Financial Results 2018 0
consolidation scope – general information The consolidated financial statements include the accounts of Sonatel and all its directly or indirectly controlled subsidiaries (see page 36). Subsidiaries are incorporated using the full consolidation method or the equity method of consolidation. Orange Sierra Leone owned at 50% is consolidated using the full consolidation method in accordance with the shareholders’ agreement. Orange Services Group “OSG” owned at 47% by Sonatel and its subsidiaries is accounted for in the consolidation scope using the equity method of consolidation as of June 2018. Transactions, balances and reciprocal incomes between integrated companies are eliminated. The consolidated financial statements are presented in XOF. Assets, liabilities and income statements of subsidiaries out of XOF zone are converted at the exchange rate prevailing at the closing period. The Group’s consolidated financial statements are prepared in accordance with the West African System of Accounting (SYSCOA), with a revised version effective since January 1, 2018 (SYSCOHADA). Sonatel 1 2018 Financial Results
warning This presentation contains information which may be deemed as forecasted information. Though the Company considers the statements and information rely on reasonable assumptions on the publication date of the present release, they are by nature subject to risks and uncertainties, which may give rise to a difference between the actual figures and those reported or induced in these statements or information. Sonatel cannot guarantee, or be held liable for the accuracy, thoroughness, coherence and effectiveness of any of the statements or information presented in this release. Sonatel 2 2018 Financial Results
contents Highlights Operational results Financial results Perspectives Appendices Sonatel 3 2018 Financial Results
Highlights Key messages Key financial figures Key operational figures #1 Environment and business Network coverage Highlights per country Contribution to the economy Corporate Social Responsibility Commercial ads Sonatel 2018 Financial results
Key messages 5 Continuing transformation of the business model, oriented Net income data centric and Strong commercial preserved thanks to on mobile the growth relays positions preserved financial services despite an increase despite a slight decline in in amortizations subscribers’ base growth due to recruitment based on value-oriented A continuously Continued growth in 3 mutating environment subscribers in Mali turnover and maintained with structuring EBITDA growth in evolutions in the absolute value telecom sector 1 across all perimeters 4 2 5 Sonatel : 2018 Financial Results
Key financial figures 1 022 462,6 194,2 268,4 202,3 Billion XOF Billion XOF Billion XOF Billion XOF Billion XOF +5% stable -0.2% +2.2% +5.7% EBITDA Net income Turnover Free cash flow CAPEX A 9.8 billion XOF A 0.1 billion XOF 0.7 billion XOF decrease The bar for the 1 000 billion increase in terms of 10.6 billion XOF increase in absolute in free cash flow (-0.3%) XOF turnover reached with absolute value but a value. increase in investments due to a higher growth of a 5% evolution supported slight decrease in (in absolute value). the investments Stabilization of net by data and Orange Money EBITDA growth compared to EBITDA The CAPEX/Turnover income following the compared to 2017 (2.2% (5.7% vs 2.2%) ratio remains stable at 6.3% decrease vs 2.8%). 19%. recorded in 2017. 1.2 basis points decrease of the EBITDA rate at 45.3%. 6 Sonatel : 2018 Financial Results
Key operational figures 29.7 29.1 219.1 10.8 5.6 Million Million thousand Million Million -1.7% -2% +17.5% +34% +26.1% FMI subscribers Mobile Internet Data Orange Money (Fixed lines + Mobile + subscribers subscribers subscribers subscribers Internet) (voix, sms et SVA) (ADSL + Fibre + Flybox (Internet Mobile) +Wimax) Evolution of the FMI base 2% drop in the mobile Strengthening Continuously growing subscribers’ mostly impacted by the base Growth by +34% contribution from data activity (+1.2 Million active slowdown in recruitments compared to 2017 due to a compared to 2017 thanks to a competitive subscribers, +36.1% in Mali following the end of decrease in customer base largely drawn by the advantage on increase in turnover bonuses at activation and in Mali with their new convergence and the connectivity notably with compared to 2017) and a refocus for base recruitment approach attractiveness of offers the 4G in Senegal, Mali improvement in management around value centered around value. around ADSL, the flybox and Bissau. profitability. and fiber. Excluding Mali, the mobile subscribers’ base increased by +8.9%. 7 Sonatel : 2018 Financial Results
