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INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS ABRIDGED PROSPECTUS, ESPECIALLY

THE RISK FACTORS GIVEN AT PARA 4.10, BEFORE MAKING ANY INVESTMENT DECISION. SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

ABRIDGED PROSPECTUS
Present Issue consist of 110,000,000 ordinary shares of PKR 10 each (20.85% of the enhanced paid up capital of PKR 5,274,746,200) with a Greenshoe option of up to additional 90,000,000 ordinary shares (14.58% of the enhanced paid up capital of PKR 6,174,746,200) in case of over-subscription at an Issue price of PKR 10/- per share to general public Subscription list will open at the commencement of banking hours on 20th April, 2010 and will close on 21st April, 2010 at the close of banking hours Advisor & Arranger

Joint Advisor & Arranger

Underwritten by:
National Bank of Pakistan Arif Habib Limited MCB Bank Limited Askari Bank Limited KASB Bank Limited Arif Habib Bank Limited Pearl Securities Limited Atlas Bank Limited Habib Bank Limited Bank of Khyber Allied Bank Limited Pak Oman Investment Co. Limited Faysal Bank Limited Wincom (Pvt.) Limited

The date of publication of this abridged Prospectus is 08 April, 2010

PART 1 1 1.1 APPROVALS AND LISTING AT THE STOCK EXCHANGE APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN

The approval of the Securities & Exchange Commission of Pakistan (SECP or the Commission) has been obtained for the issue, circulation, and publication of this Prospectus (the Prospectus) as required under section 57(1) of the Companies Ordinance, 1984 (the Ordinance). It must be distinctly understood that in giving this approval, the SECP does not take any responsibility for the financial soundness of the Company and any of its scheme stated herein or for the correctness of any of the statements made or opinions expressed with regard to them. The SECP has not evaluated the quality of the Issue and its approval of the Prospectus should not be construed as any commitment of the same. The public / investors should conduct their own independent investigation and analysis regarding the quality of the Issue before subscribing. 1.2 CLEARANCE OF THE PROSPECTUS BY THE STOCK EXCHANGE

The Prospectus has been cleared by the Karachi Stock Exchange (Guarantee) Limited (KSE) and the Lahore Stock Exchange (Guarantee) Limited (LSE) jointly referred to as the Stock Exchange in accordance with the requirements of its Listing Regulations. While clearing this Prospectus, the Stock Exchange neither guarantees the correctness of the contents of this document nor the viability of Wateen. The Stock Exchange has not evaluated the quality of the issue and its clearance of the prospectus should not be construed as any commitment in respect of the same. The public / investors should conduct their own independent investigation and analysis regarding the quality of the Issue before subscribing. 1.3 LISTING AT THE STOCK EXCHANGE

An application has been made to the Stock Exchange for permission to deal in and for the quotation of the shares of Wateen. In accordance with the Regulations for Future Trading in Provisionally Listed Companies of the Stock Exchange, the Company shall stand provisionally listed for trading and for the quotation of its shares on the Stock Exchange from the date of publication of this Prospectus, or any other date as may be specified by the Stock Exchange. If for any reason, the application for formal listing is not accepted by the Stock Exchange, the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund the application money to the applicants in pursuance of this issue, as required under the provisions of section 72 of the Ordinance.

PART 2 2 2.1 SHARE CAPITAL AND RELATED MATTERS SHARE CAPITAL Total (PKR) Authorized Capital 1,000,000,000 Ordinary shares of PKR 10/- each Issued, Subscribed, & Paid up Capital 208,737,310 208,737,310 417,474,620 No. of shares The existing issued, subscribed & paid up capital of the Company is held as follows: Shareholders of the Company 680,000 H.H. Sheikh Sultan Bin Hamdan 1,000 H.H. Nahayan Mabarak Al Nahayan(Chairman) H.E. Sheikh Saif Bin Muhammad Bin Butti Hamid Al Hamid 1,000 (Director) 1,000 Mr. Dhafer Sahmi Jaber Mufreh Al Ahbabi 1,000 Mr. Ali Salem Al Owais 900 Mr. Bashir Ahmed Tahir (Director) 1,000 Mr. Marwan Suleiman Zawaydeh 100 Mr. Parvez A. Shahid (Director) 100 Mr. Ahmed Darwish Dagher Al Marar (Director) 450 Mr. Khalid Manea Saeed Ahmed Al Otaiba(Director) 450 Mr. Abdulla Khalil Muhammad Samea Al Mutawa (Director) Shares held by Sponsors 333,292,700 M/s Warid Telecom International L.L.C. 83,494,920 M/s Bank Alfalah Limited 417,474,620 Total No. of shares Present Issue Shares to be issued to general public (20.85% of the post-IPO paid up 110,000,000 capital) at a price of PKR 10/- per share 110,000,000 Sub total 527,474,620 GRAND TOTAL 6,800,000 10,000 10,000 10,000 10,000 9,000 10,000 1,000 1,000 4,500 4,500 3,332,927,000 834,949,200 4,174,746,200 Total (PKR) 1,100,000,000 1,100,000,000 5,274,746,200 Issued for cash Ordinary shares of PKR 10/- each Issued for bonus Ordinary shares of PKR 10/- each Total 2,087,373,100 2,087,373,100 4,174,746,200 Total (PKR) 10,000,000,000

No. of shares

Notes:
(i) As per Rule 3(I)(iv) of the Companies (Issue of Capital) Rules, 1996, the sponsors shall, at all times, retain at least twenty five per cent (25%) of the paid-up capital of the Company;

(ii) As per Listing Regulation No. 6(A)(7) of the Stock Exchange, sponsors shareholding in excess of 25% shall not be saleable for a period of six months from the date of public subscription. (iii) The shares allotted to investors before the IPO, other than the sponsors, shall not be saleable and transferable for a period of six months from the date of public subscription. The Company will ensure that it will not allow transfer of these shares and have issued necessary instructions to its Share Registrar in this regard; (iv) In case of oversubscription, the Company shall exercise the Greenshoe option, and Issue up to 90,000,000 additional ordinary shares at PKR 10 to general public. (v) The Company through its special resolution under Section 208 of the Companies Ordinance, 1984 passed on December 15, 2009 proposed acquisition of 397,027 shares (49%) of the face value of Rs. 100 each from the existing individual shareholder of Wateen Solutions (Pvt.) Limited (formerly National Engineers (Pvt.) Limited) (WSPL) at a price of PKR 1,234.18 each, to make it a wholly owned subsidiary. The existing individual shareholder of WSPL from whom the said 49% shares are being purchased is Mr. Jahangir Ahmad who was employed by the Company from 1 January 2007 to 31 December 2009. Break-up value per share of WSPL as on June 30, 2009 is PKR 425.11/-. Wateen Telecom Limited had sold the said 397,027 (49%) shares of WSPL to Mr. Jahangir Ahmad during the Fiscal Year 2008-2009 at a price of PKR 131/- per share. Break-up value per share of WSPL as on June 30, 2008 was PKR 550/-.

(vi) The members of the Company through special resolution under Section 86(1) of the Companies
Ordinance 1984 passed on December 15, 2009 has also permitted the Company to raise a further capital of up to PKR 1.5 billion through an equity line of credit in addition to the PKR 2 billion being raised through this public offering of shares.

2.2

OPENING AND CLOSING OF SUBSCRIPTION LIST

The subscription list will open on 20th April, 2010 at the commencement of banking hours and will close on 21st April, 2010 at the close of banking hours. 2.3 INVESTOR ELIGIBILITY CRITERIA

(a) Pakistani citizens residing in Pakistan; (b) Pakistani citizens residing outside Pakistan; (c) Persons holding two nationalities including Pakistani nationality; (d) Foreign Nationals whether living in or outside Pakistan; (e) Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be); (f) Mutual funds, provident/pension/gratuity funds/trusts, (subject to the terms of their respective Trust Deeds and existing regulations); and (g) Branches in Pakistan of companies and bodies corporate incorporated in Pakistan. 2.4 FACILITIES AVAILABLE TO NON-RESIDENT PAKISTANI AND FOREIGN INVESTORS Non-resident Pakistani investors may subscribe for the public issue using their Special Convertible Rupee Account (SCRA) as set out under Chapter 20 of the Foreign Exchange Manual of the State Bank of Pakistan (b) Facilities available to foreign investors:

(a) Facilities available to non-resident Pakistani investors:

Foreign investors may subscribe for the public issue using their Special Convertible Rupee Account (SCRA) as set out under Chapter 20 of the Foreign Exchange Manual of State Bank of Pakistan. 2.5 MINIMUM AMOUNT OF APPLICATION, AND BASIS OF ALLOTMENT OF SHARES Following are the categories of applications which the applicant can opt for: Application size For 500 shares For 1,000 shares For 3,000 shares For 5,00 shares and in multiples thereof Reserved allocation of capital 25% of the offer size 30% of the offer size 25% of the offer size 20% of the offer size Total No. of shares allocated 27,500,000 32,999,000 27,501,000 22,000,000 110,000,000 Maximum No. of applications that can be accommodated 55,000 32,999 9,167 4,400 101,566 Amount (PKR) 275,000,000 329,990,000 275,010,000 220,000,000 1,100,000,000

Category A B C D

The basis and conditions for allotment of shares to the general public shall be as follows: (i) (ii) (iii) Application for subscription of less than 500 shares shall not be entertained; The minimum amount of application for subscription of 500 shares is Rs. 5,000. Application for subscription of shares must be made for 500 shares or 1,000 shares or 3,000 shares or 5,000 shares or in multiples of 5,000 shares only. Applications, which are not for 500 shares or 1,000 shares or 3,000 shares or 5,000 shares or in multiple of 5,000 shares, shall be rejected; SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS MONEY SHALL BE LIABLE TO CONFISCATION UNDER SECTION 18-A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969; An applicant will be entitled to apply in one category only; If the shares to be issued to the general public are sufficient for the purpose, all applications shall be accommodated; If the shares applied for by the general public are in excess of the shares offered to them, the distribution shall be made by computer balloting separately within each category, in the presence of the representative(s) of the Karachi Stock Exchange; In case of under-subscription of any category(ies) and over-subscription of other(s), the applicants of over-subscribed category(ies) will be allotted the shares of under subscribe category(ies). First preference will be given to the applicants who applied for 500 shares then 1,000 shares then 3,000 shares and then 5,000 shares category; Any shares left unsubscribed after allotment in the manner as mentioned in (viii) above shall be allotted on pro-rata basis to the applicants who applied for more than 5,000 shares; Allotment of shares will be subject to scrutiny of applications for subscription of shares; Applications, that do not meet the above-mentioned requirements, or applications that are incomplete, will be rejected.

(iv)

(v) (vi) (vii)

(viii)

(ix) (x) (xi)

2.6

SHARES ISSUED DURING PRECEDING YEARS

The following are the details of the shares issued by the Company in preceding years. Date 07 Mar 2005 25 Feb 2006 01 Mar 2006 26 Sep 2006 30 Sep 2009 Total 2.7 Consideration Initial Subscription in cash Cash Cash Cash Bonus No. of Shares 1,000,000 165,989,850 35,000,000 6,747,460 208,737,310 417,474,620 Par value 10 10 10 10 10 Premium per share Nil Nil Nil Nil Nil Amount 10,000,000 1,659,898,500 350,000,000 67,474,600 2,087,373,100 4,174,746,200

PRINCIPAL PURPOSE OF THE INITIAL PUBLIC OFFERING

The principal purpose of the proposed Initial Public Offering is to (i) repay PKR 1.469 billion to financial institutions as against the Companys financial obligations arises out of payment of LCs, (ii) acquire 49 percent shares (397,027 shares of face value of PKR 100 per share) of WSPL at a price of PKR 1,234.18 per share amounting to PKR 490 million to make it a wholly owned subsidiary of Wateen Telecom Limited, (iii) broaden the investor base through an increase in the number of shareholders and (iv) provide the public investor an opportunity to participate in the future of the Company with sound prospects. The 397,027 shares of the face value of PKR 100 each of WSPL are being purchased from Mr. Jahangir Ahmad. Break-up value per share of WSPL as on June 30, 2009 is PKR 425.11/-. Wateen Telecom Limited had sold the said 397,027 (49%) shares of WSPL to Mr. Jahangir Ahmad during the Fiscal Year 2008-2009 at a price of PKR 131/- per share. Break-up value per share of WSPL as on June 30, 2008 was PKR 550/- (for details see part 4.21). Furthermore, Mr. Jahangir Ahmad was employed by the Company from 1 January 2007 to 31 December 2009. 2.8 ELIGIBILITY FOR DIVIDEND

The Company in this matter will follow the provisions of Section 92 (2) of the Companies Ordinance, 1984, which reads as under: The new shares issued by a company shall rank pari-passu with the existing shares of the class to which the new shares belong in all matters, including the right to such bonus or right issue and dividends as may be declared by the Company subsequent to the date of issue of such new shares. PART 3 3 UNDERWRITING, COMMISSIONS, BROKERAGE, AND OTHER EXPENSES

The present Issue of 110,000,000 shares at a price of PKR 10 per share has been fully underwritten as follow: S. No. Name of the underwriters No. of shares Amount (PKR) 1 National Bank of Pakistan 20,000,000 200,000,000 2 Atlas Bank Limited 15,000,000 150,000,000 3 Arif Habib Limited 10,500,000 105,000,000 4 Habib Bank Limited 10,000,000 100,000,000 5 MCB Bank Limited 10,000,000 100,000,000 6 Bank of Khyber 10,000,000 100,000,000 7 Askari Bank Limited 7,500,000 75,000,000

8 9 10 11 12 13 14

Allied Bank Limited KASB Bank Limited Pak Oman Investment Co. Limited Arif Habib Bank Limited Faysal Bank Limited Pearl Securities Limited Wincom (Pvt.) Limited Total

5,000,000 5,000,000 5,000,000 5,000,000 2,500,000 2,500,000 2,000,000 110,000,000

50,000,000 50,000,000 50,000,000 50,000,000 25,000,000 25,000,000 20,000,000 1,100,000,000

If, and to the extent, the Shares Underwritten are not subscribed and paid for in full by the Closing date for the public subscription, the Underwriters in terms of the underwriting agreements will, within 15 (fifteen) days of being called upon to do so by the Company, (i) subscribe and take up against full payment in cash or (ii) procure subscribers to subscribe and take up against full payment in cash, the shares remained unsubscribed subject to the maximum of the Shares Underwritten. In the opinion of the directors, the resources of the underwriters are sufficient to discharge their respective underwriting commitments. 3.1 BUY-BACK / REPURCHASE AGREEMENT

THE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY-BACK / REPURCHASE AGREEMENT WITH THE COMPANY OR ANY OTHER PERSON IN RESPECT OF THIS ISSUE. ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATE(S) HAVE ENTERED INTO ANY BUY-BACK/REPURCHASE AGREEMENTS WITH THE UNDERWRITER(S) OR THEIR ASSOCIATE(S). THE COMPANY AND ITS ASSOCIATE(S) SHALL NOT BUYBACK/REPURCHASE SHARES FROM THE UNDERWRITER(S) AND/OR THEIR ASSOCIATE(S). 3.2 EXPENSES TO THE ISSUE Amount (Rupees) 11,000,000 16,500,000 5,500,000 11,000,000 16,500,000 1,500,000 2,500,000 50,000 50,000 1,000,000 90,000 50,000 500,000

