MAROC_TELECOM_REGISTRATION_DOCUMENT_2017

KEY FIGURES, GROUP STRATEGY AND RISK FACTORS

Risk factors

1.3.2 REGULATORY RISKS

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THE INTERPRETATION OF EXISTING REGULATIONS AND THE ADOPTION OF FUTURE LEGAL OR REGULATORY STANDARDS COULD SIGNIFICANTLY AFFECT MAROC TELECOM’S OPERATIONS The regulatory environment of the telecommunications industry in Morocco and in the countries where the Group operates is constantly changing. InMorocco, Law 24-96 and its implementing provisions, as amended and supplemented, as well as current revisions, could be interpreted in a way that might affect Maroc Telecom’s business and lead to a decrease in revenues and net profits. Major directions for the future, as outlined by the ANRT in the context of the 2014-2018 General Policy Document and the proposed Law 121-12 amending Law 24-96, as well as the new guidelines that have taken effect since Mayb2016, could have a significant impact on the profitability of some services, and Maroc Telecom’s business more generally, especially with regard to: – the strengthening of existing and future regulatory measures in terms of access to the wired local loop and passive infrastructures; – tougher sanctions (increase in fines of up to 2% of revenues, or 5% in the case of repeat offenses, and assigning greater powers to the regulator, which will have both investigative and punitive powers); – boosting of national roaming and its extension to the areas designated by theANRT, in addition to areas with universal service; – the intensification of price controls over Maroc Telecom’s retail offers and promotions (owing to its position as the dominant operator in all markets), and communication and quality of servicemonitoring introduced by the regulator, risk prejudicing its commercial freedom and particularly its ability to launch attractive promotions on the market; – the guidelines for reviewing the operators’ rate offers published in 2016 are favorable to third-party operators. In contrast to Maroc Telecom, they have the possibility of practicing different on-net and off-net rates for prepaid communications. Promotions and offers will be subject to a replicability test based on the full cost. The minimum rate required from Maroc Telecom for the replicability test is now 20% for fixed-line and mobile. These lines could negatively impact the competitive capacity of IAM; – the rules applicable to the occupation of the public domain contain uncertainties andmight evolve in a way that is unfavorable to Maroc Telecom; – new rules relating to urban planning and new real estate developments that have not yet been approved could have unfavorable consequences for Maroc Telecom; – changes in Net Neutrality regulations encourage more intense competition from Over The Top (OTT) operators. The regulatory levers were already strengthened in 2017 through the decisions made by the ANRT regarding the asymmetry of mobile termination rates (see Section 3.2.1.4, Regulatory environment).

Following the passage of Lawb 104-12 on price freedom and competition, the Decreebof Mayb31, 2016 amending and completing the Decreebof Julyb13, 2005 governing the proceeding with theANRT for disputes, anti-competitive practices and economic concentration, granted to theANRTnewpowers to control anti-competitive practices and concentration in the telecommunications sector. As a result, the ANRT was given new powers to sanction anti-competitive practices, which can reach 10% of the revenue of the operator in question, which is doubled in the event of repeated violations. MAROC TELECOM’S BUSINESS COULD BE AFFECTED BY REGULATORY PRESSURE IN THE MARKETS IN WHICH ITS SUBSIDIARIES OPERATE Group subsidiaries must comply with a set of regulations relating to the conduct of their operations. They are subject to oversight by the authorities, which aim to ensure fair competition. Major changes in the nature,interpretation or applicationof regulation by governmental, legal or regulatory authorities, particularly as concerns antitrust law, could result in additional expense for Maroc Telecom or cause it to modify its service, resulting in material impact on its operations, earnings and growth outlook. For all subsidiaries, obligations relating to the identification of mobile subscribers have increased, and for some of them the identification deadlines are expiring. After that, the accounts of unidentified subscribers would have to be suspended. The risk of a fine cannot be ruled out. If Maroc Telecom and its subsidiaries should be unable to acquire, to renew the licenses they need, in good time and at a reasonable cost, to carry out, continue, and develop their operations, and if they should be unable to retain them, in particular for noncompliance with commitments made in return for obtaining said licenses, their ability to achieve strategic objectives could be adversely affected. Broadly speaking, the rise in regulatory fees and special taxes in countries in which Maroc Telecom Group does business also constitutes a significant risk factor.

MAROC TELECOM MAY BE UNABLE TO DEDUCT CERTAIN PROVISIONS FOR DOUBTFUL RECEIVABLES

The amount of doubtful receivables for which Maroc Telecom has made provisions is deductible from its taxable profit, subject to the presentation of evidence that legal action has been taken against the debtors. If the deductibility of such provisions for doubtful receivables was challenged, the Company’s earnings and profits could be adversely affected.

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MAROC TELECOM ____ 2017 Registration Document