Environment & Context Competition Country Regulations • 4G frequency allocation in Sierra Leone • • Finalization of TIGO Senegal takeover, acquisition of 4G Security context still tense in the North of Mali, re-election of • Retroactive decrease in tariffs for national interconnection in frequencies the outgoing president, establishment of a new government Senegal with a return to symmetry (9F/11F to 6F/6F per • • Strong commercial positions maintained (volume and value) Political stalemate in Bissau, governmental instability minute) • • Start of activities for the 3rd operator (QCELL) in Sierra Political tensions and crisis in many social sectors in Guinea • New interconnection tariff signed by the regulator in Mali: 11 • Leone Democratic transition in Sierra Leone, establishment of a XOF/Min in 2018 and 2 XOF/Text • Start of activities for the 3rd operator (TELECEL) in Mali new administration • Sustainable development funds (0.5% of turnover) applicable • • 4G launch by the competitors in Mali and Sierra Leone Significant increase in OTTs and the SIMBOX fraud since mid-February 2018 in Mali • Termination of activities of INTERCEL in Guinea • Launch by the regulator in Senegal of the unbundling of the • Leadership conquest and confirmation of Orange in the area local loop for other operators and ISPs to take advantage of of domestic transfer (Senegal) Sonatel’s wired network. • LTE/TDD frequency allocation (Senegal) • Ongoing discussions in Guinea on 4G frequencies Revenues and charges • Establishment of the CST tax in replacement of the Offers CODETTE and PST taxes with an 1% increase in taxation (goes from 4% to 5% of turnover excluding interconnection • Revenues maintained fees – Senegal) • 4G+ launch in Senegal and Mali • Significant growth in turnover drawn by the strengthening of • Launch of Orange Energy (Mali, Guinea and Senegal) the contribution from mobile data and Orange Money • Launch of the optical fiber in Mali • Regulatory and accounting impacts • Launch of LTE/TDD in Mali • Savings on direct costs (international outgoing, distributor • Accompaniment in the digital emergence in Senegal, commissions, terminals) thus allowing to maintain a deployment of Act II of the Internet revolution (engagement sustained level in the EBITDA margin generated taken in 2017 for the decrease in mobile internet by 50% by • Proper management of direct costs, significant fiscal impacts CAPEX and financing 2019 was realized in 2018) on the evolution of indirect costs • Launch of international Orange Money transfer from France to Guinea • Increase in investments within the Group • Development of data usage and voice bundles • Ongoing disbursement for license acquisitions (Sierra Leone, Economy Mali, Senegal) • Sustained debt level (Senegal and Mali) related to external Customer experience treasury factors (short and medium term credit) • Increased fiscal pressure all in the countries of presence • Establishment of medium term financing for a coverage of • Favorable economic climate in Senegal and Mali treasury needs accentuated by exceptional disbursements • Confirmation for the COPC certification in Senegal • Economic gloom in Bissau (licenses, frequencies, CAPEX) • NPS leadership in Senegal and improving • Foreign exchange challenges with the Leone and the • 4G coverage in all the regional capitals in Senegal Guinean franc • Contract with the new MSP Huawei, improvement of the 8 NUR indicator (Mali) Sonatel : 2018 Financial Results
Network coverage SIERRA SENEGAL MALI GUINEA BISSAU LEONE Mobile penetration 105% 106% 101% 79% 54% 2G Population coverage (%) 97.9% 94% 95% 90% 83.8% 3G Population coverage (%) 92.2% 66% 56% 69% 41% 4G Population coverage (%) 62.0% 31% 34% N/A N/A 3G Active subscribers (in million) 3.6 3.9 1.3 0.2 0.8 4G Active subscribers (in thousand) 708 229 27 N/A N/A Data penetration 40.7% 37.0% 18.4% 19.0% 41.0% 4G penetration rate 19.7% 5.7% 3.9% N/A N/A Fiber (equipped households) 79 426 3 274 N/A N/A N/A 9 Sonatel : 2018 Financial Results
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