Expense Underwriting Commission Take up commission Bankers to the Issue commission Brokerage commission Consultant to the issue fees Printing, publication etc. KSE listing fee and charges: Initial Listing Fee Annual Listing Fee Service Charges LSE listing fee and charges: Initial Listing Fee Annual Listing Fee Service Charges CDC fees and deposits

Rate 1.00% 1.50% 0.50% 1.00% 1.50%

SECP Application and processing Fees Legal Advisor Fee Balloters, Transfers Agents and Share registrar fees Marketing & advertisement Stamp duty Miscellaneous costs Total

100,000 500,000 2,800,000 35,000,000 500,000 1,000,000 106,140,000*

*These amounts represent the estimated costs relating to the subscription amount, which may alter post-IPO. PART 4 4 THE COMPANY

4.1 WATEEN TELECOM LIMITED OVERVIEW Wateen Telecom Limited (Wateen) was incorporated in Pakistan under the Companies Ordinance 1984, on 4th March 2005. The business model of the Company was to initially focus on the wholesale telecom market by becoming the leading carriers carrier by providing Long Distance and International (LDI), national transmission network (over fiber and VSAT services) and telecoms infrastructure. After successfully achieving this milestone, Wateen then focused on the consumer market through true broadband internet and telephony services as well as multimedia, TV broadcast services (through an affiliate) and value added services in Pakistan. The registered office of the Company is situated in Lahore. The Company commenced its commercial operations in LDI segment on 1 May 2005. Wateen is owned by the Abu Dhabi Group, one of the leading business conglomerates in the United Arab Emirates (UAE) and is one of the largest foreign investor groups in Pakistan. Wateens successful four years of operations in the telecom industry of Pakistan speak for itself, as it has successfully deployed the largest commercial and first nationwide 3.5 GHz WiMAX network in the world covering 22 cities and 1,100 sites. Rapid customer take up has helped Wateen acquire over 150,000 wireless broadband customers representing more than 60 percent of the total wireless broadband market. Additionally, 12,000 broadband customers over fiber with 2,700 corporate links (including 26 of the 31 commercial banks) and relationship with almost all the major GSM and telecommunication companies in Pakistan as its customers. Wateen is also proudly the largest operator of Satellite services in the country with 500+ MHz in commercial use and now also providing Satellite bandwidth services to telecom operators in Afghanistan. Additionally, infrastructure of Optic Fiber network spanning more than 10,000 km (including Government of Pakistan USF1 projects) across all the four provinces of Pakistan including metro connectivity in 22 cities powering 3 of the 5 GSM operators in Pakistan. Wateen also has been acknowledged as the largest alternative LDI operator in Pakistan (with over 1 billion minutes of traffic volume) duly acknowledged by the regulating authority PTA. Such remarkable performance has made Wateen the fastest growing telecommunication company in Pakistan, thus, making Wateen an icon in the industry and presents ample proof of the robustness of Wateen. Sales performance has also been quite encouraging and consistent with over 20,000 monthly additions to the broadband internet and telephony subscriber base reflecting acceptance of the technology and more importantly of Wateens brand value in the market. Sales growth rate has been far steeper compared to the industry average, evident from the fact that Wateen enjoys over 60 percent share of the wireless broadband market. Wateen has an established sales channel network with a well trained wireless operation team for installation and support which together can be leveraged to ensure critical momentum. It possesses efficient and effective business processes including entire customer lifecycle
1Sind

FOC (703km, PKR 449mn); Baluchistan FOC package 1 (900km, PKR 374mn); Baluchistan FOC package 3 (1,069km, PKR 986mn); Sargodha Broadband project (16,500 subs; PKR 239mn); Abbottabad Broadband project(3,250 subs, PKR 55mn); GTR Broadband 5 Districts (26,500 subs; PKR 295mn); CTR Broadband 5 Districts (56,000 subs; PKR 540mn)

management as well as the largest ISP call centre (200 agents capacity) and robust pre/post paid billing system supported by a state of the art Business Intelligence (BI) system. All the GSM operators and almost 80 percent of the commercial banks in Pakistan are using Wateens services in one form or the other including but not limited to dark fiber / data connectivity, VSAT (Satellite transmission), LDI services, etc. That just shows the reliability and dependability of Wateens telecom network and further compliments Wateens vision to be a Carriers Carrier. The current market dynamics of the telecom industry lead towards a price war between all the players - a natural result of a price war is increase in volume that will lead to higher capacity demand thus directly increasing business for Wateens services to the telecom and corporate industry and majority of these contracts with other telecom and institutional companies are based on a longer term basis. Key financial highlights and achievements for last five years are: All amounts are in PKR mn (except EPS) Revenue Cost of sales Gross Profit General & Admin Marketing & Selling Operating Profit Depreciation Other income Finance cost PBT Provision for tax Non controlling interest PAT EPS EPS net Mgt fee 2009 16,184.80 10,946.70 5,238.10 32% 1,920.60 299.7 3,017.80 19% 960 191.4 568.4 1,680.70 10% 532.1 129.9 1,018.70 4.88 4.88 2008 9,289.10 5,234.70 4,054.40 44% 1,715.80 340.5 1,998.10 22% 434.6 200 204.7 1,558.80 17% 474.6 1,084.20 5.19 7.22 2007 4,448.30 2,726.70 1,721.70 39% 854.2 82 785.5 18% 67.2 25.8 165.9 578.2 13% 192.7 385.5 1.86 2.91 2006 2,793.80 1,712.30 1,081.50 39% 564.8 14 502.7 18% 122.3 5.8 15 371.1 13% 144.3 226.8 3.35 1.81 2005 14.6 46.4 -31.8 -218% 12.7 -44.5 -305% 12.5 -57 -390% -19.9 -37.1 -37.1 -37.1

Largest alternative LDI operator in the country; over 1 billion minutes per annum including direct LDI routes / interconnects with major incumbents i.e., Etisalat, STC, BT, MOC Kuwait etc. Deployed fully redundant fibre optic network in record time 8,000+ km on long haul across the country 1,700+ km metro in 22 cities in record duration

Tele-housing / Co-location facilities in 70 cities Largest operator of Satellite services in the country (c. 500+ MHz in use) Deployed triple play HFC infrastructure in Pakistan for 20,000 house passes with 50%+ take-up of households within few months of launch Largest commercial and first nationwide WiMAX network rollout in the world covering 22 cities and more than 1,100 sites (900 live) Major clients include

Only 3 months of operation in FY2005

Carrier: Warid, CM Pak for dark fibre, Telenor for managed capacity and VSAT, Mobilink for OFC joint preventive measures Corporates: Clients include 26 Banks, 8 Media companies, 13 Telecos & Carrier over 2,700 links in other corporates Consumers: 150,000+ subscribers on WiMAX and HFC 26 out of top 31 banks use Wateen data network connectivity with 1,600 of the 5,000 on-line branches connected 8 TV Channels 13 Telco & Carrier customers 150,000+ broadband customers and 2,700+ enterprise links SWAP deal of fibre with the incumbent for alternative redundancy On an investment of PKR 2 billion, Company delivered cumulative revenue of PKR 37.5 billion, EBITDA of PKR 5.8 billion and profit of PKR 2.1 billion since inception to November 2009 including management fee Strategic vendor relationships, preferential pricing and vendor deferment of $75m as a Greenfield project. Wateen has secured $108 million dollars as vendor financing through reputable organizations such as MCC ($65 million) and ECGD ($43 million). Futhermore, Company secured local funding to the tune of PKR 14 billion and short term facility of PKR 3.5 billion Successfully completed VAR / PS (IP telephony, IP Contact Centre, Data Centre, Enterprise Data Network) project in Uganda, Congo and Bangladesh Cisco top customer Advocacy partner in the Middle East, Africa Region in 2006 Established sales channel network which can be leveraged to ensure critical momentum Well trained Wireless Operation team for installation and support Tested business processes including entire customer lifecycle management Largest ISP call centre (200 agents capacity) Robust pre/post paid billing system State of the art Business Intelligence (BI) system in place

Over the course of its operations, Wateen has successfully achieved strategic vendor relationships and preferential pricing. Wateen has also entered into long term contracts with major vendors and customers thus securing certainty in future cash flows. Wateen recently closed the largest syndicate financing transaction for 2009 raising PKR 4.7 billion from leading banks in the industry even in these challenging times showing the confidence of the market in Wateens business model and operations. Moreover, Wateen also successfully closed one of the largest Islamic Financing deal of PKR 530 million in the same period. In addition to the above, Wateen has secured $108 million dollars as vendor financing through reputable organizations such as MCC ($65 million) and ECGD ($43 million). ARCH-e-decon a leading valuer in the telecom industry was engaged to assess the current value of Wateens key strategic assets and after a thorough scrutiny of the assets comprising the companys fiber optic network (long haul and metro) and WiMAX licenses, their independent report suggested a replacement value of PKR 17.29 billion (current book value of these assets is PKR 1.64 billion) translating into intrinsic value of PKR 52.5 per share. Such a high intrinsic value share will now be available through the IPO at par value of PKR 10.0 per share - a huge discount for the people of Pakistan to benefit from. The said revaluation was only conducted for the management purpose and has not recorded in financial statement.

While Pakistans telecom industry continues to take positive steps towards the development of telecom infrastructure in the country, the massive boom in the mobile phone segment of telecom industry has also provided significant momentum for expansion and development in other segments of telecom as well. 4.2 COMPETITIVE FINANCIAL COMPARISON
WTL PKR m 26,289 2,087 21,522 4,767 397 16,185 5,238 3,018 568 1,681 1,019 4.88 32% 6% 21% 0.75 0.62 PTCL 215,140 51,000 109,887 105,253 21,186 92,720 37,375 16,081 4,473 16,739 10,923 2.14 1.50 40% 12% 10% 1.05 0.43 Telecard 9,719 3,000 6,010 3,709 10 3,791 1,181 589 494 95 44 0.15 31% 1% 1% 0.62 0.39 Pak Datacom 1,001 513 410 591 127 1,042 403 228 0.58 249 162 20.64 14.45 39% 16% 27% 1.75 1.04 Worldcall* 22,108 8,606 10,649 11,459 279 3,990 645 52 169 (259) (227) (0.26) 16% -6% -2% 0.91 0.18

PKR m Balance Sheet as on 30 June 2009 Total Assets Paid Up capital Total Liability Equity Cash Balance Income Statemen t as on 30 June 2009 Revenue Gross Revenue Operating Revenue Finance Cost Profit Before Tax Profit After Tax Earning Per Share Dividend Per Share Key Ratios Gross margin Net M argin Return on Equity Current Ratio Total Assets Turnover
* 06 months ended June 30, 2009

4.3

LICENSE DETAILS
Nature of Licence
Wireless Local Loop Services in 14 regions (each region has separate licence), with two licences in 4 of the regions

Wateen Licences
WLL Pakistan

Date
01-Dec-04 for 13 licences 04-Nov-04 for 5 licences

Term

Aggregate Licence Fees

20 years from the commencement date, Initial Licence Fee: US$180,000 renewable at discretion of PTA Initial Spectrum Fee: PKR116,405,379 Annual Fees/Payments: 0.5% plus 1.5% (Universal Service Fund) plus 1% (Research & Development Fund) of gross revenue from licensed services per annum Annual Spectrum Fee PKR 14,268,000

WLL AJK & NA

Wireless Local Loop Services in 2 3-Jun-09 regions (each region has separate licence),

20 years from the commencement date, Initial Licence Fee: US$3000 renewable at discretion of PTA Initial Spectrum Fee: PKR 8,000,000 Annual Fees/Payments: 0.5% plus 2% (Universal Service Fund) of gross revenue from licensed services per annum Annual Spectrum Fee PKR 740,000 20 years from the commencement date, Licence Fee: US$500,000 renewable at the discretion of PTA Annual Fees/Payments: 0.5% plus 1.5% (Universal Service Fund) plus 1% (Research & Development Fund) of gross revenue from licensed services per annum 20 years from the commencement date, Licence Fee: US$20,000 renewable at the discretion of PTA Annual Fees/Payments: 0.5% plus 2% (Universal Service Fund) of gross revenue from licensed services per annum

LDI Pakistan

Long Distance and International 26-Jul-04 Public Voice Telephone Services

LDI AJK & NA

Long Distance and International 28-May-08 Public Voice Telephone Services

Data Licence Pakistan Data Licence AJK & NA Data Registration

Data Class Value Added Services Licence

10-May-07

15 years from the date of issuance

Initial Licence Fee: US$4,762 Annual Fees/Payments: 0.5% of the Annual Gross Revenue

Data Class Value Added Services 28-May-08 License Certificate

15 years from the date of issuance

Initial Fee: US$3,704 Annual Fees/Payments: 0.5% of the Annual Gross Revenue Fee: US$124

Class Value Added Registration Certificate for providing video conferencing services

9-Jun-09

5 years from the date of issuance

Cable TV *

Cable TV transmission services in parts of Lahore and Multan

26-Dec-06/9-Feb-09 5 years from the commencement date, renewable at the discretion of PEMRA

Initial Licence Fee: PKR 1'400,000 Initial In-house Channel Fee/ channel: PKR 340,000 Annual Fees/Payments: PKR 612,500 plus PKR 2 (plus tax) annually for each subscriber

* Services being offered through strategic partner

4.4

FINANCIAL OVERVIEW (CURRENT YEAR WITH FUTURE OUTLOOK)

Wateen to date has had a phenomenal track record both operationally and financially and management has prepared a business plan in light of the current infrastructure deployed and prevailing market landscape over the foreseeable future. Revenue for 08 / 09 stood at PKR 16 billion representing a 74% year on year growth and cumulative revenue crossing PKR 32 billion over 4 years representing a 3 year growth of 479% which equates to 160% per annum or 80% compounded annual growth rate; Since inception, the company has delivered profits year after year. Furthermore, Wateen has posted PKR 1 billion profit after tax for two consecutive years i.e. 07/08 and 08/09. In addition to that profitability stands at an average Gross Profit of 39%, Operating Profit (EBITDA) of 19% and profit after tax (PAT) of 9% over last 4 years Return on Equity of more than 165%, with an earnings per share (EPS) (including management fee proceeds) averaging PKR 4.2 per annum over the last 4 years on a fully diluted basis Gain in net worth during 2009 totaled PKR 841 million, which increased the book value of the stock by 22%. Over the last four years, book value has grown from PKR 1.4 billion to PKR 4.8 billion, at a growth rate of 29 percent compounded annually. ARCH-e-decon a leading valuer in the telecom industry was engaged to assess the current value of Wateens key strategic assets, their independent report suggested a replacement value of circa PKR 17.3 billion (current book value of these assets is PKR 1.64 billion) translating into intrinsic value of PKR 52.5 per share Strategic vendor relationships, preferential pricing and vendor deferment of $75 million as a Greenfield project. Wateen has secured $108 million dollars as vendor financing through reputable organizations such as MCC ($65 million) and ECGD ($43 million). Furthermore, the Company secured local funding to the tune of PKR 14 billion and short term facility of PKR 3.5 billion, representing confidence in Wateen and Wateens prospects

This exemplary growth has been the best in the telecommunication industry of Pakistan representing a strong and tested track record with even a more lucrative future ahead of it. By leveraging the current infrastructure / network Wateen believes it can create significant shareholder value as the leading alternative telecommunications provider of Pakistan. Wateen decided to list its shares after addressing the turmoil created by the International and Pakistan economies for the past 18 months. It should be noted Wateens year end is 30th June and the current year 2010 relates to the 12 months ending 30th June 10 which is 7.5 month actual and 4.5 month forecast. 4.4.1 Revenue

