MAROC_TELECOM_REGISTRATION_DOCUMENT_2017

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

NOTE 32 — RISK MANAGEMENT

CURRENCY RISK Maroc TelecomGroup is exposed to exchange rate fluctuations to the extent that inflows and outflows are in different currencies. Maroc Telecom receives inflows in foreign currencies in the form of international operator’s revenues, andmakes expenditures in foreign currencies in the formof payments to international suppliers (notably, as capital expenditure and when buying terminals) and payments for interconnections with foreign operators. These outflows are mainly denominated in euros. In Morocco, at 31bDecemberb2017, euro-denominated outflows in foreign currencies accounted for 78% of total outflows in foreign currencies total outflows MAD 3,754 million. In 2017, these outflows in foreign currencies were less than inflows in foreign currencies amounting to MAD 3,886 million. Internationally, at 31bDecemberb2017, dollar-denominated outflows in foreign currencies accounted for 47% of total outflows in foreign currencies, totaling MAD 2,478 million. In 2017, these outflows in foreign currencies were more than inflows in foreign currencies amounting to MAD 766 million.

The Group is exposed to different risks of market related to its activity.

CREDIT RISK Maroc Telecomminimizes its credit risk by committing solely to credit transactions with merchant banks or financial institutions that have a high credit rating and by splitting its transactions among selected institutions. Maroc Telecom’s receivables show no major concentration of credit risk, as their dilution ratio is high.

In addition, Maroc TelecomGroup held debt of MAD 15,090 million at 31bDecemberb2017 vs. MAD 14,775 million at 31bDecemberb2016. The bulk of this debt is denominated in Euro and MAD:

(in MAD million)

2017

2016

2015

Euro

2,067 7,535 5,488

3,277 7,064 4,434

6,641 6,711 2,295

Moroccan dirham

Other (mainly CFA Franc)

CURRENT DEBT

15,090

14,775

15,648

Maroc TelecomGroup cannot fully offset its inflows against outflows or vice-versa as Moroccan regulations allow only 80% of its telecoms receipts in foreign currencies to be kept in a foreign-currency account, the remaining 20% having to be settled in dirhams. Maroc Telecom Group results may therefore be sensitive to fluctuations in exchange rates, particularly in terms of dirham, US dollars or euros. In 2017, the euro slipped by 5.09% against the dirham (from 10.6450 dirhams per euro on 31bDecemberb2016 to 11.1870 on 31bDecemberb2017). Over the same period, the US dollar rose by 7.59%, from 10.0960 dirhams per dollar in 2016 to 9.3295 in 2017. The subsidiaries whose accounting currency is the CFA franc and the Mauritanian subsidiary whose currency is the ouguiya increase the Group’s exposure to currency risk, particularly as regards to fluctuations in the exchange rate of the euro and the ouguiya against the dirham.

However, based on the Group’s 2017 financial statements, a 1% devaluation of the dirham against the euro would have the following limited impacts: – revenues =b+bMAD 153 million;

– earnings from operations =b+bMAD 40 million; – net earnings, Group share =b+bMAD 15 million.

At Maroc Telecom, assets in foreign currencies consist mainly of receivables from its subsidiaries and foreign operators. Liabilities in foreign currencies consist mainly of debts to the parent company, suppliers and operators. Internationally, assets in foreign currencies consist mainly of receivables from foreign operators. The Group’s currency liabilities are made up primarily of payables to foreign suppliers and operators.

Total foreign currencies

(in MAD million)

EUR/FFCFA

USD 634

MRO

MAD Final balance

Total assets

32,381 -18,763 13,618

1,713 -1,172

27

27,927 -38,328 -10,401

62,682 -62,682

Total shareholders’equity and liabilities

-4,405 -3,771

-15 12

NET POSITION

542

0

164

MAROC TELECOM ____ 2017 Registration Document