30)

5

5.1.2 Scope of consolidation

Mauritel group

Maroc Telecom holds 51.5% of the voting rights of Mauritel S.A., the incumbent operator in Mauritania and operator of a fixed-line and mobile telecommunications network, following the merger of Mauritel SA (fixed-line) and Mauritel Mobile. Mauritel SA is owned by the holding Compagnie Mauritanienne de Communica-tions (CMC), in which Maroc Telecom holds 80%, so that Maroc Telecom holds a 41.2% interest in the Mauritanian incumbent operator. Through, the Mauritel group has been consolidated by Maroc Telecom since July 1, 2004.

Onatel

On December 29, 2006, Maroc Telecom acquired 51% of the capital of the Burkinabe operator Onatel and 100% of its mobile subsidiary Telmob. Onatel has been fully consolidated by Maroc Telecom since January 1, 2007.

Gabon Telecom

On February 9, 2007, Maroc Telecom acquired 51% of the capital of the operator Gabon Telecom and 100% of its mobile subsidiary Libertis. Gabon Telecom has been fully consolidated by Maroc Telecom since March 1, 2007.

Mobisud France

On November 3, 2006, Maroc Telecom acquired a 66% stake in SFR6, renamed Mobisud, alongside the other shareholders SAHAM (18%) and SFR (16%). Mobisud has been operating as an MVNO (Mobile Vir-tual Network Operator) since December 1, in France. Mobisud has been consolidated since its acquisition (cf .notes to consolidated financial statements).

Maroc Telecom Belgium

In Belgium, Maroc Telecom launched an activity of MVNO via its wholly-owned subsidiary Maroc Telecom Belgium (trade name: Mobisud Belgium). This company has been operating since May 2007 and has been consolidated by Maroc Telecom since April 1, 2007.

Medi-1-Sat

Medi-1-Sat has been accounted by the equity method since 2006, Maroc Telecom held 28% of the com-pany’s share capital at December 31, 2007. Medi-1-Sat produces and broadcasts news programs in French and Arabic in Maghreb countries. The company started broadcasting on December 1, 2006.

Other non-consolidated investments

Maroc Telecom’s other non-consolidated investments include Casanet, in charge of maintaining Maroc Telecom’s “Menara” Internet portal, an investment in Matelca, currently in liquidation, and other minority stakes. These companies are not consolidated as their results do not have a material impact on Maroc Telecom’s financial statements.

(31)

The table below sets out data regarding Maroc Telecom’s consolidated income statement for the first halves ended June 30, 2007 and 2008.

(in millions of Moroccan dirhams) 2008 2007

Revenues 14,308 13,007

Cost of purchases (2,238) (2,089)

Payroll costs (1,412) (1,303)

Sundry taxes and duties (351) (371)

Other operating income and expenses (1,826) (1,514)

Net depreciation, amortization and provisions (1,814) (1,731)

Earnings from operations 6,666 5,999

Income from ordinary activities 0 2

Depreciation of goodwill (8) 0

Income from equity affiliates (1) (12)

Earnings from continuing operations 6,658 5,989

Income from cash and cash equivalents 74 64

Financial costs (46) (52)

Net finance costs 28 12

Other financial income and expenses (78) (9)

Net financial items (50) 3

Income tax expense (2,119) (2,064)

Earnings 4,489 3,928

Attributable to equity holders of the parent 4,526 3,850

Minority interests (37) 78

EARNINGS PER SHARE (in MAD) 2008 2007

Earnings per share 5.1 4.5

Diluted earnings per share 5.1 4.5

5.2 INCOME STATEMENT

5. Financial report

Income statement

(32)

The analyzes below sets out data regarding Maroc Telecom’s consolidated income statement and details of its changes over the specified periods.

5.2.1 Comparison of the first halves of 2007 and 2008

Revenues

The table below shows the breakdown of revenues for the first halves of 2007 and 2008.

During the first half year of 2008, Maroc Telecom group achieved consolidatedrevenues of MAD14,308 million, up 10.0%, thanks to the continuing growth of Mobile activities both in Morocco and abroad in the subsidiaries, and despite an unfavourable economic context. On a comparable basis, consolidated reve-nues are up by 8.2%.