Wateen has shown consistent revenue growth to date with a compounded annual growth rate of 80%. With similar growth rate, Wateen can launch new projects and believes it can achieve the targeted compound annual revenue growth rate 21% from 10 / 11 to 13 / 14 and other financial key performance indicators (KPIs). 4.4.2 09 / 10 Performance

Inflation, trade deficit, balance of payment, foreign exchange reserves, circular debt, liquidity issues, irratic performance of stocks as well as the Karachi Stock Exchange coupled with political instability have remained the key highlights of FYE2009. Despite all of these and the international economic and

financial crises, Wateen has shown resilience during this period. This remarkable performance has been driven by one of the best workforces in the telecommunication industry of Pakistan complimented by an arsenal of a diversified product portfolio. The Company holds reputation of both over performing from budget and surpassing all industry expectations. Keeping the economic climate in mind, Wateens Business Plan for the next five years is based on a relatively conservative outlook of the market especially for FYE 2010 where a dip in revenues is projected with a loss after tax. Moving forward, revenues for FYE 2011 are expected to grow at 80% to PKR 19 billion vs. PKR 10.7 billion in FYE 2010 and a modest growth of 19% vs. PKR 16 billion in FYE 2009. 07 / 08 9,289 08 / 09 16,185 63% 10,336 87% 917 245% 4,932 18% 09 / 10 10,706 -33% 7,432 -29% 2,030 131% 1,244 -73% 10 / 11 19,729 84% 9,258 25% 5,517 172% 4,953 298% 11 / 12 23,374 18% 11,430 23% 10,422 89% 1,522 -69% 12 / 13 29,427 26% 13,746 20% 14,083 35% 1,598 5% 13 / 14 34,913 19% 15,657 14% 17,597 15% 1,677 5%

Total Revenues LDI, VSAT & Solutions Broadband Managed Capacity

5,118 242 3,929

4.4.3

LDI, VSAT & Solutions

Growth in mature businesses comprising LDI, VSAT and Solutions is restricted to a compound average growth rate of a mere 19% against an impressive historical growth of 56% and 84% for LDI and VSAT. The solutions division was a recent addition and is showing a strong revenue contribution of approximately PKR 1 billion per annum. As per PTAs annual report for 2009, the LDI industry posted a 119 percent growth in revenue. Wateens growth in traffic volumes has been significantly greater than the industry average, particularly for its international outbound traffic which grew at 145 percent compared to 73 percent for the industry in 2009. A similar trend has been witnessed in VSAT, where Wateen has a tremendous advantage in being the largest satellite bandwidth provider in Pakistan enjoying over 65% market share (500+ MHz in commercial use). This gives Wateen enormous bargaining power for securing the best possible rates for bandwidth to maintain a leading position in market share. Additionally, a great potential still lies in provision of International connectivity to countries like Afghanistan, where a few telecom companies are already using Wateens Satellite services The current year 09 / 10 revenue decline was based on Wateen working with many of its major wholesale customers in respect of both deferment of some of the large projects to 10 / 11 and short term discounts to assist them during the financial turmoil in return for future business commitments to ensure a win-win situation. Furthermore a major reduction in revenue was noted in the LDI business line due to the current APC regime and grey traffic. This issue has been taken up with PTA to regulate this irregular competitive practice and PTA has issued a notice for decrease in APC from 7.5 cents to 5.5 cents effective 20 July 2009. PTA and the industry are working together to implement the one country one rate policy which will increase traffic, reduce grey / illegal routes and dramatically improve profits for all. Wateen has shown (and will continue to show) resilience to the international and local economic climate in these business lines. Some the key contributors to further strengthen the revenues going forward will include Most revenues are contracted in US $ denomination giving a natural year on year increase in PKR denominated revenues Many contracts are frame 1 20 year term contracts with annual year on year price escalations of 10-15%

Organic growth and current business opportunities for natural growth of existing business lines Introduction of several additional product lines / revenues streams like Transit for LDI, extending VSAT services to neighboring countries and hosted services under Solutions will further strengthen revenue growth in the years to come. Broadband

4.4.4

Phenomenal growth has been witnessed so far, where monthly sales hovered around 20,000 per month against an industry average of around 30,000 suggesting over 65% share in the pie depleting Wateens stocks. Forecast for the period is based on the fact that Pakistans overall broadband market, driving these product lines, is undergoing exponential growth; the market has grown by 146 percent in 2009 and at the same time, Wateen has grown by 346 percent attaining a market share of 29 percent and 65 percent plus market share in the wireless broadband market. As per PTA, the market is going to grow to nearly 5 million subscribers by 2014. This revenue is further supported by several value added services such as Wateens gaming service is the second largest gaming portal in Pakistan with more than 12,000 registered members acquired in only 3 months. At present, Wateen has one of the top 20 sites in Pakistan and a partnership with Getmo; an online distribution company of Sony BMG group. Wateens original content portals, coupled with captive audience of Wateens customer base will quickly make Wateen portal one of the top 5 sites, thereby bringing huge online advertising revenue even with a modest market share of 5 percent. Wateens revenue run rate in Jul 09 was PKR 96 million (annualized revenue of PKR 1.15 billion). For February 10 the revenue for the same is expected at PKR 173 million (annualized revenue of PKR 2.1 billion) and for Jun 10 based on current track record Wateen will surpass a monthly revenue of PKR 300 million (annualized of PKR 3.6 billion). Based this track record Wateen has already achieved a 8 month growth in revenue of 80%+ which on an annual basis is 120%+. This puts Wateen in a very strong position to hit the 10 / 11 target revenue of PKR 4.9 billion (monthly average of PKR 400 million) which is only a 33% growth from June 10 revenue forecast. Additionally, new CPEs for WiMAX are forecasted to cost as low as $50 to $70 as result of extensive vendor selection and negotiations as well as economies of scale. Moreover, Wateen has been granted a subsidy by USF amounting to approx. PKR 1.12 billion for 4 telecom regions and 102,250 additional customers. 4.4.5 Fiber network - OFC

Wateens revenue in managed capacity was PKR 3.9 billion and PKR 4.9 billion for 07 / 08 and 08 / 09, respectively. During 09 / 10 the optical fiber network of the Company grew from 5,000 km to around 10,000 km suggesting that by FYE 2011 Wateen shall reap the benefits of deploying additional 5,000 km during the period and is expecting a windfall payment of PKR 2.2 billion through the sale of dark fiber to the neighboring countries and some strategic customers - with successful dark fiber and lambda deals as a first by Wateen, it will be uniquely positioned to be an ideal choice for such requirements. With most of the growth in infrastructure coming through a subsidy from USF, Wateen will have the second largest, if not the largest OFC network in Pakistan. The roll-out along almost all of the national highways will make it an ideal choice for operators to shift onto dark fiber for backhauling from existing microwave media which is comparatively less reliable. Following are some more comments on this segment of the business: 1. As highlighted earlier that 09/10 was year Wateen grew its infrastructure e.g. 4,500 KMs and 10/11 will be the year to monetize what we built 2. Revenues realized from the IRU of 3 pair out of 12 on 5,500 KMs was $ 96 million. Suggesting a huge potential exists through the sale of the remaining pairs or capitalizing on the additional length deployed 3. ARCH-e-decon a leading valuer in the telecom industry was engaged to assess the current value of Wateens fiber optic network, their independent report suggested a replacement value of circa PKR 13.5 billion against a book value (recorded at cost) of about PKR 1.45 billion

4. New business opportunities like telehousing, powering 3G networks, extending fiber to the neighboring countries, offer redundancy to the other fiber network operations are to name a few which are yet to be capitalized 5. Wateen has also been granted a subsidy by USF amounting to approx. PKR 1.81 billion for OFC expansion of 2,672 km in Balochistan and Sindh. On the profitability side, as the aforementioned table suggests that gross margins historically and forecasted are fairly stable having an average gross profit margin 44% over ten years. A dip in profit after tax is observed in 09 / 10 due to the following: 1. Revenue decline in 09 / 10 due to i. ii. iii. time to deploy new networks deferment of projects and support for major wholesale clients APC regime realignment

2. Pre launch / launch costs of WiMAX / Broadband. Not only has Wateen supported the entire network rollout and operations during this period but also seen CPE prices start from $200+ and now $50 to $70 for future CPEs as a result of extensive vendor selection and negotiations as well as economies of scale 3. Increase in finance cost due to the tight monetary policy being practiced by the central bank since 2008 took its due share from the profit after tax. Profits will soar to as low as -19% in FYE 2010 due to the operational cost for WiMAX and depreciation that will start yielding results in years to come. Furthermore, due to diversified portfolio that ranges from retail to wholesale, this loss is restricted to one year only vs. loss spanning over three to four years for companies having single line of business. Operating margins (ebitda margins) follows a steady trend and hovers around 32% as the broadband starts maturing. In 2012 operating margins declines to 28% vs. 32% in the preceding year due to the fact that revenue contribution from OFC will drop to 7% vs. 25% of total revenue in FYE 2011. Operational cost for WiMAX, dip in revenues, drop in revenue contribution from OFC to the total revenues, short term discounts and support to the major wholesale customers to assist them during the financial turmoil in return for future business commitments are the variables that can be classified as reasons for lower operating profits in FYE 2010. Despite the international economic and financial crises Wateen is on the trajectory of posting operating profits by FYE 2010. In summary Wateens management believes the business plan is a highly achievable plan given the current infrastructure deployed by the Company, the current market landscape, industry / competitor backdrop and Managements track record. Wateens Business Plan for the next 5 years is based on a relatively conservative outlook of the market. By segmenting the market in terms of wholesale versus retail, we can have an insight into the growth potential for a TMT company such as Wateen ideally positioned to ride future growth wave. Retail On the retail side, Wateens business includes the WiMAX, FTT(X) and VAS platforms. Pakistans overall broadband market, driving these product lines, is undergoing exponential growth; the market has grown by 146% in 2009 and at the same time, Wateen has grown by 346% attaining a market share of 29%2 and 65% plus market share in the wireless broadband market. As per PTA, the market is going to grow to nearly 5 million subscribers by 2014. With traditional broadband technologies based on copper facing challenges due to aging and poor quality, the growth in broadband will be led by Wireless and optic fibre (HFC/Fiber) based technologies which will ensure a healthy growth in market share by
2 From

PTA 2008-2009 report, the total broadband market turns out to be around 550,000. Out of which Wateens share is 160,000.

Wateen. Due to this, the WiMAX segment has promising potential of generating revenue at a CAGR of 80% in the five year period starting 2009 from PKR 0.7 billion to PKR 14.1 billion by 2014. On the profitability side, Wateen has considerable competitive advantages which will ensure long term sustainability of better than industry EBITDA and net profitability. By having its own metro fiber, FTT(X) and long haul network (revenue centers, as opposed to cost centers), Wateen has virtually no media costs compared to competition. Similarly, site sharing arrangements with Warid at fractional costs compared to other wireless access providers ensure considerable reduction in OPEX. In addition, presence in 22 cities with the highest on-air WiMAX site count and complementary product lines (voice, Internet, data, and VAS) provide Wateen both economies of scale and scope enjoyed by none other. However, pressure on EBITDA margin shall be felt till 2010 due to heavy subscriber acquisition that is expected to be released thereafter. Margins are therefore expected to hover around 46% by 2014, which is 2% to 5% higher than the industry average. On VAS side, Wateen has a price advantage over GSM operators because of asymmetric termination rates on voice. SMS services with low cost of installation will be able to add incremental revenues. In addition, Wateens gaming is the second largest gaming portal in Pakistan with more than 12,000 registered members in just 3 months. With the exponential increase in gaming customers, the largest library of games in different genres and 24/7 support the customer traffic is expected to increase dramatically. Similarly, the current online advertizing market in Pakistan is estimated to be over US$10 million. At present, Wateen is one of the top 20 sites in Pakistan. Our original content portals, coupled with captive audience of Wateens customer base will quickly make Wateen portal one of the top 5 sites, thereby bringing huge online advertising revenue even with a modest market share of 5%. To complement WiMAX, metro fiber and GPON platforms have been rolled-out in selective areas throughout larger cities to cater for growing bandwidth needs in the enterprise market. In a short span of 2 years, Wateen already has 26 out of 37 commercial banks on board for data connectivity (70%). As businesses are getting more reliant on Information technology for everyday operations, applications are getting more bandwidth hungry and the need for a one-window and reliable service model has increased substantially. As broadband proliferates in this market for data connectivity3 (banks are already upgrading their infrastructures from legacy dial-up and DXX to broadband), Wateen is ready to reap the benefits of its timely investments in infrastructure to capitalize on first mover advantage and its unique position in the market as a one-stop shop. With these steps, Wateens growth in market share will not only be fueled by customer churn to Wateen, but also overall adoption of broadband in place of legacy systems. Furthermore, year on year reduction in ARPU already budgeted will ensure Wateen does not become uncompetitive in the market. Wholesale LDI On the wholesale side, Wateens business includes LDI, Managed Capacity (on OFC and VSAT), and System Integration product lines. The recent growth in the Pakistani LDI sector has been consistently strong. As per PTAs annual report for 2009, the industry boasted a 119% revenue growth. Wateens growth in traffic volumes has been significantly greater than the industry average, particularly for its international outbound traffic which grew at 145% as compared to the 73% for the industry. Despite a temporary flux in the market owing to the one-off readjustment in the exchange rate, PTA predicts this growth to remain strong over the coming years due to its concerted efforts to curb grey traffic. LDI revenues are therefore expected to grow at a CAGR of 5% in the period 2009 to 2014 from PKR 7.8 billion in FY2009 to PKR 9.9 billion in FY2014. After achieving the high of PKR 7.8 billion in FY2009, LDI revenues are expected to surpass this figure in FY2013 where revenue for the year is projected at PKR 8.7 billion and growing to PKR 9.9 billion in FY2014. Growth in gross profit and EBITDA is projected at a CAGR of 9% and 15%, respectively for the corresponding period. Gross profit and EBITDA margins remain within the range of 11% - 13% and 7% - 12% in the period 2009 to
3

Wateen in-house research puts the total data connectivity market around 18,000 links.

