Wateen 1st QTR

QUARTER
July 01,
to
september 30,
CONTENTS
02. Corporate Information
03. Director’s Report
Financial Information
04. Condensed Interim Balance Sheet
06. Condensed Interim Profit and Loss Account
07. Condensed Interim Statement of Comprehensive Income
08. Condensed Interim Cash Flow Statement
10. Condensed Interim Statement of Changes in Equity
11. Condensed Interim Notes to and Forming Part of Financial Information
Consolidated Financial Information

16. Condensed Consolidated Interim Balance Sheet
18. Condensed Consolidated Interim Profit and Loss Account
19. Condensed Consolidated Interim Statement of Comprehensive Income
20. Condensed Consolidated Interim Cash Flow and Statement
22. Condensed Consolidated Interim Statement of Changes in Equity
23. Notes to and Forming Part of the Condensed Consolidated Interim Financial Information
CORPORATE
INFORMATION
Board of Directors Bankers
H.H. Sheikh Nahayan Mabarak Al Nahayan Standard Chartered Bank (Pakistan) Limited
Chairman of the Board Bank Al Habib Limited
Habib Bank Limited
H.E. Sheikh Saif Bin Mohammed Butti Al Hamid Bank Alfalah Limited
National Bank of Pakistan Limited
Mr. Ahmed Darwish Dagher Al Marar Pak Libya Holding Company (Pvt.) Limited
(up till 15/10/2010) Summit Bank Limited (Formerly Arif Habib Bank Limited)
Askari Bank Limited
H.E. Sultan Khalfan Hudairem Al Ktebi Soneri Bank Limited
(15/10/2010 onwards) Pak Brunei Investment Company Limited
The Bank of Khyber
Mr. Abdulla Khalil Mohd Samea Al Mutawa
Mr. Khalid Mana Saeed Ahmed Al Otaiba Auditors
Mr. Bashir A. Tahir A.F. Ferguson & Co.

Chartered Accountants
Mr. Parvez A. Shahid PIA Building, 3rd Floor,
49, Blue Area, P.O. Box 3021,
Mr. Mohamed Amersi Islamabad
Registered Office
4th Floor New Auriga Complex,

Main Boulevard, Gulberg II, Lahore
Share Registrar
THK Associates (Pvt.) Limited

Ground Floor
State Life Building No.3,
Dr. Zia-ud-Din Ahmed Road Karachi
Tel: +92 21 111 000 322
QUARTERLY REPORT 2010 wateen telecom ltd

2
DIRECTORs’ Report
The Directors of Wateen Telecom On USF Sindh, Milestone 1 & 2 audit has been successfully
achieved whereas Milestone 3 has been offered for audit.
Limited are pleased to present the
On USF Balochistan (packages 1 and 3), Milestones 1 has
financial information for the three been successfully completed while Milestone 2 has been
months ended 30th September, 2010. offered for audit. With most of the growth in infrastructure
coming through a subsidy from USF (approximately Rs.
1.8 Billion), Wateen will have the second largest, if not
the largest, OFC network in Pakistan. The roll-out along
Financial almost all of the national highways will make it an ideal
The company posted revenues of Rs 1,931 million for the choice for operators to shift onto dark fibre for backhauling
three months ended September 2010 representing an from the comparatively less reliable, existing microwave
increase in revenue of 5% over last quarter. Management media. On USF Broadband, first milestones for FTR and
is focusing on more profitable revenue streams due to HTR regions have been completed and offered for audit.
which gross margin has shown considerable improvement
increasing to 31% this quarter compared to 14% for the In line with our vision of exceeding customer expectations,
same period last year. At the same time, through various Wateen has taken a number of steps to improve customer
cost rationalization and operations restructuring initiatives, experience. Self-care portal has been revamped with
management has consistently improved EBITDA margins; many new features such as ability to use soft phone via
whereas EBITDA was negative 4% the same period portal, online bill payment through auto-debit authorization,
last year, it increased to positive 12% last quarter and SMS and email alerts for reminders and usage tracking,
continued rising to positive 20% this quarter. Keeping etc. New and innovative recharge mechanisms such as
in view the business requirements and to support the payment through ATMs, credit cards and phone banking
company, Sponsors’ have also come up with a substantial will also be introduced to enhance reach to the customer.
support of USD 14m in the quarter through the issuance Similarly, through direct peering with most popular
of SBLC to settle certain liabilities. Further support is also customer websites such as Google and Youtube, Wateen
committed by sponsors in the 2nd quarter. will significantly improve response times and increase
customer loyalty. Recent integration of Oracle’s ERP
within Wateen’s internal operations has automated a lot of
future outlook business processes ensuring quicker response times for
Wateen has undertaken a number of steps to build our partners and customers.
shareholder value through various cost reduction and
rationalization programs. By bringing in-house the
development, deployment and support of various business-
critical BSS modules such as CRM, TMS, customer self-
care, Business Intelligence (MIS) and others, Wateen has
made significant reductions in OPEX. Similarly, by bringing
various Engineering operations in-house, Wateen has not
only been able to reduce OPEX further, but also gained
direct control over customer experience, as a result of
which considerable improvement in operational KPI (Key
Tariq Malik Parvez A. Shahid
Performance indicators) has been realized. Chief Executive Officer Director
wateen telecom ltd QUARTERLY REPORT 2010