Mobile revenues grew by 14.3% (+13.0% on a comparable basis) to MAD10.2 billion, drived by the strong growth in the customer base. The Fixed-line revenues are steady at MAD5.5 billion.

Operating expenses

The table below shows operating expenses for the first halves of 2007 and 2008.

(in millions of Moroccan dirhams) 2008 2007

Mobile gross revenues 10,161 8,889

Fixed-line and Internet gross revenues 5,544 5,532

Total consolidated gross revenues 15,705 14,420

Elimination of intra-segment transactions (1,397) (1,413)

Total net consolidated revenues 14,308 13,007

(in millions of Moroccan dirhams) 2008 2007

Revenues 14,308 13,007 Cost of purchases % 2,238 16% 2,089 16% Payroll costs % 1,412 10% 1,303 10% Sundry taxes and duties

%

351 2%

371 3% Other operating income and expenses

%

1,826 13%

1,514 12% Net depreciation, amortization and provisions

%

1,814 13%

1,731 13%

Total operating expenses 7,642 7,008

(33)

Purchases

Between first halves of 2007 and 2008, purchases increased by 7.1% to MAD2,238 million, maintained at the same level compared to revenues and this, whereas in Morocco, costs of handsets are in rise due to the commercialization of handsets (2G and 3G) which unit purchase prices are appreciably higher.

Payroll costs

Between first halves of 2007 and 2008, payroll costs increased by 8.4%, with the consolidation of Gabon Telecom in the whole of the first half of 2008 compared with 4 months in 2007, and restructuring costs of Mobisud France, which the number of employees has been reduced by 50% .

Sundry taxes and duties

Between first halves of 2007 and 2008, taxes, duties are down 5.4% to MAD351 million, due mainly to the elimination of the urban tax in Morocco, the reduction of the professional tax rate and the obtaining of Uni-versal service exemptions within the framework of the ‘’Pacte’’ program.

Other operating income and expenses

Between first halves of 2007 and 2008, other operating income and expenses increased by 20.6%, partly linked to the rise of distributors’ commissions given in Morocco and the impact of the commercial efforts granted by subsidiaries.

Net depreciation, impairment and provisions

Net depreciation, impairment and provisions include in the first half of 2007 a MAD100 million release re-lated to voluntary redundancies plan achieved at the end of 2007.

Earnings from operations

Thanks to the control of costs, and despite of the competing pressures, Maroc Telecom group achieved a consolidated earnings from operations of MAD6,666 million (+11.1% and +12.4% on a comparable basis). The operating margin is then improved by 1.8 point (on a comparable basis) to 46.6%.

Income from equity affiliates

Medi-1-Sat has been accounted for using the equity method since 2006 fiscal year with an impact of MAD-1 million at June 30, 2008 compared to MAD-12 million at June 30, 2007.

Net financial items

Between first halves of 2007 and 2008, net financial items decreased from MAD3 million to a loss of MAD50 million. This fall is explained mainly by the constitution of a provision for depreciation of Medi-1-Sat asset and the adjustment of receivable interests not yet due of Gabon Telecom, following the revaluation of its debt at the fair value .

Tax expense

Although the tax rate in Morocco is 30% since January 1, 2008, the effective tax rate is 32% with the im-pact of deferred taxes for an amount of MAD166 million.

5. FINANCIAL REPORT

Income statement

(34)

Earnings

Earnings rose to MAD4,489 million at the end of June 2008 from MAD3,928 million at the end of June 2007,up 14.3% thanks mainly to Maroc Telecom results.

Minority interests

Minority interests, reflecting the interests of shareholders other than Maroc Telecom in the earnings of the group’s consolidated entities, amounted to MAD-37 million, versus MAD78 million as of June 30, 2007.

Net income (group share)

For 2008 first half, net income group share amounted to MAD4,526 million, up 17.6% compared to the end of June 2007.

Earnings per share

Earnings per share amounted to MAD5.1 in the first half of 2008, versus MAD4.5 in the first half of 2007.

5.2.2 Cash and cash equivalents

The group’s main source of liquidity is net cash from operating activities. Maroc Telecom group funds all its capital expenditure with its operating cash flow.