2014. MoUs are only projected to decline in FY2010 from 1.2 billion in FY2009 to 1.1 billion and then experience a year on year growth reaching the mark of 2 billion by 2014 at a CAGR of 11%. Wateen is collaborating with the rest of the LDI industry to stabilize the rates and further improve profitability of the market. According to industry experts, this will inevitably allow the operators to charge higher rates and return to the significantly higher EBITDA of yester-years, by squeezing out illegal operators. Presently, Wateen has a robust network and is currently operating at excess capacity and with its relations to the leading LDI operators in the world; it is uniquely placed in the sector to gain the most from the promising market prospects. Managed Capacity (OFC) Managed Capacity is a cash cow for Wateen since any increase in revenue directly hits the bottom line as evident from the high EBITDA margin which ranges from 35% - 81% for the period 2009 to 2014. Wateens total OFC footprint will span 10,000+ kilometers of fiber. With most of the growth in infrastructure coming through USF subsidy, Wateen will have the second largest, if not the largest OFC network in Pakistan. The roll-out along highways will make it an ideal choice for GSM operators to shift onto dark fiber for backhauling from existing microwave media which is comparatively less reliable. Alongside, revenue from IP Transit and IPLC business will undergo exponential growth as Wateen makes terrestrial interconnects with Afghanistan, Iran and India. In addition, as large government, defense and private organizations upgrade their infrastructures and move on to a paradigm where distributed applications are serving business needs and the importance of transport media outgrows currently available capacities on the market, lambdas will increasingly become popular. With successful dark fiber and lambda deals as a first by Wateen, it will be uniquely positioned to be an ideal choice for such requirements. The current projected business plan for Managed Capacity is therefore based on a very conservative outlook where the revenue is expected to decline at a negative growth rate from PKR 4.6 billion in FY2009 to PKR 1.7 billion in FY2014. Compounded growth is not the best predicator of revenue performance for this business segment since revenue is expected to peak in FY2012 where it is projected at PKR 4.9 billion. This will be in synch with completion of fiber deployments under USF expansion. Managed Capacity (VSAT) On VSAT, Wateen has a tremendous advantage in being the largest satellite bandwidth consumer in Pakistan. This gives Wateen enormous bargaining power in securing the best possible rates for bandwidth. Since bandwidth prices have been consistently rising over the last few years due to DTH operators in the region, Wateen has and will have a cost advantage over others, which will make it an extremely profitable platform. Additionally, a great potential still lies in provision of International connectivity to countries like Afghanistan, where some telecom companies are already using Wateens Satellite services. With such positioning, revenue from VSAT is expected to grow at a CAGR of 15% from PKR 1.7 billion in FY2009 to PKR 3.4 billion in FY2014. Gross profit and EBITDA in the corresponding period also projected to grow at a decent CAGR of 27% and 33%, respectively. The gross profit margin remains within the modest range of 29% - 38% while the EBITDA margin increases from 17% in FY2009 to 35% in FY2014. System Integration As the largest system integrator in Pakistan; Wateen has the experience as well as the technical capabilities for small network upgrades to building multimillion dollar data centers. Globally, both premises and hosted solutions are seeing exponential growths. Value Added Reselling was responsible for over $600 billion dollar business last year. With 2000+ service providers & enterprises and 350,000+ SMEs; the potential for growth is huge in Pakistan. Also, the margins in this business are not just dependent on first sale; but also on services and Warranties which are a big strength of the Wateen solutions team. Cloud computing is called the future of business and Wateen with the only Tier-2 data centre in the country has the infrastructure to provide low cost managed solutions. With our large nationwide infrastructure and established relationships; these solutions have generated a great interested and at

present we are expanding our data centre capacity to coup with maturing demand. With minimal incremental cost; hosted business is just short of pure margin and continues long-term revenue stream for Wateen. With this potential, VAR and HS are expected to generate steady revenue streams over the five year period 2009 to 2014 together posting year on year growth of 22% and a CAGR of 28% taking the revenue from PKR 1.1 billion in FY2009 to PKR 2.3 billion in FY2014. EBITDA is projected to grow at an even steeper rate of 36% compounded annually over the corresponding period. EBITDA margin remains within the range of 13% - 21%. 4.5 THE TECHNOLOGY The purpose of this section is to shed light on the various technologies deployed by Wateen. To become the leading carriers carrier to usher in the digital revolution and to provide a variety of services with focus on high reliability, scalability and affordability, Wateen has selected cutting edge, futuristic technologies coupled with time tested infrastructure to compliment its vision. Being a customer centric company it was very important for Wateen to build a network with the capability of offering flexibility, scalability and reliability to deliver what customer wants rather than what the technology features. Wateen has always selected the leading international vendors based on open RFIs to ensure the best technical solutions at the best price. With the objective in sight and vision in mind, Wateen has built a transmission layer on fiber across the country and in major metro areas spanning over 10,000 kilometers and with having fiber in place it was important to build an access agnostic core to deliver technology agnostic services. Data centric Wireless (WiMAX) and wired line (FTTx) mediums were selected with a fiber based backbone having converged core to serve the end customer demand for generations to come. Technology and capacity shall pose no constraint for delivering customer needs in the time to come. 4.5.1 Wireless Access - WiMAX

WiMAX was selected as the preferred wireless access medium. The aforementioned technology has the capability of offering higher throughput coupled with advanced features compared to other wireless technologies like eVDO. To mention just a few advantages, per sector throughput in WiMAX ranges up to 25MB vs. 1MB for eVDO and research is underway to enhance per sector capacity to over 100MB. Smooth convergence with LTE (4G technology) is considered another advantage of WiMAX over other wireless technologies available in the market. Region Band Range 21 3499.25-3520.25 For deployment, Motorola was selected as the vendor CTR 42 3499.25-3541.25 of choice over Ericsson, Huawei, Cisco-Navini, FTR Alcatel-Lucent and Redline through a multi stage GTR 42 3541.25-3583.25 evaluation process. Since then Motorola has sold ten HTR 21 3499.25-3520.25 thousand access points and nearly one million ITR 42 3499.25-3541.25 WiMAX terminals. KTR 42 3499.25-3541.25 LTR4 42 3499.25-3541.25 Wateen holds license to operate in 22 cities in all 14 MTR 21 3499.25-3520.25 WLL regions with wide frequency bands. In the urban NTR-1 21 3499.25-3520.25 regions, Wateen enjoys over 40MHz band, which is NTR-2 21 3499.25-3520.25 required for efficient Radio Frequency (RF) network RTR 21 3499.25-3520.25 design featuring minimum interference and high STR-1 21 3499.25-3520.25 capacity using 7 MHz - 4 sector access points. The STR-V 21 3499.25-3520.25 network comprises 1,081 sites of 4 sectors each. 21 3499.25-3520.25 Amongst those, around 1,000 sites are already WTR operational while the remaining are in the process of deployment. The overall capacity of the network for a typical subscriber profile with applicable contentions is beyond 1 million subscribers with a 512 Kbps profile which is the largest amongst the Wireless broadband operators in the region. State of the art high capacity IP Microwave (MW) links have been deployed to backhaul the traffic from the Access Point (AP) sites for aggregation to the hub sites which are further linked to the MPLS core network.
4

In partnership with DHA

Most of the AP sites have been deployed on shared sites with other operators for minimizing capital and operating expenditure as well as for reducing the time to market; eventually contributing to enhanced availability and affordability for the end customer. Hub sites to gather the traffic from the overall network and backhaul to the core network have been built at strategic locations for a resilient optimized and scalable network design as well as to enable business to offer flexible corporate solutions. 4.5.2 Wireless Access Satellite

Wateens Satellite Division provides state of the art satellite based voice, data, video, fax, internet and TV uplinking turn-key solutions backed by 24/7 all year round professional support. Wateen enjoys a full-time, cross-disciplined skilled team of experienced and dedicated technical and business professionals who understand the business and technology issues of different industries and therefore are fully capable of accurately translating customer requirements to viable and reliable technical solutions. Satellite technology is best suited for remote areas where conventional transmission layer faces difficulties. Satellite backhaul has particularly established itself as a recognized and efficient medium to deliver services in geographically challenged areas. Sites connected via satellite provide instant infrastructure on both temporary and permanent basis, enabling rapid deployment in remote and inaccessible locations. Satellite is also the fastest method of restoring communications in disaster struck areas. It is the ideal medium to provide additional capacity for one-time events, such as cellular coverage to guests on a cruise ship or to attendees of major sports events. Wateen Satellite technology features a flexible and powerful architecture that can concurrently support any or combination of applications focused towards providing networks which are cost-effective, reliable, efficient, and scalable. Wateen through its Satellite services offers products and solutions to support various applications through top of the line Satellites orbiting the earth having footprints in Pakistan, Europe and Africa. Wateen Satellite also provides complete turnkey solutions to its clients covering planning, survey, design, supply, delivery, installation, and commissioning, testing, and post-sales O&M support. Few of the products and services offered over Satellite are: GSM Backhaul Carrier class telephony networks Broadband Internet, and multimedia access Enterprise private networks

Rural telephony public networks Government and Military Networks TV Up-Linking Direct to Home (DTH) DSNG vans for news gathering

Wateen works with industry renowned manufactures which include STM Networks, Comtech EFDATA and iDirect to overcome the bandwidth challenges featuring turbo coding, 16QAM, drop and insert, CinC, silence suppression, and others. All these technologies are approved and recommended by ITU and all American / European Telecom authorities. 4.5.3 Wireless Access DVB-RCS DVB-RCS (Digital Video Broadcasting Return channel via satellite (DVB-RCS, also Return channel over system) is a satellite communication standard with highly efficient bandwidth management, making it a cost-efficient alternative in many cases. On top of traditional dedicated VSAT services, Wateen Satellite DVB-RCS product offering forms an integral part of the overall communication solution for its customers. DVB-RCS network facilitates the corporate and banking sector at over 500 distant locations all over Pakistan enabling customers to expand their ATM networks, business applications to remote localities while guaranteeing security. DVB-RCS HUBs located at Lahore, Hyderabad and Karachi are fully integrated with Wateens Optical Fiber that extends to 77 cities across Pakistan with IP/MPLS core back bone for fast routing of data to the desired destination. The last miles are established on Metro Fiber Rings to the customer locations or through wireless WiMAX connectivity. 4.5.4 Wireline Access - FTTx

Wateen has already launched HFC network of 30,000+ House Passes (HP) in DHA Lahore for offering triple play services. In Pakistan, HFC networks have been successfully deployed by cable operators since the 1990s. In traditional HFC networks, fiber optic network extends to the main head end out to a virtual hub and finally to a fiber optic node. Each node is able to serve houses with and without amplifiers to provide VDV (voice, data and video) services at an optimal quality. In todays increasingly competitive and technologically advanced telecom environment, broadband networks offer telecom operators both new business opportunities and challenges. Carriers are now confronted with many problems such fierce competition, subscriber churn, lower revenue, high costs of operation and etc. At the same time, subscribers demand more bandwidth, better services and cheaper packages, more personalized applications, and quicker troubleshooting to support a vast array of VDV services. To address all the demand, capacity and financial concerns of this evolving technological business environment, Wateen has opted for GPON technology because it can make a high bandwidth capacity and low OPEX Fiber To The Home (FTTH) access platform for carriers. Wateens FTTx architecture includes GPON (2.4 Gbps downstream, 1.2 Gbps upstream). To leverage existing HE of DVBC Wateen implemented an overlay for RF video transport: a 1,550 nm wavelength multiplexed onto the fiber with the 1,490 nm downstream wavelength and the 1,310 nm upstream wavelength. 4.5.5 Core

One of the biggest strengths of Wateens network is its highly scalable and exceptionally reliable Core Network serving as the backbone of all the services being offered. The truly convergent core comprises of Cisco supplied highly redundant Multiple WiMAX IP/MPLS IP transport layer, BTS per City POP Multiple scalable Class 4 transit network and Customer Premise per WiMAX BTS feature rich Class 5 VoIP Core which provides the required strength to products ranging from City POPs Consumer to Enterprise and Wholesale to Retail.
Network Operations Centre CP
Internet

City Pop

CP

City Pop

CP

CP

ISP Data Centre

City Pop

CP

CP

Hosted ISP intelligence Hosted VoIP Network Intelligence

VoIP Control Pop LAN

WiMAX The IP Core transport layer Broadband Access City Local comprises GSR12800 based core Media Gateway nodes in Lahore, Karachi, Islamabad and Faisalabad connected over STM16 links in a Media Gateway POP ring topology. 16 other cities are being aggregated through Cisco 7609 MPLS routers with STM4 and STM1 level connectivity scalable to much higher bandwidth (BW). The traffic in the cities with Metro Ethernet rings is aggregated on Metro Ethernet Hub sites and backhauled over the metro rings to the MPLS network. The traffic in the remote cities is aggregated directly to the MPLS core node in the city for onward connectivity to service platforms and nationwide connectivity. Internet service is being provided by a Cisco supplied geographically distributed pair of Data centers in Lahore and Karachi. Wateen partnering with Tier 1 BW providers like Singtel and TWA is presently the largest ISP in Pakistan with 5xSTM4 of internet bandwidth and expanding exponentially. The rapidly increasing usage of BW demonstrates great trust of Wateen customers in its network and services. The largest Data centers are deployed in a geographically redundant fashion to provide high resiliency of services to its customers. The data centers are currently being expanded to handle multiples of STM16s to handle the BW growth requirements.
City Pop
Legacy Circuit Switched Network Legacy Circuit Switched Network

Legacy Circuit Switched Network

The IP Multimedia Sub System (IMS) based Class 5 VoIP platform supplied by Motorola and Application Server by Sylantro has been deployed to offer a wide range of Voice features. Pioneering services like Find me, Follow me and Hosted PBX, Conferencing, Wateen stands out from the competition and continues taking the credit of being innovative in service offering supported by cutting edge technology. The nationwide class 4 network supplied by the leading equipment manufacturer Sonus, deployed across the country in 18 cities with a capacity to handle multibillion minutes per annum provides capability to interconnect Wateen with all other Landline and Mobile networks in Pakistan for exchanging voice traffic at an exceptionally high level of redundancy for continuity of services. The international presence of Class 4 network in UK, Saudi Arabia, UAE, Uganda, Congo, Bangladesh and Afghanistan provides Wateen a lot of flexibility in interconnecting with international carriers and offering them the most reliable means to terminate their traffic in different countries of the world.

4.5.6

Transmission

4.5.6.1 Wateen Optical Infrastructure In this emerging era of exponential growth in the telecom sector, the need for having an optical fiber cable in telecom infrastructure has increased by manifolds. This growth is manifested not only in the sheer increase in the number of telecom companies and the coverage area (KMs) of their networks, but also in the amount of data they can carry. This rapid growth has also led to fierce competition. Carriers are now struggling to build and maintain networks that will provide a flexible platform from which to offer multiple services at the lowest possible cost. 4.5.6.2 Longhaul and Metro Network Wateens existing 10,000+ km optic fibre infrastructure across the nation covering all major business hubs is playing a pivotal role in meeting capacity demand of major GSM players in the domestic market i.e. Warid, CMPak and Telenor as well as bandwidth demand of the corporate sector of Pakistan. The traditional practice of selecting conventional fibre is almost obsolete. Instead, designers and users are learning that proper planning of the fibre design can save a lot of investment, required to upgrade the network in future. Wateen selected a state-of-the-art 24/36/96 strands optical fibre transmission network with a vision to provide faster, more reliable and ubiquitous connections at lower costs than ever before. Optical fibre, due to its superior transmission capability, forms the foundation for todays optical networks. In order to unleash the vast potential of fibre, Wateen has decided to opt hybrid configuration of fibre with upgraded specifications of International Telecommunication Union (ITU) as G.652-D defines a full-spectrum to support all 5 optical windows with a feature of low water peak with low PMD along with G.655 NZ-DSF for long distance communications to support Multi Tera Bit data rates for current and future applications. 4.5.6.3 Wateen DWDM/SDH Backbone Wateen has selected Huawei Technologies as an equipment vendor to establish its backbone network based on OptiX BWS1600G (Type III DWDM scalable upto 160 i.e 1.6 Tbps capacity) system and OptiX OSN7500 & 3500 for SDH layer.

