H1 2018 CONSOLIDATED RESULTS

Highlights

  • Acceleration of growth of the Group customer base (nearly 10.0%), exceeding 60 million customers;
  • Sustained growth in consolidated results: revenues and Group share of net income increased by 5.0% and 8.6% respectively over the first six months of the year;
  • In Morocco, sustained growth in the Fixed-line and Mobile businesses, with revenues up 5.0% in the second quarter;
  • Further revenue growth for Mobile in Morocco thanks to the popularity of Mobile Internet;
  • Continued strong growth of the Sub-Saharan subsidiaries, which sales increased by 7.4% in the first half of 2018.

         

Improved outlook for 2018, at constant scope and exchange rates:

  • Increase in revenues;
  • Increase in EBITDA;
  • Maximum CAPEX of 20% of revenues, excluding frequencies and licenses.

To mark the publication of this press release, Abdeslam Ahizoune, Chairman of the Management Board, made the following comments:



"Maroc Telecom confirms the return of the growth of its activities in Morocco. This positive trend can be attributed to its investment policy and its efforts to differentiate itself through the excellence of its networks and services. Combined with the sustained growth of its subsidiaries, it gives the Group faith to achieve its objectives for the year and enables it to raise its outlook accordingly."


group adjusted* consolidated results

IFRS in MAD million H1-2017 H1-2018 Change Change
at constant exchange rates(1)
Revenues 17,091 17,939

 
+5.0%

 
+3.3%

 
EBITDA 8,521 8,860

 
+4.0%

 
+2.7%

 
 Margin (%) 49.9% 49.4%

 
-0.5 pt

 
-0.3 pt

 
Adjusted EBITA 5,287 5,540

 
+4.8%

 
+3.7%

 
 Margin (%) 30.9% 30.9% +0.0 pt +0.1 pt
Group share of adjusted net income 2,923 2,991

 
+2.3%

 
+1.6%

 
Margin (%) 17.1% 16.7% -0.4 pt -0.3 pt
Group share of published net income 2,762 3,001 8.6% 7.8%
CAPEX(2) 3,021 3,599

 
+19.1%

 
+16.2%
 Of which frequencies and  licenses   480    
 CAPEX/revenues (excluding frequencies and licenses)

 

 
17.7% 17.4% -0.3 pt -0.4 pt
Adjusted CFFO 4,526 4,230

 
-6.5%

 
-6.9%
Net debt 16,959 17,129 +1.0% -0.4%
 Net debt/EBITDA 1.0x 1.0x    

* Details of the financial indicator adjustments are provided in Appendix 1.

  •    Customer base

At June 30, 2018, the Group's customer base stood at more than 60 million customers, up 9.7% year-on-year, driven by sustained growth in both the subsidiaries' customer base (+13.6%) and the Mobile and Fixed high speed customer base in Morocco .

  •  Revenues

Maroc Telecom Group's consolidated revenues(3) at June 30, 2018 amounted to MAD  17,939  million, up 5.0% (+3.3% at constant exchange rates) compared to the first half of 2017. This performance was driven by sustained revenue growth from operations in Morocco, combined with the growth of international subsidiaries.

  •  Earnings from operations before depreciation and amortization

Maroc Telecom's earnings from operations before depreciation and amortization (EBITDA) for the first six months of 2018 amounted to MAD 8,860 million, up 4.0% (+2.7% at constant exchange rates), due to EBITDA growth in both Morocco and the subsidiaries. The EBITDA margin remained high at 49.4%.

  • Earnings from operations

At the end of June 2018, Maroc Telecom's adjusted consolidated earnings from operations (EBITA)(4) amounted to MAD 5,540 million, up 4.8% (+3.7% at constant exchange rates) under the combined effect of the 4.0% increase in EBITDA and limited increase of depreciation and amortization expense. The operating margin was 30.9%, up 0.1 pt (at constant exchange rates).

  • Group share of net income

In the first half of 2018, the Group share of adjusted net income increased by 2.3% (+1.6% at constant exchange rates) compared to the first half of the previous year, mainly due to the strong increase in net income from operations in Morocco.

