MAROC_TELECOM_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT

Consolidated financial statements at 31 December 2015, 2016 and 2017

NOTE 17 — REVENUES

(in MAD million)

2017

2016

2015

Morocco

20,481 15,733 -1,250 34,963

21,244 15,326 -1,318 35,252

21,033 14,010

International

Elimination of transactions between the parent company andbsubsidiaries

-910

TOTAL CONSOLIDATED REVENUES

34,134

As of December-end 2017 Maroc Telecom Group’s consolidated revenues amounted to MAD 34,963 million, down slightly by 0.8% (-0.9% at constant exchange rates).The 2.4% increase in subsidiaries’ revenues at constant exchange rates offset the impact in Morocco

of the deregulation of IP telephony since Novemberb2016 and the decline in call termination rates. Revenues from outgoing services were up 3.7% thanks mainly to the growth in the customer base and increased Data usage.

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NOTE 18 — COST OF SALES

(in MAD million) Cost of handsets

2017

2016

2015

659

793

835

Domestic and international interconnection charges

4,090 1,188 5,937

4,290 1,140 6,223

4,213

Other cost of sales

998

TOTAL

6,046

The “Other cost of sales” itemmainly comprises purchases of energy (fuel and electricity), the cost of purchasing phone cards, and other consumables.

Purchases consumed decreased from MAD 6,223 million in 2016 to MAD 5,937 million in 2017, following lower termination rates for international call.

NOTE 19 — PAYROLL COSTS

(in MAD million)

2017

2016

2015

Wages

2,654

2,796

2,761

Payroll taxes

484

463

483

Wages and taxes

3,138 3,138

3,260 3,260

3,245 3,245

Payroll costs

Average headcount (in number of employees)

11,022

12,162

12,556

This item includes the payroll costs for the fiscal year (wages, payroll taxes, training costs) but excludes employee severance plan costs, which were recognized as other operating expenses.

In 2017, personnel expenses declined byMAD 122million due to the finalization of the voluntary redundancy plan in Morocco.

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MAROC TELECOM ____ 2017 Registration Document