The OptiX OSN 7500 & 3500 is new generation equipment that Huawei Technologies Co., Ltd. develops to accommodate the status and future trend of Metropolitan Area Network (MAN) and Wide Area network (WAN). It integrates the technologies of synchronous digital hierarchy (SDH), wavelength division multiplexing (WDM), Ethernet, Asynchronous Transfer Mode (ATM), Plesiochronous Digital Hierarchy (PDH), enterprise systems connection (ESCON), fiber channel/fiber connection (FC/FICON), digital video broadcast-asynchronous serial interface (DVB-ASI). So it can transmit voice, data, storage area network (SAN), and video services efficiently on the same platform without any additional investment as the case of conventional networks. 4.6 PLANT & MACHINERY INFORMATION

Wateen Telecom Limited has acquired state of the art equipment for providing all its services summarized in the table below:
Description Telecom Equipment Air Conditioners Bladecentre Equipment Cisco Routers Digital Circuit Multiplexing Equip Dense Wavelength Division Multiplex Equipment Eltek Cabinets Genset Perkins Hosted Internet Protocol Contact Centre Network Servers Ups Batteries Iprep Platform Equipment Line Conditioners Motorola Access Equipment Daps Motorola Access Equipment Eltek Cabinets Motorola Access Equipment Microwave Equipment Motorola Class 4 Equipment Motorola Class 5 Equipment Stulz, Mitsubishi, Sabro etc. International Business Machine (Ibm) Cisco Systems International Bv Mitsubishi Huawei Technology Eltek Valere Bahum Associates Pvt Ltd Cisco Systems International Bv International Business Machine (Ibm) Mge Ups System Motorola Comcept Pvt. Ltd. Multiline Motorola Inc Motorola Inc Supplier Name/Manufacturer Cost (PKR) 11,056,307,940 6,613,444 19,198,011 22,962,203 76,345,234 472,061,408 103,784,424 170,513,185 67,216,127 149,888,245 11,794,303 55,905,088 49,318,349 2,516,055 3,962,183,769 368,576,407 New New New New New New New New New New New New New New New 110KVA (With Backup) 1450 Banks 20M Billable Minutes/Mont h 1024 1081 Sites 1024 Cabinets 65 % 90 % 45 % 100 % 90 % 70 % each Part Of Class 4. Covered In No.23 Below 20Gbps 1024 Cabinets 13 Kva-400 Kva 60 % 70 % each 80 % each 100 % 1.5-4 Ton 100 % 100 % 100 % Status Capacity Utilization

Motorola Inc

1,415,017,923

New

1127 Links 210M Minutes/Mont h 262k Subs

90 %

Motorola Inc Motorola Inc

190,355,648 417,878,231

New New

45 % 35 %

Motorola Class Ig&Dc Equipment Motorola Class Ip/Mpls Equipment Motorola In Platform Network Cameras For Hfc Network Local Equipment Portal Equipment Pop Equipment Project Module Screen Towers Scientific Atlanta Equipment Synchronous Digital Hierarchy (Sdh) Network Servers Survelance Equipment Consumer Premises Equipment Domestic Interface Units Bt Band Earth Satellite Media Gateway Equipment Media Convertors, Routers, Rectifiers & Infra Equipment Etc. Very Small Aperture Terminal (Vsat) Equipment Ku Band For Gsm Backhaul C Band For Gsm Backhaul Ku Band For Corporate Digital Video Broadcast Return Channel Via Satellite (Dvbrcs) Line & Wire Equipment Longhaul Fiber Network Metro Lahore

Motorola Inc Motorola Inc Motorola Inc Astaa Technologies National Engineers Broadhop Cisco Systems International Bv Barco Pte Ltd Spleen Manufacturers, Imran Engineering, Arden Engineering Pvt. Ltd. Khl Etc Scientific Atlanta Inc Huawei Technology Pakistan (Pvt) Ltd Dell International First Video Communications Motorola Inc Pakistan Telecommunication Co. Bt/Cgns United Network Limited Various Suppliers

327,626,823 779,529,781 380,097,316 1,442,100 123,086,168 10,139,834 71,953,014 17,369,114 17,560,122 111,030,076 130,413,636 14,902,947 12,445,407 1,281,026,834 27,228,700 39,056,278 61,169,037 88,102,698

New New New New New New New New New New New New New New New New New New

2Gbps STM16 Backbone 300k Subs 10000hp 18000hp 50K Concurrent Sessions

90 % 20 % 40 % 15 % 80 % 8% 100 %

02 Screens 103 Towers 20000 Subs 10Gbps

100 % 65 % each 52 % 50 %

2000 Subs

12 %

886,871,495 Stm Networks,Radyne,Vertex Stm Networks,Comtech,Vert ex,China Sun Radyne Comstream Stm Networks 432,079,097 321,083,979 25,541,453 108,166,966 1,609,692,982 Frontier Works Organization, Rawalpindi Konnect Holden Pvt. Ltd. Islamabad/Ots 846,950,658 83,281,845 New New 24 Fibre (Hybrid) 96/36 Fiber 25 % 90 % New New New New 100 Sites 90 Sites 30 Sites 750 Sites 65 % 100 % 30 % 71 %

Metro Karachi Metro Islamabad Metro Faisalabad Metro Gujranawala Metro Sialkot Metro Gujrat Metro Sargodha Metro Peshawar Metro Dera Ismail Khan Metro Jehlum Metro Multan Metro Sahiwal Metro Sukkuar Metro Hyderabad Metro Quetta Metro Abbotabad HFC Tripple Play Dha IT Equipment Data Servers Billing Servers Desk Tops Note Books Printers & Scanners Networking Accessories (Hard Drives, Routers Etc.) Tools & Gear Optical Fiber Fusion Splicer Optical Time Domain Reflectometer Optical Talk Set Splicing Kit Cable Route Locator Bert Tester Binoculars Digital Meter Global Positioning

Konnect Holden Pvt. Ltd. Islamabad/ Almansoor Konnect Holden Pvt. Ltd. Islamabad Star Ag (Pvt) Limited, Lahore, Gk Construction Star Ag (Pvt) Limited, Lahore Elc, Lahore Utel, Lahore Star Ag (Pvt) Limited And Team International Marwat Brothers, Islamabad Star Ag (Pvt) Limited, Lahore Team International Star Ag (Pvt) Limited And Chaudhary & Sons Utel, Lahore Saa, Islamabad Al- Mansoor, Zab & Co And Cet Saa S.B Traders, Lahore/ Saa, Islamabad Star Ag (Pvt) Limited Dell International, International Business Machine Etc Multilynx,Hp,Dell Etc Ibm Lenovo Ibm Lenovo, Dell, Etc Hp,Samsung, Canon Etc Cisco Systems International Bv Various Local Suppliers

136,635,122 73,602,663 28,433,271 14,812,357 33,936,813 9,488,857 12,056,907 16,989,049 5,709,540 4,941,342 8,619,068 5,546,951 3,845,039 16,364,992 24,868,717 23,159,672 260,450,120 576,273,150 119,831,871 252,423,748 27,189,251 102,869,197 7,940,156 59,085,998 6,932,930 96,338,653

New New New New New New New New New New New New New New New New New

96/36 Fiber 96/36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 36 Fiber 96/24/12 Fiber

85 % 50 % 95 % 30 % 30 % 16 % 20 % 35 % 20 % 25 % 80 % 20 % 20 % 35 % 35 % 30 % 80 %

New New New New New New New

100 % 100 % 100 % 100 % 100 % 100 % 100 %

Multi Tech Makkays Makkays Power Tech Greenz International Makkays Mughni Traders Mughni Traders Mughni Traders

24,523,762 23,427,220 4,690,198 2,544,000 1,808,696 19,264,409 238,500 416,600 4,616,450

New New New New New New New New New

100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 %

System Light Source Optical Inspection Microscope Optical Power Meter Spectrum Analyzer Splicing Tool Kit Test Equipment Visual Fault Locator Makkays Makkays Makkays Makkays Mughni Traders Mughni Traders Makkays Grand Total 4,428,965 253,248 1,863,030 2,233,805 2,905,696 2,882,886 241,188 14,225,484,221 New New New New New New New 100 % 100 % 100 % 100 % 100 % 100 % 100 %

4.7

DETAILS OF SUBSIDIARIES

Wateen Telecom Limited has the following subsidiaries: 4.7.1 Wateen Solutions (Pvt) Limited (formerly known as National Engineers (Pvt) Limited); Wateen Telecom UK Limited; Wateen Satellite Services (Pvt) Limited; and Netsonline Services (Pvt) Limited; Wateen Solutions (Pvt.) Limited

Wateen Telecom holds 51% shares in Wateen Solutions (Pvt) Limited (formerly known as National Engineers (Pvt) Limited) [the Wateen Solutions]. Wateen Solutions is engaged in the business of providing system integration services. The principal activities of Wateen Solutions are to sell and deploy telecom equipments and provide related services. Wateen Solutions mainly focuses on three revenue streams which have been outlined in section 4.7.7 above: VAR (Value Added Reselling); Professional Services / Managed Network Services; and Commissions and Margins As already disclosed Wateen Telecom Limited will be utilising the funds of the IPO for payment / settlement of deferred consideration in relation to the purchase of remaining 49% shares held by Mr. Jahangir Ahmed in Wateen Solutions. 4.7.2 Wateen Telecom UK Limited

The Company was incorporated on 14 April 2008. The Company's objective is to provide telecommunication services and interconnection facilities and to carry on the business, inter alia, international routing and termination of direct dial telephony traffic via voice grade switched circuits to international carriers. The share capital of the Company is 10,000/- divided into 10,000 Ordinary 1 Shares. 51% shares are held in the name of Wateen Telecom Limited in the books of Wateen Telecom UK Limited (approval from State Bank of Pakistan awaited), whereas the remaining 49% shares are held in the name of Wincom Services Pakistan LLC incorporated in Abu Dhabi. Prior to the publication of the Prospectus, Wateen Telecom Limited would have acquired the remaining 49% shares held by Wincom Services Pakistan LLC subject to fulfilment of all legal formalities including the approval from the State Bank of Pakistan.

4.7.3

Wateen Satellite Services (Pvt) Limited (formerly known as Wateen STM (Pvt) Limited)

Wateen Satellite Services (Pvt) Limited was incorporated on 27 September 2005 as a 51 / 49 partnership with STM and was mainly involved in providing VSAT services to different operators, companies etc. At present 100% shareholding of Wateen Satellite Services (Pvt) Limited vests with Wateen Telecom Limited. 4.7.4 Netsonline Services (Pvt) Limited

Netsonline Services (Pvt) Limited was incorporated on 2 November 2005. The Company has been involved in providing DSL services. At present 100% shareholding of Netsonline Services (Pvt) Limited vests with Wateen Telecom Limited. 4.7.5 Unifast Management (Pvt) Limited

Wateen Telecom Limited shall also be acquiring 100% shareholding of Unifast Management (Pvt) Limited (Unifast) pursuant to the Share Purchase Agreement dated June 2007 upon achieving the closing as mentioned therein. The closing is dependent on certain deliverables by Unifast. As soon as the said transaction is completed, 100% shareholding of Unifast shall vest with Wateen Telecom Limited. This Agreement was entered into with the objective of acquiring the Right of Ways procured by Unifast in its name for the Wateen Project. 4.8 4.8.1 STRATEGIC PARTNERSHIPS Wateen Multimedia (Pvt) Limited

Wateen Telecom Limited and Wateen Multimedia (Pvt) Limited (an affiliate of Wateen Telecom Ltd.) have agreed to form a long term strategic collaboration for achieving their mutual business objectives. Under this collaboration, Wateen shall leverage the Cable TV License(s) of WMM to bundle TV services with Wateens telecommunication products to create and offer triple play services for its customers. Similarly WMM shall leverage the infrastructure of Wateen to create revenue opportunities from TV distribution through carriage and advertisement sales. The two companies intend to enter into a contractual arrangement whereby Wateen shall provide an indefeasible right to use its infrastructure to WMM for a period up to the validity of the Wateens telecom license and any extension thereto for the transmission requirements of WMM. 4.8.2 Defence Housing Authority - Lahore

Wateen has a strategic alliance with DHA - Lahore that allows Wateen the exclusive right to offer its HFC services in part of DHA Lahore and also allows Wateen to utilize the frequency under DHAs WLL license for its own WiMAX services all over Lahore. 4.9 UTILIZATION OF IPO PROCEEDS The Company has planned to raise funds through an Initial Public Offer in order to achieve its hard line business plan. This inter alia includes: i) repayment of up to PKR 1.49 billion to financial institutions as against its financial obligations, and (ii) payment for acquisition of its subsidiary company i.e. Wateen Solutions (Pvt.) Limited (formerly National Engineers (Pvt) Limited) at a price of PKR 1,234.18 per share amounting to PKR 490 million. The 397,027 shares of the face value of PKR 100 each of Wateen Solutions (Pvt.) Limited (formerly National Engineers (Pvt.) Limited) (WSPL) are being purchased from Mr. Jahangir Ahmad. Break-up value per share of WSPL as on June 30, 2009 is PKR 425.11/-. Wateen Telecom Limited had sold the said 397,027 (49%) shares of WSPL to Mr. Jahangir Ahmad during the Fiscal Year 2008-2009 at a price of PKR 131/- per share. Break-up value per share of WSPL as on June 30, 2008 was PKR 550/-.