3
CONDENSED INTERIM BALANCE SHEET (UNAUDITED)
AS AT SEPTEMBER 30, 2010
(Un-Audited) (Audited)
September 30, June 30,
2010 2010
Note (Rupees in thousand)
Share capital and reserves

Authorised capital 10,000,000 10,000,000
Issued, subscribed and paid-up capital 6,174,746 6,174,746

General reserve 134,681 134,681
Unappropriated (loss) (2,417,030) (2,099,760)
3,892,397 4,209,667
Non current liabilities
Long term finance- secured 6 508,830 -
Long term finance from associated company - unsecured 7 550,000 -
Long term finance from Sponsors - unsecured 8 1,206,800 -
Cross currency swap - fair value 6.5 4,656 4,656
Interest rate swap - fair value 6.5 134,397 134,397
Obligations under finance leases 5,429 5,429
Long term deposits 117,834 110,455
2,527,946 254,937
Deferred liabilities
Employees’ retirement benefits 41,305 43,690
Deferred income tax liability - 74,593
Deferred government grant 716,405 827,159
757,710 945,442
Current liabilities
Current portion of long term finance - secured 6 12,472,429 12,411,659
Payable to supplier to be settled through long term finance 9 - 433,798
Current portion of obligations under finance leases 1,223 1,556
Finance from supplier - unsecured 77,668 77,668
Short term running finance - secured 4,066,123 4,604,346
Trade and other payables 4,770,762 5,922,431
Interest / markup accrued 639,926 848,888
22,028,131 24,300,346
CONTINGENCIES AND COMMITMENTS 10
29,206,184 29,710,392
The annexed notes 1-15 are an integral part of this condensed interim financial information.

4
CONDENSED INTERIM BALANCE SHEET (UNAUDITED)
2010 2010
Non-current assets
Property, plant and equipment
Operating assets 11 16,783,292 17,045,929
Capital work in progress 12 4,268,201 3,883,565
Intangible assets 199,045 204,726
21,250,538 21,134,220

Long term investment in subsidiary companies 57,061 57,061
Long term deposits and prepayments

Long term prepayments 79,139 79,139
285,665 317,723
Current assets
Trade debts 3,685,353 3,097,982
Contract work in progress 55,206 18,782
Stores and stocks 923,659 847,528
Advances, deposits, prepayments
and other receivables 2,464,159 2,001,340
Income tax refundable 253,363 238,841
Cash and bank balances 231,180 1,996,915
7,612,920 8,201,388

29,206,184 29,710,392
___________________ _______________
Chief Executive Director

5
CONDENSED INTERIM
PROFIT AND LOSS ACCOUNT (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010
Three months ended

September 30, September 30,
2010 2009
Revenue 1,825,527 2,370,026
Cost of sales (excluding depreciation and amortisation) 1,230,518 2,049,791

General and administration expenses 287,172 374,603
Advertisement and marketing expenses 30,607 94,591
Selling and distribution expenses 7,352 7,192
Other income (305,442) (23,902)
Earnings/(loss) before finance cost,
taxation, depreciation and amortisation 575,320 (132,249)
Less: Depreciation and amortisation 469,116 361,893

Finance cost 13 483,223 423,690
Finance income (3,410) (7,691)
Loss before taxation (373,609) (910,141)
Income tax charge (credit) (56,339) (290,185)

Loss for the period (317,270) (619,956)
Loss per share Rs (0.51) Rs (1.49)
___________________ _______________

6
CONDENSED INTERIM
SATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Three months ended

2010 2009
(Rupees in thousand)

Other comprehensive income - -

Total comprehensive income for the period (317,270) (619,956)

___________________ _______________

7
CONDENSED INTERIM
CASH FLOW STATEMENT (UN-AUDITED)
Three months ended

2010 2009
Cash flow from operating activities

Profit/(loss) before taxation (373,609) (910,141)
Adjustment of non cash items:

Depreciation & amortisation 469,116 361,893
Finance cost 483,223 423,690
Deferred income (110,754) -
(Profit)/loss on sale of operating assets - 19,179
Dividend income from subsidiary company (156,395) -
Provision for doubtful debts - 4,925
Provision for employees’ accumulated absences 17,161 18,228
702,351 827,915
328,742 (82,226)
Changes in working capital:
(Increase) in trade debts (587,371) (2,591,751)
(Increase) in contract work in progress (36,424) (790)
(Increase) in stores and stocks (76,131) (312,872)
(Increase) in advances, deposits, prepayments and other receivables (462,819) (1,416,693)
(Decrease)/ Increase in trade and other payable (1,151,669) 3,794,982
(2,314,414) (527,124)
Employees’ accumulated compensated absences paid (19,546) (14,901)
Taxes paid (32,776) (7,274)
Cash flow from operating activities (2,037,994) (631,525)
Cash flow from investing activities

Tangible fixed assets additions (200,798) (790,143)
Capital work in progress additions (including finance cost) (384,636) (662,060)
Long term deposits (received/paid) 32,058 1,835
Dividend income received 156,395 -
Cash flow from investing activities (396,981) (1,450,368)

