Telecommunications

Equity | Middle East & N Africa

4 April 2011

Telecommunications

Politics vs fundamentals

Recent geopolitical tension in the Mena region leads us to examine the general outlook of the Mena telecoms sector in light of unfolding events. We review our outlook for the sector and recommendations, and touch lightly on the current and future political situation.

Key recommendations & forecasts

Company Reuters Year end Dec 2011 Dec 2011 Dec 2011 Dec 2011 Dec 2011 Dec 2010 Dec 2011 Dec 2011 Mar 2011 Dec 2011 Dec 2011 Reco Current price Target Upside/ Current EV Current EV price downside (US$m) 53% 18% 10% 35% -9% -11% 18% 17% 16% 1% 15% 41,100 83,549 21,955 41,102 15,627 1,158 1,149 25,312 6,519 916 484 10,960 22,747 3,842 11,289 4,255 1,634 4,073 4,430 1,791 2,378 1,257

Mobily 7020.SE Etisalat ETEL.DU MobiNil EMOB.CA Q-Tel QTEL.QA Du DU.DU Jordan Telecom JTEL.AM Wataniya NMTC.KW Telecom Egypt ETEL.CA Vodafone Qatar VFQS.QA Oman Telecoms OTEL.MSM Nawras NWRS.MSM

Buy SR49.70 SR76.16 Buy Dh10.95 Dh12.89 Buy E£155.72 E£172.02 Buy QR139.20 QR187.58 Hold Dh3.14 Dh2.86 Sell JO5.70 JO5.09 Buy KD1.76 KD2.10 Buy E£17.23 E£20.15 Buy QR7.67 QR8.86 Hold RO1.20 RO1.21 Buy RO0.71 RO0.83

Priced at closed 29 Mar 2011. Source: Company data, Rasmala forecasts

Ongoing events should not affect broadband progress in the region Despite current negative sentiment, we maintain that broadband demand will continue to drive the region’s telecommunications sector growth. This is because most of the countries that we expect to witness the ’sweet spot’ in broadband penetration are essentially oil-driven economies that have either low or moderate exposure to the political rebellion in the area. Current outlook should not overshadow the bigger picture Taking into account mixed views on the longer-term outlook in the region and varying appetites for risk, we assess the repercussions of the political situation and the telecom sector’s longer-term strategy separately. We believe the...