4.9.1

Retirement of Loan obligation

The Company, while foreseeing growth perspectives, decided to expand its operations by introducing more equipment to its fleet. The equipment has been procured through well known suppliers both locally and abroad. The orders for the equipment were awarded to some of the key suppliers including Motorola and Huawei Technologies. Total cost of the equipment was PKR 1.469 billion. The Company has opened LCs with two banks namely Atlas Bank Limited and Standard Chartered Bank Limited. Currently, all the LCs have been opened and shipments for the required equipment have been made to the Company. Details of the LCs which were retired (bank wise) are as follows: With Atlas Bank Limited
Sr No. 1 2 3 4 LC# ABKIMP104/451/08 ABKILC104/008/09 ABKILC104/011/09 ABKIMP104/220/09 Beneficiary Realcom Int'l Premier Industries L T Engineering Comtech Equipment C-band Antinnas OFC OFC VSAT Equipment Date of LC issuance 22.10.2008 07.05.2009 15.05.2009 16.07.2009 Amount (USD) 000 3,635 418 USD/PKR Parity 82 83 Amount (PKR) 000 299,524 10,578 27,780 35,130 373,013 Status Notes Operational Operational Operational Operational 1 2 3 4

With Standard Chartered Bank


Beneficiary 1 2 3 4 5 6 7 8 9 10 11 12 451010019967-A 451010019271-A 451010003402-A 451010011689-A 401010002672 451010021231-A 451030000109 451010023033-A 451010024185-A 451010004777-A 451010022150-A 451010013231-AP Motorola Inc. Motorola Inc. Huawei Technologies Motorola Inc. Motorola Inc. Huawei Technologies Huawei Technologies Motorola Inc. STM Networks INC Motorola Inc. Huawei Tech. Investment Co. Limited Huawei Technologies Equipment CPEs MW Equipment DWDM Equipment Eltek Battries Eltek Cabnits WiMAX BTS Site Equipment DWDM Equipment CPEs/USBs VSAT Equipment Sun Servers ONS/NMS/BWS DSL Equipment Date of LC issuance 27.03.2009 24.02.2009 10.10.2007 20.03.2008 09.06.2007 16.05.2009 18.07.2007 29.07.2009 03.09.2009 03.11.2007 30.06.2009 16.05.2008 Amount (USD) 811 309 2,641 684 458 102 1,522 3,813 559 83 1,063 1,014 Grand Total
NOTES: 1 04C-Band Antennas & Remote Antennas with complete accessories; 2 Optical Fiber Cable; 3 Optical Fiber Cable; 4 VSAT-Networking Equipment; 5 Outdoor CPEs; 6 MW Equipment Microwave Transmission Equipment used for backhauling of BTS 7 DWDM Equipment Cards , Racks Patch cords, Boards; 8 Eltek Batteries 155AH Battery bank having 4 batteries of 12walt each;

USD/PKR Parity 83 83 83 84 84 84 84 84 84 84 84 84

Amount (PKR) 000 67,707 25,836 221,751 57,456 38,550 8,568 127,862 320,319 47,023 7,041 89,355 85,245 1,096,717 1,469,731

Stauts Notes Operational Operational Operational Operational Operational Operational Operational Operational Operational Operational Operational Installed 5 6 7 8 9 10 11 12 13 14 15 16

9 Eltek Batteries 155AH Battery bank having 4 batteries of 12walt each; 10 WiMAX BTS Site Equipment Four sector DAP including BCU; 11 DWDM Equipment Cards , Racks Patch cords, Boards; 12 CPEs/ USBs Customer premises Equipment of different type e.g. USB, indoor, outdoor etc; 13 VSAT Equipment; 14 Sun Servers 15 OSN/NMS/BWS Including Computer Aces, sun server machine, software etc; 16 DSL Equipment;

4.9.2

Acquisition of subsidiary

Wateen Solutions (Pvt.) Limited (formerly National Engineers (Pvt.) Limited) Wateen Telecom acquired the System Integrator (Value added reselling, professional services and managed / hosted network solutions as defined under section 4.4.4) from National Engineers through its wholly owned subsidiary Microtech Links (Pvt.) Limited (currently, known as Wateen Solutions (Pvt.) Limited WSPL) in January 2007 whereby initially Wateen purchased 100% of the assets and then sold 49% of the shares in Wateen Solutions to the founder Mr. Jahangir Ahmad through a business purchase agreement dated 30 December 2006 and a supplementary agreement no. 1 dated 18 April 2007. The said 397,027 shares of the face value of PKR 100 each of Wateen Solutions (Pvt.) Limited (formerly National Engineers (Pvt.) Limited) (WSPL) are being purchased from Mr. Jahangir Ahmad. Break-up value per share of WSPL as on June 30, 2009 is PKR 425.11/-. Wateen Telecom Limited had sold the

said 397,027 (49%) shares of WSPL to Mr. Jahangir Ahmad during the Fiscal Year 2008-2009 at a price of PKR 131/- per share. Break-up value per share of WSPL as on June 30, 2008 was PKR 550/-. It is also important to note that Mr. Jahangir Ahmad was employed by the Company from 1 January 2007 to 31 December 2009. Wateen Solutions has provided excellent financial returns posting a profit after tax of PKR 361.6 million on a revenue of PKR 1 billion in 07/08 (with a dividend payment of PKR 345 million) giving Wateen a 254% return on net investment. In 08/09 Wateen Solutions again provided strong financial return with profit after tax of PKR 265 million on revenue of PKR 1 billion and as at 31 December 2009 the company had retained profits of approx. PKR 357 million for potential distribution of dividend. Based on the strong performance to date, management forecasts for the business, the potential for leveraging this business line for both product expansion and geographic expansion internationally and a unique positioning for Wateen to bundle traditional telecom services with systems integrator / VAR / PS / MNS it was decided to purchase the balance 49% from Mr. Jahangir Ahmad to consolidate a 100% ownership as approved by the board during the board meeting dated 19 November 2009. Shareholding structure of WSPL is as follows: Shareholder Wateen Telecom Limited Mr. Jahangir Ahmed Others Total 4.9.3 Financial highlights 2009 Rupees Revenue Gross profit Operating profit Profit after taxation Total assets Total liabilities Paid up capital Shareholder equity Return on Equity Breakup value per share (PKR) Earnings per share (PKR) 996,834,189 299,689,174 243,175,381 265,202,783 1,181,504,766 815,178,481 81,025,900 366,326,285 72.40% 452.1 327.3 2008 Rupees 1,019,668,776 435,624,408 366,565,422 361,589,074 655,849,718 209,758,447 81,025,900 446,091,271 81.06% 550.6 446.3 2007 Rupees* 73,425,146 40,605,115 7,035,187 3,476,297 238,098,405 153,596,208 81,025,900 84,502,197 4.11% 104.290 4.29

Shares 413,212 397,027 20 810,259

Amount (PKR) percentage 41,321,200 50.99% 39,702,700 49.00% 2,000 81,025,900 100%

* National Engineers business was acquired on 1st January, 2007, hence the figures for financial year 2007 represent 6 months operations from Jan to June 2007

The following considerations applied while negotiating and finalizing the value and deal structure: Retained profits as of 31 December 2009 stand at circa PKR 357 million which in effect would otherwise be payable as dividend in due course under agreed 100% dividend payout practice A well reputed external valuer was engaged to advise on potential valuation ranges. Their report suggested a range of PKR 912 million to PKR 2.1 billion based on comparable earnings multiple and a range of PKR 5.6 billion to PKR 8.4 billion while using DCF valuations Wateens own evaluation of payback period, return to investors, earnings multiple / EPS impact to Wateen on 100% consolidation and performance to date

4.10

This transaction will have a positive impact on Wateens EPS RISKS AND MITIGANTS

The Company wishes to highlight the following risk factors, which may affect the returns on investment in the Company: 4.10.1 Regulatory risk Pakistan Telecom Authority (PTA) or other regulators / government bodies may modify regulations, which would have an impact on telecoms / media operators including Wateen. PTA may introduce tariffs and fees that may have a financial impact on the Company. The regulatory environment is still opaque.. After 2004, the success of the industry, signaled by high rates of revenue growth, attracted the attention of the GOP, which imposed a tax on the sector, affecting the profitability of the sector as a whole. Mitigant: Successive governments in Pakistan have taken a very positive stance to the telecommunication industry. PTA has established itself as a strong independent regulator introducing a number of initiatives to facilitate growth of the industry. Wateen is fully compliant with all licensing terms as set out by PTA including service quality. There has historically never been any incident of dispute or imposition of penalty or fine on Wateen. PTA and the GOPs positive stance towards the telecom industry has resulted in the industry attracting record foreign direct investment (FDI) of USD 4.2 billion during June 2004 June 2007 period, representing over 40 percent of total FDI in the country. The GOP strongly believes in the development of communication infrastructure of Pakistan and is expected to fully support Wateens endeavor to make telecommunication, especially broadband, easily available and affordable in the country. 4.10.2 Market risk There is a risk that Wateens subscriber base may be lower than projected. This may be a result of: (a) Pakistani ISP market growing at a rate lower than projected (b) Lower than projected market share for Wateen (c) Greater competition may result in higher subscriber churn rates to other operators ARPUs from subscribers may also be lower than projected, resulting in lower revenues and EBITDA. It is imperative to realize that price war as well as subsidy war regarding connections governs the acquisition strategy of most of the operators in Pakistan. Mitigant: With a teledensity of approximately 4 percent and a population of 168 million, the broadband telecom market of Pakistan shows tremendous potential for growth. Research estimates suggest broadband penetration to reach 8 percent 10 percent within the next five years. Thus, in terms of addressable market, Wateens projections are in line with research recommendations. In the financial model, overall weighted average ARPU assumptions have been made on a conservative basis. Wateen has projected the average churn rate to increase during the initial phase of operation, taking into account subscribers switching tendency. However, average churn rate is conservatively projected to drop as Wateen intends on providing innovative products, high network quality bundled with excellent customer service which will reduce the churn rate. Although Wateen is the first entrant in the WiMAX market in Pakistan, its network quality as provided by two top class vendors, Motorola and Huawei, is expected to be superior to other potential operators in

the country. Wateen will also aim to provide better products and customer service than the other operators. 4.10.3 Interest rate risk Wateen will have substantial amount of FCY and LCY debt. The financial expenses will be a function of the LIBOR and KIBOR interest rates over the tenor of the loans. An increase in interest rates would adversely impact Wateens ability to service its debt obligations and also its ability to meet the financial covenants. Mitigant: Various scenarios have been run on the financial model for Wateen to assess strength of the business model. In order to hedge interest rate risk, Wateen will also be evaluating the merits of derivate instruments to mitigate this risk. 4.10.4 Technology risk The global and local telecommunications industry is one of the fastest growing industries in the world. As a result, the operators run the risk that the equipment used to provide services may become obsolete rather quickly. Furthermore, there are various other competing / emerging technologies available with similar capabilities to WiMAX, such as HSDPA (3G). Mitigant: Accurate and timely decision making and financial ability to meet substantial capital expenditure required to upgrade equipment is considered imperative to sustain growth and to ensure continued profitability. In this respect, Wateens relationship with its vendors and sponsor financial strength has placed the Company in an advantageous position. It should also be noted that WiMAX technology is becoming a widely acceptable digital system worldwide. WiMAX brings the most advanced developments in wireless broadband access technology at a reasonable cost by spurring severe competition among manufacturers and driving down the cost of equipment; thus, the technological risk is largely mitigated. 4.10.5 Management risk The risk that Wateens management team may not have necessary skills to manage the typical risks inherent in successfully operating WiMAX services as the first entrant in a market like Pakistan. Mitigant: Wateen has one of the most diversified, professional and experienced teams in Pakistan. The members of the management team have the relevant experience both in the local as well as international telecom markets and have worked for premier organizations across the globe. Wateen has the best quality resources in all functional areas therefore management risk is minimized. Furthermore, the management of Wateen has had the experience of establishing Warid telecom operations in Pakistan, which is a market with similar characteristics. It is anticipated that Wateen will have very few issues in adjusting to the business environment in Pakistan, as it would be able to transfer best practices from past experience. On Wateens Board of Directors, there is a good representation of telecom sector experts who bring with them vast experience that will be beneficial to Wateen. Overall the sponsors also remain committed to ensuring the success of the Company given that they have already invested USD 35 million in equity and have committed to inject further equity in the future. 4.10.6 Foreign exchange risk

Wateen has arranged debt from a local syndicate of banks in parallel to the offshore facility. This debt is denominated in PKR whereas; the offshore facility is denominated in foreign currency i.e. USD. Given that majority of Wateens revenues will be in PKR, the operations of Wateen are therefore highly vulnerable to exchange rate fluctuations. Substantial depreciation of the PKR against USD may lead to cash flow constraints which may affect the Companys ability to deliver desired objectives. Mitigant: Wateen currently has a natural hedge given that revenues from inbound LDI operations & VSAT are USD denominated and these currently contribute approximately 50 percent of revenues. However, going forward LDI contribution to total revenues will be significantly lower as revenues from expansions in WiMAX, FTT(x) and Channels businesses come into effect. Wateen is fully aware of the prevailing currency risk associated with its business in Pakistan. Several sensitivities have been run in the financial model and currency rate variation has been assumed on the conservative side. Wateen will also be evaluating the merits of derivate instruments to mitigate this risk. 4.10.7 Political risk Political instability has been one of the major impediments for the development of Pakistan. Although Pakistan follows a democratic form of Government, electoral problems have persisted in the past and have affected the general public. Mitigant: Regardless of the government in power, it is expected that importance of the development of the telecom sector will be recognized, as it is one of the major contributors to the success of the nation, with its operators being amongst the largest tax contributors to the government. Additionally, successive governments in Pakistan have enjoyed very cordial relations with the royal family of UAE, and this carries significant weight since Wateen is a significant investment of members of the royal family of UAE. 4.10.8 Competition risk Competition in the telecom sector is fierce and this is evident from the various marketing activities of the existing telecom operators in the country. With the entry of Orascom and Qtel into the broadband telecom market, competition has escalated to a new level. Mitigant: Although Wateen is the first entrant in the wireless broadband sector in Pakistan, the management of the company is fully aware of the competitive pressures that might stem from the existing and potential operators. The business plan for Wateen is based on realistic assumptions and sensitivities have been run. The projected market share has been set based on the operations of the new entrant. Wateen plans to deliver innovative products and services based on an efficient distribution system with excellent promotional activities. Customer satisfaction, which is the core to the success of the business, will be managed by providing the very best of customer services. Furthermore, the management of Wateen has been involved in launching Warid Pakistan where the company has experienced phenomenal growth in a market which has many similarities to this segment. The Wateen brand already has a recognizable recall in the market. Management is confident that, having sustained the competitive pressures in Pakistans cellular market, they have the experience to compete with the other operators in the market.

PART 5 5 5.1 FINANCIAL INFORMATION AUDITORS REPORT UNDER SECTION 53(1) READ WITH CLAUSE 28 OF SECTION 2 PART I OF THE SECOND SCHEDULE TO THE COMPANIES ORDINANCE, 1984, FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF WATEEN TELECOM LIMITED

5.2

CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED) AS AT DECEMBER 31, 2009

CONDENSED INTERIM BALANCE SHEET (UNAUDITED) AS AT DECEMBER 31, 2009 Based on consolidated financial statements of the Company Dec. 31, 2009 Rs('000) June 30, 2009 Rs('000)

Based on separate financial statements of the Company Dec. 31, 2009 Rs('000) SHARE CAPITAL AND RESERVES Authorised capital 1,000,000,000 (June 30, 2009: 1,000,000,000) ordinary shares of Rs. 10 each Issued, subscribed and paid-up capital 417,474,620 (June 30, 2009: 208,737,310) ordinary shares of Rs. 10 each General reserve Unappropriated profit/(loss) June 30, 2009 Rs('000)

10,000,000

10,000,000

10,000,000

10,000,000

4,174,746 134,681 (1,250,626) 3,058,801 3,058,801

2,087,373 392,908 1,829,146 4,309,427 4,309,427

4,174,746 134,681 (936,815) 3,372,612 214,456 3,587,068

2,087,373 392,908 2,107,630 4,587,911 179,500 4,767,411

Non controlling interest in equity of Subsidiary Company Wateen Solutions (Pvt.) Limited

LONG TERM LIABILITIES Long term finance- secured Payable to supplier to be settled through long term finance Cross currency swap- fair value Obligation under finance leases Long term deposits

11,061,066 296,719 43,813 6,354 139,326 11,547,278

6,155,733 3,168,945 125,732 9,450,410

11,061,066 296,719 43,813 6,354 139,326 11,547,278

6,155,733 3,168,945 125,732 9,450,410

DEFERRED LIABILITIES Employees' retirement benefits Deferred income tax liability Deferred government grant

40,291 607,930 510,388 1,158,609

36,063 1,188,299 212,428 1,436,790

55,247 603,997 510,388 1,169,632

48,592 1,187,887 212,428 1,448,907

CURRENT LIABILITIES Current portion of long term finance- secured Current portion of obligations under finance leases Finance from supplier- unsecured Short term running finance- secured Trade and other payables Interest/markup accrued Advance from customers CONTINGENCIES AND COMMITMENTS

1,781,059 1,256 128,319 2,835,867 6,490,246 526,200 252,210 12,015,157

1,466,165 338,530 2,658,541 5,802,871 310,755 231,472 10,808,334

1,781,059 1,256 128,319 2,835,867 5,744,288 526,200 339,274 11,356,263

1,466,165 338,530 2,658,541 5,491,115 310,755 357,294 10,622,400

27,779,845

26,004,961

27,660,241

26,289,128

NON-CURRENT ASSETS Property, plant and equipment Operating assets Capital work in progress Intangible assets

