MAROC_TELECOM_REGISTRATION_DOCUMENT_2017

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FINANCIAL REPORT Consolidated financial statements at 31 December 2015, 2016 and 2017

Assets not yet in service are recorded as assets in progress. Assets financed through finance leases are recorded at the lower of the fair value of the asset and the present value of the minimum lease payments, and related debt is recorded under “Borrowings and other financial liabilities.” These assets are depreciated on a straight-line basis over their estimated useful lives. Depreciation of assets acquired under finance leases is recorded as a general depreciation expense. Maroc Telecom has elected not to apply the option provided in IFRS 1 to remeasure property, plant, and equipment at fair value as at Januaryb1, 2004. The carrying value of an item of property, plant, and equipment includes the replacement cost of a component of such an item if this cost is incurred, if it is probable that the future economic benefits associated with the asset will flow to Maroc Telecom Group, and if the cost can be measured reliably. All maintenance costs are expensed when incurred. 1.3.9.4 IMPAIRMENT OF FIXED ASSETS Goodwill and other intangible assets with indefinite useful lives are subject to an impairment test at the close of each annual period, and are also tested whenever there is an indication that they may be impaired. The carrying value of other fixed assets is also subject to an impairment test whenever events or circumstances indicate that the carrying value of such assets may not be recoverable. The impairment test compares the asset’s carrying amount with its recoverable amount (i.e., the higher of fair value less disposal costs and value in use). The recoverable amount is determined for an individual asset as long as the asset generates cash inflows that are largely independent of those from other assets or groups of assets. If such is the case, as it is for goodwill, the recoverable amount is determined for the cash- generating unit. Maroc Telecom has selected as its cash generating units its fixed and Mobile business units (BU). 1.3.9.5 FINANCIAL ASSETS IFRS 9 establishes a new classification of financial assets permitting subsequent rather than initial recognition. Under IFRS 9, financial assets may be classified in the following 3 categories: – financial instruments as assets at amortized cost; – financial instruments as assets at fair value through other comprehensive income; – financial instruments as assets at fair value through net income. Furthermore, the classification is based on two criteria: – the economic model adopted by the entity tomanage its financial assets; – the contractual cash flow of financial assets. The Group has applied IFRS 9 to financial instruments that were not derecognized at the initial application date, which was 1bJanuaryb2017. All recognized financial assets falling under IFRS 9 must subsequently be valued at amortized cost or at fair value based on the basis of two criteria mentioned above. Financial assets classified as held-to-maturity and loans and receivables under IAS 39 measured at amortized cost continue to be measured at amortized cost under IFRS 9 as they are held in a

Pursuant to IAS 38 Intangible Assets, development costs are capitalized only after the technical and financial feasibility of the asset for sale or use have been established, where it is likely that the future economic benefits attributable to the asset will flow to the company, and where the cost of the asset can be measured reliably. 1.3.9.3 PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment are carried at historical cost less any accumulated depreciation and impairment losses. Historical cost includes acquisition or production costs as well as costs directly attributable to transporting the asset to its physical location and to preparing it for use in operations. For the purposes of IAS 23, borrowing costs directly attributable to the acquisition, construction, or production of a qualifying asset are included in the cost of the asset. Other borrowing costs are recognized as an expense for the period in which they are incurred. When property, plant, and equipment include significant components with various useful lives, the components are recorded and depreciated separately. Property assets comprising the items “land” and “buildings” are derived in part from the contribution in kind granted in 1998 by the Moroccan government (in connection with the breakup of ONPT) to Maroc Telecom when it was established. When these assets were transferred, the property titles could not be registered with the property registry. Fully 97% of such assets had been assigned property titles at the end of 2017. Although uncertainty over the property titles remains, the risk is limited, because the Moroccan government has guaranteed Maroc Telecomuse of the transferred property as at the end of 2013, and because to date there have been no significant incidents related to this situation. The assets transferred by theMoroccan government on Februaryb26, 1998, to establishMaroc Telecomas a public operator were recorded as a net amount in the opening statement of financial position, as approved by: – the Postal Services and Information Technology Act no.b24–96; – the joint order no.b341–98 of the Ministry of Telecommunications and the Ministry of Finance, Commerce, and Industry, approving the inventory of assets transferred to Maroc Telecom Group. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Useful lives are reviewed at the end of each reporting period and are as follows: – Construction and buildings 20 years – Civil engineering projects 15 years – Network equipment: — Transmission (Mobile) 10 years — Switching 8 years – Transmission (fixed line) 10 years – Fixtures and fittings — various facilities 10 years — fitting out of buildings 20 years – Computer equipment 5 years – Office equipment 10 years – Transportation equipment 5 years

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MAROC TELECOM ____ 2017 Registration Document