8
CONDENSED INTERIM
Three months ended

2010 2009
Cash flow from financing activities

Long term finance received 2,326,400 3,309,163
Long term finance repaid - (1,661,663)
Long term payable to supplier (repaid) - (1,015)
Short term borrowings (repaid) (1,680,165) -
Payable to supplier to be settled through
long term finance received/(repaid) (433,798) (309,866)
Obligations under finance leases (repaid) (333) 8,345
Long term deposits received 7,379 -
Finance cost paid (692,185) (391,316)
Cash flow from financing activities (472,702) 953,648
(Decrease) in cash and cash equivalents (2,907,677) (1,128,245)

Cash and cash equivalents at beginning of the period (927,266) (2,324,688)
Cash and cash equivalents at end of the period (3,834,943) (3,452,933)
Cash and cash equivalents comprise:

Cash and bank balances 231,180 320,424
Short term running finance (4,066,123) (3,773,357)
(3,834,943) (3,452,933)


___________________ _______________

9
CONDENSED INTERIM
STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)
Share General Unappropriated

capital reserve profit/(loss) Total
Balance at July 1, 2009 2,087,373 392,908 1,829,146 4,309,427

Total comprehensive income for the period
Loss for the period - - (619,956) (619,956)
Other comprehensive income - - - -
- - (619,956) (619,956)
Balance at September 30, 2009 2,087,373 392,908 1,209,190 3,689,471

Issue of 208,737,310 bonus shares 2,087,373 (258,227) (1,829,146) -
Issue of 200,000,000 shares for cash 2,000,000 - - 2,000,000
on April 20, 2010
Shares issue cost (net of tax benefit) - - (79,247) (79,247)

Loss for the period - - (1,400,557) (1,400,557)
- - (1,400,557) (1,400,557)
Balance at June 30, 2010 6,174,746 134,681 (2,099,760) 4,209,667

- - (317,270) (317,270)
Balance at September 30, 2010 6,174,746 134,681 (2,417,030) 3,892,397

___________________ _______________

10
SELECTED NOTES TO AND FORMING PART OF THE
CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED)
1. Legal status and operations

The Company was incorporated in Pakistan as a Private Limited Company under Companies Ordinance, 1984 on
March 4, 2005 for providing Long Distance and International public voice telephone (LDI) services and Wireless
Local Loop (WLL) service in Pakistan. The Company commenced its LDI business commercial operations from May
1, 2005. The legal status of the Company was changed from “Private Limited” to “Public Limited” with effect from
October 19, 2009. The Company was listed on Karachi, Lahore and Islamabad Stock Exchanges with effect from
May 27, 2010. The registered office of the Company is situated at Lahore. The Company is a subsidiary of Warid
Telecom International LLC, U.A.E.
2. Basis of preparation
These condensed interim financial information are unaudited and are being submitted to shareholders in accordance
with the requirement of Section 245 of the Companies Ordinance, 1984 and International Accounting Standard (IAS
34) ‘Interim Financial Reporting’. These condensed interim financial information do not include all the information
and disclosures required in the annual financial statements and should be read in conjunction with the published
financial statements of the Company for the year ended June 30, 2010.
3. Accounting policies
The accounting policies adopted in the preparation of this condensed interim financial information are the same as
those applied in preparation of audited annual published financial statements of the Company for the year ended
June 30, 2010.
4. Use of estimates and judgements
The preparation of these condensed interim financial information in conformity with approved accounting standards
requires management to make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
Estimates and judgements made by the management in the preparation of this condensed financial information are
the same as those used in the preparation of the preceding annual published financial statements of the Company
for the year ending June 30, 2011.
5. Taxation
The provision for taxation for the three months ended September 30, 2010 has been provided on estimation basis.
2010 2010
6. Long term finance - secured
Syndicate of banks 6.1 4,766,000 4,766,000
Export Credit Guarantee Department - (ECGD) 6.2 2,467,479 2,450,304
Standard Chartered Bank 6.3 40,500 54,000
Dubai Islamic Bank 6.4 477,000 477,000
Motorola Credit Corporation (MCC) 6.5 4,998,613 4,963,819
Term finance facility 6.6 508,830 -
Total 13,258,422 12,711,123
Unamortized transaction and other ancillary cost
Opening balance 299,464 -
Additions during the period - 400,862
Amortisation for the period (22,301) (101,398)
(277,163) (299,464)
12,981,259 12,411,659
Amount due within next twelve months
shown as current liability (1,991,174) (1,991,174)
Amount Due after September 30, 2011 (10,481,255) (10,420,485)
508,830 -