Statement of cash flows

The table below contains information relating to Maroc Telecom’s consolidated cash flows for the specified periods:

Cash flow from operating activities

At June 30, 2008, cash flow from operating activities totaled MAD4,774 million compared with MAD5,443 million at the end of June 30, 2007. Actually, this decrease masks an improvement of net cash earnings for an amount of MAD931 million offset by a rise of paid tax (MAD892 million) and an increase of working ca-pital requirement (MAD786 million), mainly in Morocco.

5

(in millions of Moroccan dirhams) June 30, 2008 June 30, 2007

Cash flow from operating activities 4,774 5,443 Cash flow used in investing activities (1,964) (2,322)

Cash flow used in financing activities (5,640) (2,962)

Foreign currency translation adjustments (3) 9 Change in cash and cash equivalents (2,833) 168

Cash and cash equivalents at beginning of period 3,725 2,741

Cash and cash equivalents at end of period 892 2,909

(35)

Cash flows used in investing activities

At June 30, 2008, cash flows used in investing activities amounted to MAD-1,964 million compared with MAD-2,322 million in 2007. It should be noted that a disbursement of MAD293 million was recorded in the first half of 2007, linked to the acquisition of 51% stake of Gabon Telecom.

A detailed breakdown of capital expenditure by segment is shown below

.

Cash flows used in financing activities

At June 30, 2008, cash flows used in financing activities amounted to MAD-5,640 million, compared with MAD-2,962 million in the first half of 2007. This increase is due mainly to the distribution of MAD8,220 mil-lion dividend in the first half of 2008, versus MAD6,950 milmil-lion in the first half of 2007; in the same time, the amount of borrowings and overdrafts facilities was limited to MAD2,514 million in 2008 compared with MAD3,968 million in 2007.

Capital expenditure

The table below sets out Maroc Telecom’s capital expenditure by segment for the specified periods.

In the first half of 2008, the group’s capital expenditure amounted to MAD1.930 billion, with a slight de-crease compared with the first half of 2007. Morocco represents 85% of these capex.

Mobile capex

The capex are in slight fall compared to the first half of 2007 linked to a capital expenditure schedule main-ly planning in the second half of 2008, in particular with the carrying out of the 2008 program of ‘’Pacte’’ project.

Fixed-line and Internet capex

Capex are stable compared to the first half of 2007.

Capital resources

In the first half of 2008, Maroc Telecom used a bank overdraft of MAD3.147 billion to finance its activity, versus MAD779 million at the end of December 31, 2007. Oustanding debts increased in the first half of 2008 by MAD246 million mainly in Onatel and Mobisud France.

5. FINANCIAL REPORT

Income statement

(in millions of Moroccan dirhams) June 30, 2008 June 30, 2007

Fixed-line 902 959

Mobile 1,028 1,184

Total 1,930 2,143

(in millions of Moroccan dirhams) June 30,

2008

December 31, 2007 Outstanding debt and accrued interests (a) 5,006 2,392

Cash * (b) 988 3,843

Net cash position ** (b) - (a) (4,018) 1,451

*: Investments securities are treated as cash equivalents if their maturity does not exceed three months **: of which a blocked cash for an amount of MAD96 million as at June 30, 2008

(36)

5.4 CONSOLIDATED FINANCIAL STATEMENTS

• Consolidated balance sheet at June 30, 2008 and December 31, 2007

• Consolidated income statements for the first halves of 2008

and 2007

• Consolidated statement of cash flows for the first halves of 2008 and 2007

• Consolidated statements of changes in equity for the first halves of 2008 and 2007

• Notes to consolidated financial statements

• Note 1. Accounting principles and valuation methods • Note 2. Scope of consolidation for 2008 and 2007 • Note 3. Dividends

• Note 4. Borrowings and other financial liabilities at June 30, 2008 and December 31, 2007

• Note 5. Restructuring • Note 6. Tax expense

• Note 7. Segment data at June 30, 2008 and 2007 • Note 8. Contractual obligations and contingent assets

and liabilities

8.1 Contractual obligations and commercial commit-ments recorded in the balance sheet

8.2 Other commitments given and received relating to ordinary operations

• Note 9. Post-balance sheet events

(37)