The Group share of published net income increased sharply by 8.6% at current exchange rates thanks to the growth of activities and restructuring charges recorded in the first half of 2017.

  •    Cash flow

Adjusted cash flow from operations (CFFO)(5) amounted to MAD 4,230 million, down 6.5% with investments (excluding frequencies and licenses) 3.2% up during the period, representing 17.4% of Group revenues.

At the end of June 2018, Maroc Telecom's consolidated net debt(6) amounted to MAD 17 billion, up only 1% over the year. The cash generation coming from the Group's activities enables the payment of MAD 6 billion of dividends to all Maroc Telecom group shareholders.

  •  Exceptional highlights

On April 17, 2018, Maroc Telecom acquired 10% of Onatel's share capital on the Abidjan Regional Stock Exchange for MAD 469 million, bringing its stake in the capital of its subsidiary in Burkina Faso to 61%.

In June 2018, Maroc Telecom's subsidiary in Togo obtained a 2G/3G/4G Mobile license valid until the 31st of December 2036, for MAD 480 million, to be paid in three annual installments starting in July 2018.

  •    Improved outlook for 2018, at constant scope and exchange rates

On the basis of the recent changes in the market, to the extent that no new major exceptional event impacts the Group's business, Maroc Telecom raised its outlook for 2018, at constant scope and exchange rates:

  • Increase in revenues.
  • Increase in EBITDA.
  • Maximum CAPEX of 20% of revenues, excluding frequencies and licenses.

review of the group's activities

Details of the financial indicator adjustments for "Morocco" and "International" are provided in Appendix 1.

  • Morocco
IFRS in MAD million H1-2017 H1-2018 Change
Revenues 10,076 10,562

 
+4.8%

 
Mobile 6,552 6,784

 
+3.5%

 
 Services 6,435 6,645

 
+3.3%

 
 Equipment 117 138

 
+18.2%

 
Fixed-Line 4,451 4,665

 
+4.8%

 
 Of which Fixed-Line Data* 1,322 1,472 +11.4%
Eliminations and other income -927 -887  
EBITDA 5,355 5,542

 
+3.5%

 
 Margin (%) 53.1% 52.5%

 
-0.7 pt

 
Adjusted EBITA 3,493 3,679

 
+5.4%

 
 Margin (%) 34.7% 34.8% +0.2 pt
CAPEX 1,793 1,376 -23.3%
Of which frequencies and licenses

 
     
 CAPEX/revenues (excluding frequencies and licenses) 17.8% 13.0% -4.8 pt
Adjusted CFFO 3,092 3,186 +3.0%
Net Debt 14,493 14,119 -2.6%
 Net debt/EBITDA 1.4x 1.3x  

        *Fixed-line data includes Internet, ADSL TV and Data services to businesses

The sustained growth in revenues from the activities in Morocco continued with a 4.8% increase in the first half of 2018, to MAD 10,562 million. This growth was driven both by Mobile revenues (+3.5%) and Fixed-line revenues (+4.8%), which continued to benefit from the surge in Data.

Earnings from operations before depreciation and amortization (EBITDA) for the first half of 2018 amounted to MAD 5,542 million. It was up 3.5% compared to the same period of the previous year and enabled the EBITDA margin rate to remain high at 52.5%.

Adjusted earnings from operations (EBITA) amounted to MAD 3,679 million, up 5.4% in one year, thanks to the increase in EBITDA and a virtually stable amortization charge. The adjusted EBITA margin remained high at 34.8%.

In the first six months of 2018, adjusted cash flow from operations (CFFO) in Morocco amounted to MAD 3,186 million, up 3.0%, the decrease in CAPEX offsetting the seasonality of Working Capital Requirements (WCR).