11
6.1 The Company has obtained syndicate term finance facility from a syndicate of banks with Standard Chartered
Bank Limited (SCB), Habib Bank Limited (HBL), Bank Al-Habib Limited (BAHL) and National Bank of Pakistan
(NBP), being lead arrangers to finance the capital requirements of the Company amounting to Rs 5.0 billion, of
which Rs 4.8 billion has been availed till September 30, 2010. The tenor of the facility is 5 years commencing
from November 4, 2009. The principal is repayable in six unequal stepped -up- semi annual instalments. The first
such instalment shall be due on June 30, 2012 and subsequently every six months thereafter until December 31,
2014. The rate of mark-up is 6 months KIBOR+2.75% per annum for 1-2 years and KIBOR + 2.5% per annum for
next 3-5 years.
The facility is secured by way of hypothecation over all present and future moveable assets (including all current
assets) and present and future current/fixed assets (excluding assets under specific charge of CM Pak, CISCO,
Motorola, DIB, World call and USF), a mortgage by deposit of title deeds in respect of immoveable properties
of the company, lien over collection accounts and Debt Service Reserve Account, a corporate guarantee from
Warid Telecom International LLC.
6.2 The Company has obtained long term finance facility amounting to USD 42 million from Export Credit Guarantee
Department (ECGD) UK, of which US$ 35 million has been availed till September 30, 2010. The loan is repayable
in 14 semi annual installments of USD 3,025 thousand each starting from October 14, 2009. The rate of mark-up
is LIBOR + 1.5% per annum. Additional mark-up at 2% per annum will be payable on default payment from the
due date for payment upto the date of payment. If the finance charge is not paid then additional interest rate
will be payable at 1.5% per annum above CIRR rate applicable to the period during which the finance charge
remained unpaid or at 5% per annum whichever is higher. The loan is secured by personal guarantees by three
Sponsors of the Company.
6.3 The Company has obtained an aggregate medium term finance facility of USD 3 million from Standard Chartered
bank. The principal is repayable in 8 equal semi annual installments commencing from October 1, 2007. The rate
of interest is six month average KIBOR + 1.25%.The loan is secured by first pari passu hypothecation charge
over the specific assets of the Company amounting to Rs 275 million.
6.4 The Company has obtained Ijarah finance facility of Rs 530 million from Dubai Islamic Bank (DIB). The principal
is repayable in 10 semi annual installments of 53 million each commencing from February 1, 2010. The rate of
mark up is 6 month KIBOR plus 1.5% per annum. Additional interest is payable on default payment at KIBOR +
4% per annum from the due date for payment upto the date of payment. The loan is secured by specific fixed
assets (DWDM equipment, eltek cabinets and batteries).
6.5 The Company has obtained term finance facility of USD 65 million from MCC of which USD 64 million has
been availed till September 30, 2010. The principal amount of outstanding facility is repayable in 12 unequal
semi annual installments commencing from June 30, 2009 until and including the final maturity date which is
December 31, 2014. The rate of mark-up is six month LIBOR + 1.7% per annum. Additional interest is payable on
default payment at six month LIBOR + 2% per annum from the due date for payment upto the date of payment.
The loan is secured through hypothecation charge over specific assets of the Company supplied under supply
& services agreements with Motorola.
Repayment of principal and interest payments thereon (except for margin of 1.7% per annum) amounting to US$
25.5 million at September 30, 2010 are hedged through cross currency swap contract with SCB. In consideration,
the Company pays the difference between interest based on LIBOR and KIBOR + 2.2% per annum to the bank.
The fair value of the contract at June 30, 2010 was Rs 4.656 million in favour of the bank, as determined by an
independent valuer using the ‘Forward Model’, which has been recognised as a liability.
The interest payments (except for margin of 1.7% per annum) upon principal amounting to US$ 58.5 million at
September 30, 2010 are hedged through interest rate swap contract with SCB. In consideration, the company
pays 3.05% on the notional amount. The fair value of the contract at June 30, 2010 was Rs 134.397 million
in favour of the bank, as determined by an independent valuer using the ‘Forward Model’, which has been
recognised as a liability.

12
6.6 During the period the Company has obtained long term finance facility from Standard Chartered bank amounting
to Rs 291 million against letter of credit facilities availed till June 30, 2010.The loan is repayable in June 30, 2013.
The loan is secured by ranking charge over current and fixed assets amounting to Rs 1,000 million.
During the period the Company has obtained long term finance facility from Standard Chartered bank amounting
to Rs 217 million against Cross currency and Interest rate swap agreements till June 30, 2010.The loan is
repayable in June 30, 2013. The loan is secured by ranking charge over current and fixed assets amounting to
Rs 500 million.
6.7 The Company is required to make payments of long term loans on due dates and to maintain certain ratios
as specified in loan agreements. The Company was not able to make payment of MCC loan installment of Rs
428,000 thousand and interest of Rs 59,010 thousand due on June 30, 2010 and SCB loan installment of Rs
13,500 thousand and interest of Rs 3,775 thousand due on April 24, 2010. Further, certain ratios specified in the
loan agreements have not been maintained at June 30, 2010. As a consequence, the lenders shall be entitled to
declare all outstanding amount of the loans immediately due and payable. In terms of provisions of International
Accounting Standard on Presentation of financial statements (IAS 1), since the Company does not have an
unconditional right to defer settlement of liabilities for at least twelve months after the balance sheet date, all
liabilities under these loan agreements are required to be classified as current liabilities. Based on above, loan
instalments due as per loan agreements after September 30, 2011 amounting to Rs 10,481,255 thousand have
been shown as current liability.
The Company is in the process of rescheduling of existing facilities, which would facilitate the Company to great
extent in meeting its obligations/covenants under loan agreements. In addition, during the period Company has
received USD 14 million from sponsors through Standby Letter of Credit (SBLC) to discharge its liabilities when
due.
7. Long term finance from associated company - Unsecured

During the period the Company has obtained long term finance facility from associated Company Taavun (Pvt)
Limited amounting to Rs 600 million of which Rs 550 million was availed till September 30, 2010. The tenure of
the facility is two years. The rate of interest is six months KIBOR + 2.5% per annum.
8. Long term finance from Sponsors - Unsecured

During the period the Company has obtained loan from sponsors amounting to Rs 1.2 billion through Standby
letter of Credit (SBLC). The rate of interest is six months LIBOR + 2.5% per annum.
9. Payable to supplier to be settled through long term finance

During the period the Company has repaid entire facility (June 30, 2009 Rs: 434 million).