5. FINANCIAL REPORT

Consolidated financial statements

Consolidated balance sheet at June 30, 2008 and December 31, 2007

ASSETS (in millions of Moroccan Dirhams) Note June 30, 2008 December 31, ₂₀₀₇

Goodwill 2,117 2,197

Intangible assets 3,590 3,644

Property, plant and equipment 16,992 16,870

Investment in equity affiliates 0 1

Other non-current financial assets 340 326

Deferred tax assets 57 204

Non-current assets 23,095 23,242

Inventories 791 749

Trade accounts receivable and other 10,112 9,897

Other current financial assets 98 104

Cash and cash equivalents 892 3,725

Available for sale assets 114 32

Current assets 12,007 14,507

TOTAL ASSETS 35,102 37,749

LIABILITIES (in millions of Moroccan dirhams)

Share capital 5,275 5,275

Retained earnings 3,998 4,071

Earnings for the fiscal year-group share 4,526 8,033

Equity attributable to equity holders of the parent 3 13,799 17,380

Minority interests 1,075 1,254

Total equity 14,874 18,634

Non-current provisions 197 203

Borrowings and other non-current financial liabilities 4 1,211 1,233

Deferred tax liabilities 25 0

Non-current liabilities 1,433 1,436

Trade accounts payable and other 14,716 15,385

Current income tax liabilities 153 992

Current provisions 5 137 142

Borrowings and other current financial liabilities 4 3,795 1,159

Current liabilities 18,795 17,679

(38)

Consolidated income statement for the first halves of 2008 and 2007

(in millions of Moroccan dirhams) Note 2008 2007

Consolidated revenues 14,308 13,007

Cost of purchases (2,238) (2,089)

Payroll costs _(1,412) _(1,303)

Sundry taxes and duties ₍₃₅₁₎ ₍₃₇₁₎

Other operating income and expenses _(1,826) _(1,514)

Net depreciation, amortization and provisions (1,814) (1,731)

Earnings from operations _6,666 _5,999

Income from ordinary activities 0 2

Depreciation of Goodwill (8) 0

Income from equity affiliates (1) (12)

Earnings from continuing operations _6,658 _5,989

Income from cash and cash equivalents ₇₄ ₆₄

Finance expense (46) (52)

Net finance costs 28 12

Other finance income and expense (78) (9)

Net financial items ₍₅₀₎ ₃

Tax expense 6 (2,119) (2,064)

Earnings 4,489 3,928

Earnings from discountinued operations 0 0

Earnings 4,489 3,928

Attributable to the equity holders of the parents _4,526 _3,850

Minority interests (37) 78

EARNINGS PER SHARE (in Moroccan dirhams) 2008 2007

Earnings per share 5.1 4.5

Diluted earnings per share 5.1 4.5

(39)

5. FINANCIAL REPORT

Consolidated financial statements

Consolidated statements of cash flows for the first halves of 2008 and 2007

(in millions of Moroccan dirhams) 2008 2007

Consolidated earnings (including minority interests) _4,489 _3,928

Net depreciation, impairment and provisions 1,930 1,517

Non-cash expenses/income ₁ ₁₂

Capital gains and losses (35) (3)

Net earnings after net finance costs _6,385 _5,454

Net finance costs (28) (12)

Income tax expense (including deferred taxes) _2,119 _2,064

Tax paid (B) (2,916) (2,024)

Change in WCR related to operating activities (C) (786) (39)

Cash flow from operating activities (D) = (A+B+C) 4,774 5,443

Purchase of PP&E and intangible assets _(1,930) _(2,143)

Disposals of PP&E and intangible assets 44 14

Purchase of non-consolidated investments (1) (334)

Cash flow of long-term debt (12) 8

Cash flow of other financial assets (64) (6) Effects of changes in scope of consolidation 0 139

Cash flow used in investing activities (E) (1,964) (2,322)

Dividends paid during the year (8,220) (6,950) Principal payments on borrowings 2,514 3,968

Net interest 28 20

Changes in blocked cash 26 0

Changes in share capital ₁₉ ₀

Other (6) 0

Cash flow used in financing activities (F) _(5,640) _(2,962)

Foreign currency translation adjustments (G) (3) 9

Change in cash and cash equivalents (D+E+F+G) _(2,833) ₁₆₈

Cash and cash equivalents at beginning of period _3,725 _2,741

Cash and cash equivalents at end of period 892 2,909

2008 First half financial report