Mobile

 

 
Unit H1-2017 H1-2018 Change
Mobile        
Customer base(7) (000) 18,411 18,935 +2.8%
 Prepaid (000) 16,635 17,090 +2.7%
 Postpaid (000) 1,776 1,845 +3.9%
 Of which 3G/4G+ Internet(8) (000) 8,372 10,084 +20.5%
ARPU(9) (MAD/month) 56.9 57.5 +0.9%

At June 30, 2018, the Mobile customer base(7) reached 18.9 million customers, up 2.8% in one year, driven by the increase in the number of postpaid (+2.7%) and prepaid (+3.9%) customers.

With the reduced impact of the liberalization of VoIP telephony in November 2016 and the strong growth of Mobile Internet, Mobile revenues grew for the second quarter in a row and increased by 3.5% over the first half to reach MAD 6,784 million.

Mixed ARPU(9) amounted to MAD 57.5 for the first six months of 2018, up 0.9% compared to the same period in 2017, thanks to the strong increase in Data usage.

Fixed-Line and Internet

 

 
Unit H1-2017 H1-2018 Change
Fixed-Line        
Fixed lines (000) 1,678 1,787 +6.5%
Broadband access(10) (000) 1,306 1,439 +10.2%

The Fixed-line customer base improved by 6.5% year-on-year to 1.8 million lines and the ADSL customer base grew by 10.2% in one year to nearly 1.4 million subscriptions.

Fixed-line and Internet revenues increased by 4.8%, with 11.4% growth in Data revenues more than offsetting the decline in Voice revenues.

  • International

Financial indicators

IFRS in MAD million H1-2017 H1-2018 Change Change
at constant exchange rates
Revenues 7,582 8,146 +7.4% +3.7%
 Of which Mobile Services 6,878 7,443 +8.2% +4.4%
EBITDA 3,166 3,318 +4.8% +1.5%
 Margin (%) 41.8% 40.7% -1.0 pt -0.9 pt
Adjusted EBITA 1,794 1,861 +3.7% +0.6%
 Margin (%) 23.7% 22.8% -0.8 pt -0.7 pt
CAPEX 1,228 2,223 +81.0% +73.8%
 Of which frequencies and licenses   480    
 CAPEX/revenues (excluding frequencies and licenses) 16.2% 21.4% +5.2 pt +5.1 pt
Adjusted CFFO 1,435 1,044 -27.2% -28.4%
Net Debt 6,164 6,583 +6.8% +3.0%
 Net debt/EBITDA 1.0x 1.0 x    

At the end of June 2018, the Group's international operations generated revenues of MAD 8,146 million, up 7.4% (+3.7% at constant exchange rates). This increase was driven by the sustained revenue growth of the new subsidiaries, particularly in Ivory Coast, Benin and Togo, the return to growth of activities in Mali, and the increase in Data and Mobile Money usage.

During the first half of 2018, earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 3,318 million, up 4.8% (+1.5% at constant exchange rates). The EBITDA margin amounted to 40.7%, down 0.9 pt at constant exchange rates due to the increase in the weight of regulatory taxes and fees, notably with the introduction of new taxes in Mali and Gabon.

During the same period, adjusted earnings from operations (EBITA) were MAD 1,861 million, up 3.7% (+0.6% at constant exchange rates) mainly due to the 4.8% increase in EBITDA. The adjusted operating margin declined by 0.7 pts (at constant exchange rates) to 22.8%.

The adjusted cash flow from operations (CFFO) from international operations was down 27.2% to MAD 1,044 million, due primarily to increased investment which supports the development of 3G and 4G technologies in the countries where licenses were obtained. 


Operating indicators

  Unit H1 2017 H1 2018 Change
Mobile        
 Customer base(7) (000) 33,254 37,818  
 Mauritania   2,047 2,160 +5.6%
 Burkina Faso   7,056 7,526 +6.7%
 Gabon   1,721 1,648 -4.3%
 Mali   6,898 8,360 +21.2%
 Ivory Coast   7,100 8,167 +15.0%
 Benin   3,880 4,385 +13.0%
 Togo   2,634 3,151 +19.6%
 Niger   1,780 2,273 +27.7%
 Central African Republic   137 147 +7.1%
Fixed-Line        
Customer base (000) 296 310  
 Mauritania   49 53 +8.0%
 Burkina Faso   76 77 +1.4%
 Gabon   20 22 +9.3%
 Mali   151 159 +4.9%
Fixed-line broadband        
Customer base(10) (000) 102 111  
 Mauritania   12 13 +13.5%
 Burkina Faso   13 14 +9.6%
 Gabon   14 17 +16.3%
 Mali   63 66 +6.2%