2010 2010
10. Contingencies and commitments

Claims against the Company not acknowledged as debt 264,038 264,038
Performance guarantees issued by banks in favour
of the Company 1,476,816 1,476,816
Outstanding commitments for capital expenditure 1,799,824 1,799,824
Acquisition of 49% shares in subsidiary
Wateen Solutions (Pvt) Limited 255,060 490,000

13

2010 2010
11. Operating assets

Opening net book value 17,045,929 14,050,553
Additions - owned 200,798 4,803,102
- leased - 9,293
Disposals at net book value - (191,184)
Depreciation charge (463,435) (1,625,835)
Closing net book value 16,783,292 17,045,929
12. Capital work in progress

Leasehold improvements 25,243 23,334
Line and wire 1,502,019 1,319,762
Network equipment 2,740,939 2,540,469
4,268,201 3,883,565
13. This includes exchange loss amounting to Rs 57 million (September 2009: Rs Nil)
Three months ended

2010 2009
14. Related party transactions

Subsidiary Companies
Payments made on behalf of subsidiary companies 304,272 -
Payments made by subsidiary companies - 122,090
Cost and expenses charged by subsidiary companies 439 26,343
Dividend income received 156,395 -
Associated Companies
Revenue from associated companies 479,594 592,789
Cost and expenses charged by associated companies 209,151 268,950
Payments made on behalf of associated companies 7,787 7,196
Contribution to Employees’ retirement funds 21,293 26,495
15. General
15.1 Date of authorisation
This condensed interim financial information has been authorised for circulation to the shareholders by the Board
Of Directors of the Company on 21st October, 2010.
___________________ _______________

14
consolidated
financial
INFORMATION

15
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)
2010 2010
Share capital and reserves

Authorised capital 10,000,000 10,000,000
Issued, subscribed and paid-up capital 6,174,746 6,174,746

General reserve 134,681 134,681
Unappropriated profit/(loss) (2,430,531) (1,794,123)
3,878,896 4,515,304
Non controlling interest 189,453 206,999
4,068,349 4,722,303
Non-current liabilities
Long term finance- secured 6 508,830 -
Long term finance from associated company - unsecured 7 550,000 -
Long term finance from Sponsors - unsecured 8 1,206,800 -
Cross currency swap - fair value 6.5 4,656 4,656
Interest rate swap - fair value 6.5 134,397 134,397
Obligations under finance leases 5,429 5,429
2,527,946 254,937
Deferred liabilities
Employees’ retirement benefits 57,674 60,059
Deferred income tax liability 704 76,807
Deferred government grant 716,405 827,159
774,783 964,025
Current liabilities
Current portion of long term finance - secured 6 12,472,429 12,411,659
Payable to supplier to be settled through long term finance 9 - 433,798
Current portion of obligations under finance leases 1,223 1,556
Finance from supplier - unsecured 77,668 77,668
Short term running finance - secured 4,066,123 4,604,346
Trade and other payables 4,853,777 6,030,371
Interest / markup accrued 639,926 848,888
22,111,146 24,408,286
CONTINGENCIES AND COMMITMENTS 10
29,482,224 30,349,551

16
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)
2010 2010
Non-current assets
Property, plant and equipment
Operating assets 11 16,789,903 17,053,114
Capital work in progress 12 4,268,201 3,883,565
Intangible assets 304,162 310,843
21,362,266 21,247,522
Long term deposits and prepayments

Long term prepayments 79,139 79,139
286,556 318,613
Current assets
Trade debts 4,602,582 4,060,687
Contract work in progress 81,988 47,394
Stores and stocks 933,701 855,619
Advances, deposits, prepayments
and other receivables 1,704,260 1,558,692
Income tax refundable 265,994 246,298
Cash and bank balances 244,877 2,014,726
7,833,402 8,783,416

29,482,224 30,349,551
___________________ _______________

17
CONDENSED CONSOLIDATED INTERIM
PROFIT AND LOSS ACCOUNT (UNAUDITED)
Three months ended

2010 2009
Revenue 1,930,966 2,498,429
Cost of sales (excluding depreciation and amortisation) 1,332,459 2,148,465

General and administration expenses 296,182 382,792
Advertisement and marketing expenses 30,607 94,591
Selling and distribution expenses 7,352 7,192
Other income (118,523) (24,532)
Earnings/(loss) before finance cost,
taxation, depreciation and amortisation 382,889 (110,079)
Less: Depreciation and amortisation 470,690 362,215

Finance cost 13 476,422 407,525
Finance income (3,414) (7,945)
Loss before taxation (560,809) (871,875)
Income tax charge (credit) (56,795) (287,634)

Non controlling interest in profit of

consolidated subsidiary company 17,546 (17,501)
Loss per share Rs (0.79) Rs (1.44)
___________________ _______________

18
SATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Three months ended

2010 2009

Other comprehensive income - -

Total comprehensive income for the period (504,014) (584,240)

___________________ _______________

19
Three months ended

2010 2009
Cash flow from operating activities

Profit/(loss) before taxation (560,809) (871,875)