15,746,712 3,749,803 215,488 19,712,003 57,061

14,050,553 3,513,632 226,790 17,790,975 57,061

15,754,389 3,749,803 323,605 19,827,797 -

14,062,017 3,513,632 336,907 17,912,556 -

LONG TERM INVESTMENT IN SUBSIDIARY COMPANIES LONG TERM DEPOSITS AND PREPAYMENTS Long term deposits Long term prepayments

289,824 78,419 368,243

290,037 87,233 377,270

290,715 78,418 369,133

290,928 87,233 378,161

CURRENT ASSETS Trade debts Contract work in progress Stores and stocks Advances, deposits, prepayments and other receivables Income tax refundable Cash and bank balances

3,246,553 21,208 613,747 3,208,765 214,427 337,838 7,642,538 27,779,845

2,982,561 18,068 836,935 3,414,521 193,717 333,853 7,779,655 26,004,961

4,087,446 59,539 620,603 2,111,732 220,644 363,347 7,463,311 27,660,241

3,720,786 50,012 956,794 2,673,320 200,307 397,192 7,998,411 26,289,128

CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UNAUDITED) FOR THE HALF YEAR ENDED DECEMBER 31, 2009 Based on separate financial statements of the Company Dec. 31, 2009 Rs('000) Revenue Cost of sales (excluding depreciation and amortisation) General and administration expenses Advertisement and marketing expenses Selling and distribution Other charges Other income 4,533,435 3,757,814 749,029 166,196 14,093 28,936 (33,394) 4,682,674 (149,239) 757,205 984,956 (60,405) Dec. 31, 2008 Rs('000) 10,343,414 6,295,034 909,715 156,365 48,090 (193,757) 7,215,447 3,127,967 319,661 157,486 (32,274) Based on consolidated financial statements of the Company Dec. 31, 2009 Rs('000) 4,915,648 4,049,688 780,964 166,196 14,093 28,936 (34,695) 5,005,182 (89,534) 762,748 963,734 (60,405) Dec. 31, 2008 Rs('000) 10,670,597 6,476,616 936,917 157,365 48,090 (144,761) 7,474,227 3,196,370 326,816 158,374 (81,263)

Earnings/(loss) before finance cost, taxation, depreciation and amortisation Less: Depreciation and amortisation Finance cost Finance income

Profit/(loss) before taxation Income tax charge (credit) Profit/(loss) for the period Non controlling interest in profit of consolidated subsidiary company Profit/(loss) for the period Earnings/(loss) per share

(1,830,995) (580,369) (1,250,626) (1,250,626) Rs. (3.00)

2,683,094 982,555 1,700,539 1,700,539 Rs. 4.07

(1,755,611) (575,268) (1,180,343) (34,956) (1,215,299) Rs. (2.91)

2,792,443 986,443 1,806,000 (67,702) 1,738,298 Rs. 4.16

5.3

SHARE BREAK-UP VALUE CERTIFICATE

MANAGEMENT NOTE: The revised break up value of the Company is given under on the basis of 527,474,620 shares subscribed. The scenario use un-appropriated profit of the Company as at June 30, 2009. Based on separate financial statements of the Company PKR (000) Issued, subscribed and paid up capital General reserve and unappropriated profit Total share capital and reserves 5,274,746 134,681 5,409,427 Based on consolidated financial statements of the Company PKR (000) 5,274,746 413,169 5,687,915

No. of ordinary shares of PKR 10 each Breakup value per ordinary share of PKR 10 each

527,474,620 10.26

527,474,620 10.78

5.4

AUDITORS CERTIFICATE ON ISSUED, SUBSCRIBED, AND PAID UP CAPITAL OF THE COMPANY

PART 6 6 6.1 MANAGEMENT AND RELATED MATTERS BOARD OF DIRECTORS OF THE COMPANY Designation Directorship in other companies Warid Telecom (Pvt.) td. Taavun (Pvt.) Ltd. Al Razi Healthcare (Pvt.) Ltd. United Bank Ltd.

Name & Address H.H. Sheikh Nahayan Mabarak Al Nahayan P.O. Box No. 969, Abu Dhabi, UAE

Chairman

H.H. Sheikh Saif Bin Muhammed Bin Butti Hamid Al Hamid P.O. Box No. 46468, Abu Dhabi, UAE Mr. Ahmed Darwish Dagher Al Marar P.O. Box No. 6755, Abu Dhabi, UAE

Director

Warid Telecom (Pvt.) Ltd.

Director

None Wateen Multimedia (Pvt.) Ltd. Warid Telecom (Pvt.) Ltd. Taavun (Pvt.) Ltd. Al Razi Healthcare (Pvt.) Ltd. Amoon Media Group (Pvt.) Ltd. Wateen Solutions (Pvt.) Ltd. Wateen Satellite Services (Pvt.) Ltd. Wateen Multimedia (Pvt.) Ltd. Netsonline Services (Pvt.) Ltd. Wincom (Pvt.) Ltd. Warid Telecom (Pvt.) Ltd. Al Razi Healthcare (Pvt.) Ltd. Amoon Media Group (Pvt.) Ltd.

Mr. Bashir Ahmed Tahir House No. 73/7, Munir Road, Cantt, Lahore

Director

Mr. Parvez Ahmed Shahid House No. 78/B, Nisar Colony, Nisar Road, Cantt Lahore

Director

Mr. Abdulla Khalil Muhammad Samea Al Mutawa P.O. Box No: 225, Abu Dhabi, UAE Mr. Khalid Manea Saeed Ahmed Al Otaiba P.O. Box No: 9, Abu Dhabi, UAE

Director

Bank Alfalah Limited

Director

Bank Alfalah Limited

6.2 6.2.1

THE SPONSORS Group Overview

The Abu Dhabi Group (the Group or ADG) is one of the leading business groups in the United Arab Emirates and is one of the largest foreign investor groups in Pakistan. Under the leadership of its Chairman His Highness Sheikh Nahayan Mabarak Al Nahayan, the Group has grown to include diversified business interests ranging from banking and financial services, hospitality, construction, telecommunication services (Warid Telecom has operations in four countries and collectively entertains 27.7 million subscribers), real estate development and management, manufacturing and various other interests in industries such as sugar and healthcare.

Over the past 10 years, the ADG has invested over USD 2.0 billion in Pakistan and is one of the largest foreign direct investor groups in the country. In recognition of H.H. Sheikh Nahayan Mabarak Al Nahayans contribution to Pakistan, he was awarded with the Hilal-e-Pakistan, the highest civil award in the country in May 2005. The Government of Pakistan (GOP) described the conferment of the award as a "well-deserved acknowledgement" for contribution to investment in Pakistan. The shareholding of Wateen is mainly divided between Warid Telecom International LLC and Bank Alfalah Limited in the ratio of 80:20 respectively. The shareholders have contributed a total of PKR 2,087,373,100, details of which after issuance of 100 % bonus shares are as follows:

Name of shareholders
Warid Telecom International L.L.C Bank Alfalah Limited Individual Shareholders Total

No. of shares
333,292,700 83,494,920 687,000 417,474,620

% Holding
79.84 % 20.00 % 0.16 % 100.00 %

Abu Dhabi Group Abu Dhabi Group has investments in diversified industry sectors and geographical regions as listed below (status as on 31 December, 2009): Name United Bank Limited Bank Alfalah Limited Warid Telecom (Pvt.) Ltd. Wateen Telecom (Pvt.) Ltd. Alfalah Exchange Warid Telecom International LLC Warid Telecom International Ltd. Warid Telecom Warid Telecom Iranian Sanden Industries PJS Co. Warid Cote dIvoire KOR Standard Bank Neo Pharma LLC Abu Dhabi Vegetable Oil Warid Telecom Georgia 6.2.2 Warid Telecom International, LLC. Country Pakistan Pakistan Pakistan Pakistan UAE UAE Bangladesh Uganda Congo Iran Ivory Coast Georgia UAE UAE Georgia Ownership stake 30.4 % 60.0 % 61.2 % 79.8 % 100 % 100 % 100 % 100 % 70.0 % 35.0 % 99.0 % 100 % 25.0% 51.0% 100.0%

Warid Telecom International LLC. (WTI) is the principal sponsor of Wateen Telecom Limited. At present it holds 79.8 percent of the Companys shares, whereas the remaining shareholding is with Bank Alfalah Limited and certain individuals. WTI is sponsored by the following: Sheikh Nahayan Mabarak Al Nahayan Sheikh Suroor Bin Muhammad Al Nahayan Sheikh Mohammed Bin Butti Hamid Al Hamid Sheikh Hamdan Bin Zayed Al Nahayan Dr. Mana Saeed Al Otaiba Electro Mechanical Company LLC

6.2.3

Bank Alfalah Limited

Bank Alfalah Limited was launched in the year 1997 as a 3-branch bank after Habib Credit & Exchange Bank Limited (HCEBL) was privatized by the Government of Pakistan and was sold to the winning bidder Abu Dhabi Group. HCEBL had been registered as a public limited company on June 21, 1992 under the Companies Ordinance 1984. The bank had commenced its operations on November 1, 1992. After privatization, Bank Alfalah introduced full-fledged consumer, commercial, and corporate banking and related services as defined in the Banking Companies Ordinance, 1962. Bank Alfalah is currently operating through 321 branches domestically and an international presence in Afghanistan, Bangladesh and Bahrain, with its registered office at B.A. Building, I.I. Chundrigar Road, Karachi. Some of the main branches are located in all of the major cities of Pakistan, including: Hyderabad, Lahore, Kasur, Islamabad, Gawadar, Peshawar, Faisalabad, Quetta, D.I.Khan, Rawalpindi, Sargodha, Sukkur, Sialkot, Multan, Murree, Attock District, Gujranwala, Pirmahal, Mirpur Khas, Mandi Bahauddin and etc. The Bank has a paid-up capital of PKR 13,491 million, with a net equity of PKR 20,219 million as of 30 September 2009 and in addition to this, Bank Alfalah has recently successfully concluded the largest ever Tier-2 Capital raising exercise in Pakistans history by arranging for itself a PKR 5,000 million rated, unsecured, subordinated and privately placed Term Finance Certificate issue. Financial Highlights (PKR million) Total income Operating expenses Profit after taxation Shareholder's equity Total assets Investments Deposits & other income Capital adequacy Return on equity Return on assets Advance/Deposit ratio Book Value per share incl. Rev. of Assets Earnings per share
Source: Bank Alfalah Annual Report 2008

CY2004 CY2005 CY2006 CY2007 CY2008 7,140 14,515 24,416 31,822 36,292 2,679 4,344 5,918 8,289 10,623 1,092 1,702 1,763 3,130 1,301 4,369 6,738 10,573 13,767 14,609 154,835 248,314 275,686 328,895 348,991 35,503 57,416 56,502 88,492 75,973 129,715 222,345 239,509 273,174 300,733 8.16 8.66 9.48 9.85 8.03 26.89 % 30.65 % 20.37 % 25.72 % 9.17 0.86 % 0.84 % 0.67 % 1.04 % 0.38 % 68.56 % 53.46 % 62.63 % 62.67 % 64.07 % 21.05 24.88 24.48 24.95 21.32 3.9 3.92 2.91 3.92 1.63

6.3

PROFILE OF BOARD MEMBERS

6.3.1.1 H.H. Sheikh Nahayan Mabarak Al Nahayan Chairman of the Board His Highness Sheikh Nahayan Mabarak Al Nahayan Member of the Royal Family of Abu Dhabi Minister for Higher Studies and Chancellor of the University of Al Ain. His Highness Sheikh Nahayan Mabarak Al Nahayan is the Chairman of the Company and takes keen interest in the management of Wateen Telecom. His Highness Sheikh Nahayan is the Federal Minister for Higher Education and Scientific Research for UAE and is also Chairman of Union National Bank Abu Dhabi and Chairman & Director of United Bank Limited Pakistan. His Highness is also Chancellor of the Al Ain University and President at the Higher Colleges of Technology Abu Dhabi. His Highness is also the Founder Chairman of Bank Alfalah Limited Pakistan. 6.3.1.2 H.H. Sheikh Saif Bin Mohammed Butti Al Hamid H.H Sheikh Saif Bin Mohammed Butti Al Hamid is the Vice Chairman and Managing Director of Al Hamid Group of Companies, UAE.

6.3.1.3 Mr. Ahmed Darwish Dagher Al Marar Mr. Ahmed Darwish Dagher Al Marar is the Vice-Chairman and Managing Director of Al Ain International Group, which is the holding company owned by His Highness Sheikh Hamdan bin Zayed Al Nahyan. He is a member of the Committee supervising the expenditure of Abu Dhabi International airport, and also the director of Presidential Flight. Mr. Marar served at various key institutions including Bank of Bosnia, Sudan Emirates Bank, Abu Dhabi Islamic Bank etc. He has done his Bachelors in Business Administration from Richmond University, London. 6.3.1.4 Mr. Bashir A. Tahir Mr. Tahir is a prominent and revered corporate figure who has added tremendous value to the banking, communication and real estate sectors of Pakistan. He is a Member of the Board of Wateen Telecom, Board Member and CEO of Warid Telecom International, LLC and CEO of the Abu Dhabi Group which has been a key proponent in attracting private investment into Pakistan. 6.3.1.5 Mr. Parvez A. Shahid With over thirty years experience in the financial and telecommunication sectors, Mr. Shahid is a distinguished name in the corporate sector in Pakistan. He is one of the key individuals who have helped instill best practices in quality assurance, strategy and innovation in the financial, communication and real estate sectors of Pakistan. Mr. Shahid is a member of the Board of Wateen Telecom as well as Warid Telecom. 6.3.1.6 Mr. Abdulla Khalil Mohd Samea Al Mutawa Having sound financial background and business expertise, Mr. Mutawa holds extensive experience in the field of financial and investment management. He is on the board of Bank Alfalah Limited and also serves as Advisor to the government of United Arab Emirates. He has a substantial business interest of his own both in UAE and abroad including commercial and residential real estate assets. 6.3.1.7 Mr. Khalid Mana Saeed Ahmed Al Otaiba Mr. Otaiba is the General Manager, Al Otaiba Group of Companies, Abu Dhabi. He also serves on the board of Bank Alfalah Limited and Alfalah Insurance Company Limited. Mr. Otaiba is a Masters in Arts from Suffolk University of Massachusetts, Boston, USA. 6.4 THE MANAGEMENT

6.4.1.1 Tariq Malik - Chief Executive Officer Mr. Malik has a proven track record at the Director level in diversified areas of finance, corporate banking and TMT (Telecommunication, Media and Technology). As an EMC member of Warid Telecom, he was responsible for Strategy, Commercial, Sales and Marketing. Earlier, in the capacity of Managing Director at World Call Pakistan, he handled the task of overseeing existing telecom operations and creating new businesses focusing on deregulation opportunities. Previously, he served as Director of Consumer Communities (Marketing) at Three (Hutchison 3G), UK. He also played the role of Director and Project Head with his role covering 3G, Broadband UK VAS, and Mergers and Acquisitions in British Telecommunications PLC (BT)/O2, UK and Asia Pacific. He also has a background in Corporate Finance at Granville Baird PLC, UK, and practiced Accountancy at Arthur Andersen, UK. 6.4.1.2 Muhammad Aqib Zulfiqar - CFO Muhammad Aqib Zulfiqar has been associated with Wateen Telecom since 2005. Chartered Accountant by profession, he is a creative and result oriented financial leader. He has fifteen years of vast experience mainly in telecom industry. Prior to Wateen, he was heading a similar position in Global group of companies; a diversified business concern engaged mainly in telecommunication, distribution of telecom related products and real estate.