Adjustment of non cash items:
Depreciation & amortisation 470,690 362,215
Finance cost 476,422 407,525
Deferred income (110,754) -
(Profit)/loss on sale of operating assets - 19,179
Provision for doubtful debts - 4,925
Provision for employees’ accumulated absences 18,481 (19,459)
854,839 774,385
294,030 (97,490)
Changes in working capital:
(Increase) in trade debts (541,895) (2,590,752)
(Increase) in contract work in progress (34,594) (3,405)
(Increase) in stores and stocks (78,082) (316,579)
(Increase) in advances, deposits, prepayments
and other receivables (145,568) (1,330,374)
(Decrease)/ Increase in trade and other payable (1,176,594) 3,684,431
(1,976,733) (556,679)

Employees’ accumulated compensated absences paid (20,868) 23,977
Taxes paid (39,002) (14,083)
Cash flow from operating activities (1,742,573) (644,275)

Cash flow from investing activities
Tangible fixed assets additions (200,798) (787,663)
Capital work in progress additions (including finance cost) (384,636) (662,084)
Long term deposits (received/paid) 32,057 1,835
Dividend paid to non controlling interest by subsidiary company (149,940) -
Cash flow from investing activities (703,317) (1,447,912)


20
Three months ended

2010 2009
Cash flow from financing activities

Long term finance received 2,326,400 3,309,163
Long term finance repaid - (1,661,663)
Long term payable to supplier (repaid) - (1,015)
Short term borrowings (repaid) (1,680,165) -
Payable to supplier to be settled through
long term finance received/(repaid) (433,798) (309,866)
Obligations under finance leases (repaid) (333) 8,345
Long term deposits received 7,379 -
Finance cost paid (685,384) (375,151)
Cash flow from financing activities (465,901) 969,813
(Decrease) in cash and cash equivalents (2,911,791) (1,122,374)

Cash and cash equivalents at beginning of the period (909,455) (2,261,348)
Cash and cash equivalents at end of the period (3,821,246) (3,383,722)
Cash and cash equivalents comprise:

Cash and bank balances 244,877 482,292
Short term running finance (4,066,123) (3,866,014)
(3,821,246) (3,383,722)
___________________ _______________

21
STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)
Share General Unappropriated

capital reserve profit/(loss) Total
Balance at July 1, 2009 2,087,373 392,908 2,107,630 4,587,911

- - (601,741) (601,741)
Balance at September 30, 2009 2,087,373 392,908 1,505,889 3,986,170
Issue of 208,737,310 bonus shares 2,087,373 (258,227) (1,829,146) -

Issue of 200,000,000 shares for cash 2,000,000 - - 2,000,000
on April 20, 2010
Shares issue cost (net of tax benefit) - - (79,247) (79,247)

Loss for the period - - (1,391,619) (1,391,619)
- - (1,391,619) (1,391,619)
Balance at June 30, 2010 6,174,746 134,681 (1,794,123) 4,515,304

- - (486,468) (486,468)
Dividend paid to non controlling interest by
a subsidiary company - - (149,940) (149,940)
Balance at September 30, 2010 6,174,746 134,681 (2,430,531) 3,878,896
___________________ _______________

22
SELECTED NOTES TO AND FORMING PART OF THE CONDENSED
CONSOLIDATED INTERIM FINANCIAL INFORMATION (UNAUDITED)
1. Legal status and operations

The consolidated financial information include the financial information of Wateen Telecom Limited and its subsidiary
companies Wateen Solutions (Pvt) Limited (51% owned), Wateen Satellite Services (Pvt) Limited (100% owned)
and Netsonline Services (Pvt) Limited (100% owned). For the purpose of these financial information, Wateen and
consolidated subsidiaries are referred to as the Company.
2. Basis of preparation
These condensed interim financial information are unaudited and are being submitted to shareholders in accordance
with the requirement of Section 245 of the Companies Ordinance, 1984 and International Accounting Standard (IAS
34) ‘Interim Financial Reporting’. These condensed interim financial information do not include all the information
and disclosures required in the annual financial statements and should be read in conjunction with the published
financial statements of the Company for the year ended June 30, 2010.
3. Accounting policies
The accounting policies adopted in the preparation of this condensed interim financial information are the same as
those applied in preparation of audited annual published financial statements of the Company for the year ended
June 30, 2010.
4. Use of estimates and judgements
The preparation of these condensed interim financial information in conformity with approved accounting standards
requires management to make judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
Estimates and judgements made by the management in the preparation of this condensed financial information are
the same as those used in the preparation of the preceding annual published financial statements of the Company
for the year ending June 30, 2011.
5. Taxation
The provision for taxation for the three months ended September 30, 2010 has been provided on estimation basis.

2010 2010
6. Long term finance - secured

Syndicate of banks 6.1 4,766,000 4,766,000
Export Credit Guarantee Department - (ECGD) 6.2 2,467,479 2,450,304
Standard Chartered Bank 6.3 40,500 54,000
Dubai Islamic Bank 6.4 477,000 477,000
Motorola Credit Corporation (MCC) 6.5 4,998,613 4,963,819
Term finance facility 6.6 508,830 -
Total 13,258,422 12,711,123
Unamortized transaction and other ancillary cost
Opening balance 299,464 -
Additions during the period - 400,862
Amortisation for the period (22,301) (101,398)
(277,163) (299,464)
12,981,258 12,411,659
Amount due within next twelve months
shown as current liability (1,991,174) (1,991,174)
Amount Due after September 30, 2011 (10,481,255) (10,420,485)
508,830 -