At Wateen Telecom, his responsibilities and expertise entail specific focus on Strategic Business Planning, Treasury and Cash Management, Budgeting and Forecasting, Accounting & Reporting, Tax Planning & Management, Risk Management, Credit & Collection, Audit and Supply Chain Management. 6.4.1.3 Naila Aziz - Company Secretary and Head of Corporate and Legal Affairs After completing her Bachelors in Law, Ms. Aziz joined Mandviwala & Zafar, and worked on various key national and international transactions and cases for more than six years. In her role, she was directly involved in diversified legal matters such as International Arbitration, Joint Ventures, Project Financing, Corporate Finance, Telecommunications, TFC Issues, Securities, Floatation of Modarabas, Mergers and Acquisitions, Construction and Engineering. During her significant legal experience, she advised many leading international and national financial institutions and companies. She had the opportunity to participate and voice her opinions at various forums including the SAARC Law Conference at Kathmandu, Nepal in September 2000. Furthermore, she has drafted the Ordinances for the Establishment of the Tajdeed-e-Punjab Board for the preservation, maintenance and restoration of the buildings, heritage and monuments and Prevention of Domestic Violence. Ms. Aziz has been a part of Warid since August 2004 and in new role as Company Secretary and Legal Head of Wateen, she has used her years of experience to help Wateen grow into a strong and viable entity, including the introduction of best practices in Corporate Governance. 6.4.1.4 Shahid Miah CTO & Head of International Business One of the first employees of Wateen Telecom, Mr. Miah successfully launched LDI services across Pakistan with international connectivity to UK and the Middle East. He is an accomplished telecommunications professional with expertise in operations of Next Generation Networks as well as Legacy TDM Carrier networks. A graduate with an honors degree, Mr. Miah started his telecom career in GSM in 1995 with Ericsson UK providing support to Vodafone, O2 and T-Mobile. In the decade that has passed, he has gained a wealth of experience in telecoms working for vendors, operators and systems integrators in the UK and Europe. In 2000, Mr. Miah started focusing on technologies based on the convergence of voice and data and spent 6 months working with Cisco Systems testing and evaluating their solutions based on soft switch architecture. Before joining the group in November 2004, he was a director in a consultancy firm offering services to customers such as Cable & Wireless for convergent applications and VoIP solutions. One of Mr. Miah's key achievements at Wateen has been the formation of a highly experienced, highly skilled and dynamic engineering team with a focus on delivering services of the highest quality. 6.5 DIVIDEND/BONUS RECORD OF OTHER LISTED GROUP COMPANIES 2005 Bank Alfalah Limited United Bank Limited 6.6 12% 33.33%B 25% 25%B 2006 30%B 25%B 2007 15% 23%B 30% 25%B 2008 12.5%B 25% 10%B 2009 Nil Nil

INVESTMENT IN ASSOCIATED COMPANIES

Except as already disclosed the Company has not made any investment in any of associated companies nor has any resolution been passed for investment in associated companies under Section 208 of the Ordinance. 6.7 INVESTMENT IN SUBSIDIARY COMPANIES

The Company, in its special resolution dated December 15, 2009 has decided to acquire 49% shares of Wateen Solutions (Pvt.) Limited under section 208 of the Ordinance, subject to regulatory approvals (for

details please refer to section 4.20.2). Detail of other subsidiaries such as Wateen UK are referred to in section 4.18 of the Prospectus. PART 7 7 7.1 MISCELLANEOUS REGISTERED OFFICE / HEAD OFFICE 4th Floor, New Auriga Centre Gulberg II Lahore. Phone# 042 111-999-919 Fax: 042 3578 7087 Website: www.wateen.com BANKERS TO THE ISSUE Arif Habib Bank Limited Bank AL Habib Limited Bank Alfalah Limited Dawood Islamic Bank Limited Deutsche Bank Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited J.S. Bank Limited MCB Bank Limited The Bank of Punjab United Bank Limited AUDITORS OF THE COMPANY A. F. Ferguson & Co. Chartered Accountants PIA Building, 3rd Floor, 49 Blue Area P.O.Box 3021, Islamabad Pakistan. Phone: (051) 2273457-60 Fax: (051) 2277924 LEGAL ADVISOR TO THE COMPANY Ijaz Ahmed & Associated Advocate and Legal Consultants No. 7, 11th Street, Phase V, D.H.A. Karachi. Phone: (021) 3583 3687 Fax: (021) 3601 0072 Email: ijaz.ahmed@cyber.net.pk COMPUTER BALLOTER & SHARE REGISTRAR THK Associates (Pvt.) Limited CONSULTANT TO THE ISSUE Arif Habib Limited 2/1, R. Y. 16, Pardesi House, Old Queens Road, Karachi. Tel: (021) 3241 5213

7.2

7.3

7.4

7.5 7.6

Fax: (021) 3242 9653 Website: www.arifhabibltd.com 7.7 7.7.1 MATERIAL CONTRACTS Underwriting agreements: S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Name of the underwriters National Bank of Pakistan Atlas Bank Limited Arif Habib Limited Habib Bank Limited MCB Bank Limited Bank of Khyber Askari Bank Limited Allied Bank Limited KASB Bank Limited Pak Oman Investment Co. Limited Arif Habib Bank Limited Faysal Bank Limited Pearl Securities Limited Wincom (Pvt.) Limited TOTAL 7.7.2 Other contracts and agreements:
PKR

No. of shares 20,000,000 15,000,000 10,500,000 10,000,000 10,000,000 10,000,000 7,500,000 5,000,000 5,000,000 5,000,000 5,000,000 2,500,000 2,500,000 2,000,000 110,000,000

Amount (PKR) 200,000,000 150,000,000 105,000,000 100,000,000 100,000,000 100,000,000 75,000,000 50,000,000 50,000,000 50,000,000 50,000,000 25,000,000 25,000,000 20,000,000 1,100,000,000

Standard Chartered Bank Limited Facility Amount Running Finance Facility Funded facilities Non-funded facilities Tenor 1 year Rate 3 Months KIBOR5 + 2% This is the Running Finance facility for a tenor of Repayment Schedule one year it will be renewed at maturity. Security Pari passu charge over present and future assets Purpose To finance working capital requirements. Bank Alfalah Limited

1,500,000,000 900,000,000

PKR

Facility Amount Funded facilities Non-funded facilities Tenor Rate Repayment Schedule

Running Finance Facility 1,800,000,000 100,000,000 1 year 3 Months KIBOR + 3% This is the Running Finance facility for a tenor of one year it will be renewed at maturity. Pari passu charge over present and future assets To finance working capital

Security Purpose
5

03 Months KIBOR rate = 11.96%

requirements.
Motorola Credit Corporation Facility Type Amount Tenor/Expiry Rate Repayment Terms Security USD Term Loan Facility 65,000,000 6 years exclusive 1 year of grace. 6 Months LIBOR6 + 1.7% 12 semi annual unequal installments started from June 2009. Charge over equipment forming part of supply contract Personal Guarantees of Sponsors To finance WiMAX Oriented Supplies & Services USD 42,349,486 USD 42,349,486 65,000,000 USD

Purpose

Standard Chartered Bank-ECGD Financing Facility Type Long Term Loan Amount 7 Years inclusive of 2 years Tenor availability and 6 months grace Rate 6 Months LIBOR7 + 1.50% 14 semi-annual equal installments Repayment Terms started from Oct 2009; Charge over current & fixed assets Security of the company Pledge of 20% shares of Wateen Personal Guarantees of the sponsors To finance WiMAX Oriented Supplies & Services

Purpose

HBL-BAHL-SCB (Local Syndicate) Facility Type Amount Tenor/Expiry Rate Repayment Terms Long Term Finance Facility

Rupees 4,775,000,000

Equivalent USD 57,185,629

Security

Purpose

Bridge Utilization

5 Years inclusive of 2 years Grace 6 Months K + 2.75% for first 2 years 6 Months KIBOR8 + 2.5% for last 3 years 6 semi annual unequal installments to be started from May 2012 Charge over all present and future movable assets excluding certain assets Corporate Guarantee from Warid Telecom International To finance Capex requirement of the company in the following: Wireless Local Loop VSAT Long Haul Fiber Optic Cable LDI

7 8

06 Months LIBOR rate = 0.38% 06 Months KIBOR rate = 12.01%

Any other Capex as may be specified. An amount of PKR 3.2 billion has been drawn against the said. ed - (Islamic) Rupees Dubai Islamic Bank Pakistan Limited - (Islamic) Facility Type Long Term Loan - Ijara Facility Amount Tenor 6 Years inclusive of grace period of Rate one year Repayment Terms 6 Months KIBOR + 1.50% 10 semi annual equal installments to be started from Feb 2010 Charge over specific Ijara's Assets Security under Ijara Corporate Guarantee from WTI To finance DWDM Equipment, Purpose Eltek Batteries Standard Chartered Bank (Pakistan) Ltd.-Cisco Financing Facility Type Term Finance Facility Amount Tenor/Expiry 5 Years (without any grace) Rate 6 Months KIBOR + 1.25% Repayment Terms 8 semi annual equal installments Security Charge over specific Cisco assets Purpose To finance the HFC equipment Note: Conversion Parity used as USD1/PKR83.5

Rupees 530,000,000

Equivalent USD Equivalent USD 6,347,305

Rupees 100,000,000

Equivalent USD 1,197,605

A few of the other major contracts: Parties to the Contract Interconnect agreements National Telecommunication Corporation Pakistan Telecommunication Company Limited Pak Telecom Mobile Limited CMPak Limited Pakistan Mobile Communication Limited Telenor Pakistan Warid Telecom (Pvt.) Limited Dancom Pakistan (Pvt.) Limited Velocity (Pvt.) Limited Managed Capacity Agreements Telenor Pakistan Wisecom Dancom Pakistan (Pvt.) Limited Multinet (PO) Traffic agreements Kalam Telecom Bahrain Unicom Distribution Pvt Ltd. Toronto International Telecommunication Corporation

Telekom Malaysia Berhad PCCW Global Lycatel (Ireland) Limited Sido Telecom, Canada IDT Global Limited Emirates Integrated Telecommunications Company, PJSC Etisalat, UAE Afghan Wireless Communication Company (AWCC) Vodafone Essar South Limited TATA Communications Keywest Communications (HK) Ltd. Softel (UK) Limited Sky Telecom Limited

Supply contracts Motorola Limited (supply of Wireless Broadband System & GPON) Motorola Limited (supply of WiMax) Huawei Technologies Co. Ltd. (supply of DWDM equipment) Huawei Technologies Co. Ltd. (supply of DWDM, SDH, NMS equipments) Huawei Technologies C. Ltd. (supply of Network equipments) Motorola Limited (purchase & sale of Wireless Broadband) National Engineers System Integrators Bytesense (Pvt) Ltd. Infotech (Pvt) Limited Services contracts Motorola Limited (implementation of wireless broadband & GPON) Motorola Limited (implementation of WiMax system) Huawei Technologies Co. Ltd. (implementation of Long Haul system) Huawei Technologies Co. Ltd. (implementation, integration, integration & support) Abilitec Limited (for implementation of system) Indefeasible Rights to Use (IRU) CMPak Limited Warid Telecom (Pvt.) Ltd Corporate Sales Agreements Bank Alfalah Limited Alfalah Insurance Company Limited United Nations Children's Fund United Bank Limited JS Bank Limited Sheikhu Sugar Mills Limited Network Microfinance Bank Limited Bank of Punjab MCB Bank Limited Barclays NADRA LESCO My Bank Atlas Bank

Tameer Bank Saudi Pak Commercial Bank Limited (now Silk Bank) Parke Davis & Company Limited (now Pfizer) Abbott Laboratories Pakistan

Civil and Metro Contracts Frontier Works Organization Konnect Holden Limited SAG Construction (Faisalabad and Gujranwala) Zab and Company (Hyderabad) Team International (Jhelum) Al Mansoor Enterprises (Hyderabad) AZC Enterprises (Lahore-Wagha) CET (Pvt) Limited (Hyderabad) ELC Solutions Corporation (Sialkot) GK Construction (Faisalabad) Overseas Telecom Services (Pvt) Ltd. (Lahore OTS) Telecom Foundation (Abbotabad-Murree) UTEL Pakistan (Pvt) Ltd. (Sahiwal) Universal Service Fund (USF) Fiber Optical Project in Baluchistan (Package 1) Fiber Optical Project in Baluchistan (Package 3) Broadband for HTR Broadband for FTR Fiber Optical Project in Sindh Managed Services Contracts Motorola Limited (24/7 days to manage Network) Huawei Technologies Co. Ltd. (provision of managed services) Business/Assets Sale & Purchase Agreement Unifast Management (Pvt) Limited and Wateen National Engineers & Microtech Links (Pvt) Limited ADM Sites Konnect Holden Excel Engineering (Pvt) Ltd. Roscon (Pvt) Ltd. VSAT Agreements CMPak Limited (VSAT equipment for supply & services) Telenor Pakistan Warid Telecom (Pvt.) Limited Telecom Development Company Afghanistan Limited T/A Roshan Afghan Wireless Communication Company Spacecom (MSA) Telco Carrier FZE Eutelsat (VSAT capacity agreement) VSAT equipment contract with Warid Congo LOI for VSAT equipment with Warid Uganda

LOI for MSO and Bandwidth with Warid Uganda Miscellaneous Contracts The Share Purchase Agreement (SPA) signed between Wateen Telecom Limited and Mr. Jahangir Ahmed for the acquisition of 49% remaining shares of Wateen Solutions (Pvt.) Limited by Wateen Telecom Limited Worldcall Telecom Limited (cable duct sale & purchase agreement) Higher Education Commission (for leasing of optic fiber in six regions) Special Communications Organization (RIO) IBM (SOW) ARVATO Middle East Sales Dancom Pakistan (Pvt) Limited (for telecommunication services) Eservglobal Limited (LOI) Telenor Pakistan (Pvt) Ltd. (for lease of dark optical fiber) Multan Garrison (for providing LDI, WLL, OFC & HFC services) Telenor LDI Communications (Pvt) Ltd. (for LDI services) Unitech Solutions (Pvt) Limited (PO) Defence House Authority (Strategic Services Agreement) Services Agreement with Warid Telecom (Pvt) Limited International Gateway Contract with Warid Uganda PART 8 8.1 SIGNATORIES TO ABRIDGED PROSPECTUS

Signed, as required by section 57 of the Companies Ordinance, 1984, by: -Sd_________________________ Mr. Bashir Ahmed Tahir Director

-Sd_________________________ Mr. Tariq Malik Chief Executive Officer

-Sd_________________________ Mr. Parvez Ahmed Shahid Director Witnesses: 1. ______________________ Name Address CNIC #

-Sd_________________________ Mr. Aqib Zulfiqar Chief Financial Officer

2. _____________________ Name Address CNIC #

Date: -------------Place: --------------