23
6.1 The Company has obtained syndicate term finance facility from a syndicate of banks with Standard Chartered
Bank Limited (SCB), Habib Bank Limited (HBL), Bank Al-Habib Limited (BAHL) and National Bank of Pakistan
(NBP), being lead arrangers to finance the capital requirements of the Company amounting to Rs 5.0 billion, of
which Rs 4.8 billion has been availed till September 30, 2010. The tenor of the facility is 5 years commencing
from November 4, 2009. The principal is repayable in six unequal stepped -up- semi annual instalments.
The first such instalment shall be due on June 30, 2012 and subsequently every six months thereafter until
December 31, 2014. The rate of mark-up is 6 months KIBOR+2.75% per annum for 1-2 years and KIBOR +
2.5% per annum for next 3-5 years.
The facility is secured by way of hypothecation over all present and future moveable assets (including all current
assets) and present and future current/fixed assets (excluding assets under specific charge of CM Pak, CISCO,
Motorola, DIB, World call and USF), a mortgage by deposit of title deeds in respect of immoveable properties
of the company, lien over collection accounts and Debt Service Reserve Account, a corporate guarantee from
Warid Telecom International LLC.
6.2 The Company has obtained long term finance facility amounting to USD 42 million from Export Credit Guarantee
Department (ECGD) UK, of which US$ 35 million has been availed till September 30, 2010. The loan is repayable
in 14 semi annual installments of USD 3,025 thousand each starting from October 14, 2009. The rate of mark-up
is LIBOR + 1.5% per annum. Additional mark-up at 2% per annum will be payable on default payment from the
due date for payment upto the date of payment. If the finance charge is not paid then additional interest rate
will be payable at 1.5% per annum above CIRR rate applicable to the period during which the finance charge
remained unpaid or at 5% per annum whichever is higher. The loan is secured by personal guarantees by three
Sponsors of the Company.
6.3 The Company has obtained an aggregate medium term finance facility of USD 3 million from Standard
Chartered bank. The principal is repayable in 8 equal semi annual installments commencing from October
1, 2007. The rate of interest is six month average KIBOR + 1.25%.The loan is secured by first pari passu
hypothecation charge over the specific assets of the Company amounting to Rs 275 million.

6.4 The Company has obtained Ijarah finance facility of Rs 530 million from Dubai Islamic Bank (DIB). The principal
is repayable in 10 semi annual installments of 53 million each commencing from February 1, 2010. The rate of
mark up is 6 month KIBOR plus 1.5% per annum. Additional interest is payable on default payment at KIBOR +
4% per annum from the due date for payment upto the date of payment. The loan is secured by specific fixed
assets (DWDM equipment, eltek cabinets and batteries).
6.5 The Company has obtained term finance facility of USD 65 million from MCC of which USD 64 million has
been availed till September 30, 2010. The principal amount of outstanding facility is repayable in 12 unequal
semi annual installments commencing from June 30, 2009 until and including the final maturity date which is
December 31, 2014. The rate of mark-up is six month LIBOR + 1.7% per annum. Additional interest is payable
on default payment at six month LIBOR + 2% per annum from the due date for payment upto the date of
payment. The loan is secured through hypothecation charge over specific assets of the Company supplied
under supply & services agreements with Motorola.
Repayment of principal and interest payments thereon (except for margin of 1.7% per annum) amounting
to US$ 25.5 million at September 30, 2010 are hedged through cross currency swap contract with SCB. In
consideration, the Company pays the difference between interest based on LIBOR and KIBOR + 2.2% per
annum to the bank. The fair value of the contract at June 30, 2010 was Rs 4.656 million in favour of the bank, as
determined by an independent valuer using the ‘Forward Model’, which has been recognised as a liability.
The interest payments (except for margin of 1.7% per annum) upon principal amounting to US$ 58.5 million at
September 30, 2010 are hedged through interest rate swap contract with SCB. In consideration, the company
pays 3.05% on the notional amount. The fair value of the contract at June 30, 2010 was Rs 134.397 million
in favour of the bank, as determined by an independent valuer using the ‘Forward Model’, which has been
recognised as a liability.

24
6.6 During the period the Company has obtained long term finance facility from Standard Chartered bank amounting
to Rs 291 million against letter of credit facilities availed till June 30, 2010.The loan is repayable in June 30, 2013.
The loan is secured by ranking charge over current and fixed assets amounting to Rs 1,000 million.
During the period the Company has obtained long term finance facility from Standard Chartered bank amounting
to Rs 217 million against Cross currency and Interest rate swap agreements till June 30, 2010.The loan is
repayable in June 30, 2013. The loan is secured by ranking charge over current and fixed assets amounting to
Rs 500 million.
6.7 The Company is required to make payments of long term loans on due dates and to maintain certain ratios
as specified in loan agreements. The Company was not able to make payment of MCC loan installment of Rs
428,000 thousand and interest of Rs 59,010 thousand due on June 30, 2010 and SCB loan installment of Rs
13,500 thousand and interest of Rs 3,775 thousand due on April 24, 2010. Further, certain ratios specified in the
loan agreements have not been maintained at June 30, 2010. As a consequence, the lenders shall be entitled to
declare all outstanding amount of the loans immediately due and payable. In terms of provisions of International
Accounting Standard on Presentation of financial statements (IAS 1), since the Company does not have an
unconditional right to defer settlement of liabilities for at least twelve months after the balance sheet date, all
liabilities under these loan agreements are required to be classified as current liabilities. Based on above, loan
instalments due as per loan agreements after September 30, 2011 amounting to Rs 10,481,255 thousand have
been shown as current liability.
The Company is in the process of rescheduling of existing facilities, which would facilitate the Company to great
extent in meeting its obligations/covenants under loan agreements. In addition, during the period Company has
received USD 14 million from sponsors through Standby Letter of Credit (SBLC) to discharge its liabilities when
due.
7. Long term finance from associated company - Unsecured

During the period the Company has obtained long term finance facility from associated Company Taavun (Pvt)
Limited amounting to Rs 600 million of which Rs 550 million was availed till September 30, 2010. The tenure of
the facility is two years. The rate of interest is six months KIBOR + 2.5% per annum.
8. Long term finance from Sponsors - Unsecured

During the period the Company has obtained loan from sponsors amounting to Rs 1.2 billion through Standby
letter of Credit (SBLC). The rate of interest is six months LIBOR + 2.5% per annum.
9. Payable to supplier to be settled through long term finance

During the period the Company has repaid entire facility (June 30, 2009 Rs: 434 million).

2010 2010
10. Contingencies and commitments

Claims against the Company not acknowledged as debt 264,038 264,038
Performance guarantees issued by banks in favour
of the Company 1,476,816 1,476,816
Outstanding commitments for capital expenditure 1,799,824 1,799,824
Acquisition of 49% shares in subsidiary
Wateen Solutions (Pvt) Limited 255,060 490,000

25

2010 2010
11. Operating assets

Opening net book value 17,053,114 14,062,017
Additions - owned 200,798 4,813,453
Disposals at net book value - (191,532)
Depreciation charge (464,009) (1,630,824)
Closing net book value 16,789,903 17,053,114
12. Capital work in progress

Leasehold improvements 25,243 23,334
Line and wire 1,502,019 1,319,762
Network equipment 2,740,939 2,540,469
4,268,201 3,883,565
13. This includes exchange loss amounting to Rs 57 million (September 2009: Rs Nil) .
Three months ended

2010 2009
14. Related party transactions

Associated Companies
Revenue from associated companies 479,594 592,789
Cost and expenses charged by associated companies 209,151 268,950
Payments made on behalf of associated companies 7,787 7,196
Contribution to Employees’ retirement funds 21,293 26,495
15. General
15.1 Date of authorisation

This condensed interim financial information has been authorised for circulation to the shareholders by the
Board Of Directors of the Company on 21st October, 2010.

___________________ _______________

26
NOTES

28

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QUARTER

Consolidated Financial Information

Mr. Khalid Mana Saeed Ahmed Al Otaiba Auditors

Mr. Bashir A. Tahir A.F. Ferguson & Co.

4th Floor New Auriga Complex,

THK Associates (Pvt.) Limited

QUARTERLY REPORT 2010 wateen telecom ltd

wateen telecom ltd QUARTERLY REPORT 2010

Share capital and reserves

Issued, subscribed and paid-up capital 6,174,746 6,174,746

QUARTERLY REPORT 2010 wateen telecom ltd

Long term deposits and prepayments

wateen telecom ltd QUARTERLY REPORT 2010

Three months ended

Revenue 1,825,527 2,370,026

Cost of sales (excluding depreciation and amortisation) 1,230,518 2,049,791

Less: Depreciation and amortisation 469,116 361,893

Income tax charge (credit) (56,339) (290,185)

Loss per share Rs (0.51) Rs (1.49)

QUARTERLY REPORT 2010 wateen telecom ltd

Three months ended

Loss for the period (317,270) (619,956)

wateen telecom ltd QUARTERLY REPORT 2010

Three months ended

Cash flow from operating activities

Adjustment of non cash items:

Cash flow from investing activities

QUARTERLY REPORT 2010 wateen telecom ltd

Three months ended

Cash flow from financing activities

(Decrease) in cash and cash equivalents (2,907,677) (1,128,245)

Cash and cash equivalents comprise:

wateen telecom ltd QUARTERLY REPORT 2010

Share General Unappropriated

Balance at July 1, 2009 2,087,373 392,908 1,829,146 4,309,427

QUARTERLY REPORT 2010 wateen telecom ltd

1. Legal status and operations

wateen telecom ltd QUARTERLY REPORT 2010

QUARTERLY REPORT 2010 wateen telecom ltd

7. Long term finance from associated company - Unsecured

8. Long term finance from Sponsors - Unsecured

9. Payable to supplier to be settled through long term finance

10. Contingencies and commitments

wateen telecom ltd QUARTERLY REPORT 2010

September 30, June 30,

11. Operating assets

Closing net book value 16,783,292 17,045,929

12. Capital work in progress

Three months ended

14. Related party transactions

QUARTERLY REPORT 2010 wateen telecom ltd

wateen telecom ltd QUARTERLY REPORT 2010

Share capital and reserves

Issued, subscribed and paid-up capital 6,174,746 6,174,746

QUARTERLY REPORT 2010 wateen telecom ltd

Long term deposits and prepayments

wateen telecom ltd QUARTERLY REPORT 2010

Three months ended

Revenue 1,930,966 2,498,429

Cost of sales (excluding depreciation and amortisation) 1,332,459 2,148,465

Less: Depreciation and amortisation 470,690 362,215

Income tax charge (credit) (56,795) (287,634)