Notes:

(1) At a constant exchange rate for the MAD, Ouguiya and CFA franc.
(2) CAPEX corresponds to the acquisitions of property, plant and equipment and intangible assets recognized over the period.
(3) Maroc Telecom consolidates the following companies in its financial statements: Mauritel, Onatel, Gabon Telecom, Sotelma and Casanet, as well as the new African subsidiaries (in the Ivory Coast, Benin, Togo, Niger, and the Central African Republic) and Prestige Telecom, which has provided IT services to those companies since their acquisition on January 26, 2015.
(4) EBITA corresponds to EBIT before the amortization of intangible assets acquired through business combinations, the impairment of goodwill and other intangible assets acquired through business combinations, and before other income and expenses relating to financial investment transactions and transactions with shareholders (except when recognized directly in equity).
(5) CFFO includes net cash flow from operations before tax, as set out in the cash flow statement, as well as the dividends received from affiliates and non-consolidated equity investments. CFFO also includes net capital expenditure, which corresponds to net uses of cash for acquisitions and disposals of property, plant, equipment, and intangible assets.
(6) Loans and other current and non-current liabilities less cash and cash equivalents, including cash held in escrow for bank loans.
(7) The active customer base consists of prepaid customers who have made or received a voice call (excluding ERPT or Call-Center calls) or received an SMS/MMS, or used Data services (excluding exchanges of technical data with the ERPT network in question) during the past three months, and postpaid customers who have not terminated their subscription agreements.
(8) The active customer base for 3G and 4G+ Mobile Internet includes holders of a postpaid subscription agreement (with or without a voice offer) and holders of a prepaid Internet subscription agreement, who have purchased at least one top-up during the past three months, or whose top-up is still valid, and who have used the service during that period.
(9) ARPU is defined as revenues (generated by inbound and outbound calls and by data services) net of promotional offers, excluding roaming and equipment sales, divided by the average customer base for the period. In this instance, blended ARPU covers both the prepaid and postpaid segments.
(10) The broadband customer base includes ADSL access and leased lines in Morocco, as well as the ADMA customer base in Mauritania, Burkina Faso and Mali.

Important notice:
Forward-looking statements. This press release contains forward-looking statements regarding Maroc Telecom's financial position, income from operations, strategy, and outlook, as well as the impact of certain transactions. Although Maroc Telecom believes that these forward-looking statements are based on reasonable assumptions, they do not amount to guarantees for the company's future performance. The actual results may be very different from the forward-looking statements, due to a number of risks and uncertainties, both known and unknown. The majority of these risks are beyond our control, namely the risks described in the public documents filed by Maroc Telecom with the Moroccan Capital Markets Authority (www.ammc.ma) and the French Financial Markets Authority (www.amf-france.org), which are also available in French on our website (www.iam.ma). This press release contains forward-looking information that can only be assessed at its publication date. Maroc Telecom is not making any commitments to supplement, update, or alter these forward-looking statements as a result of new information, future events, or for any other reason, subject to the applicable regulations, and especially to Articles III.2.31 et seq. of the circular issued by the Moroccan Capital Markets Authority and to Articles 223-1 et seq. of the French Financial Markets Authority's General Regulations.

Maroc Telecom is a full-service telecommunications operator in Morocco and the leader in all of its Fixed-Line, Mobile and Internet business sectors. It has expanded internationally, and currently operates in ten African countries. Maroc Telecom is listed on both the Casablanca and Paris Stock Exchanges, and its majority shareholders are Société de Participation dans les Télécommunications (SPT*) (53%), and the Kingdom of Morocco (30%).

*SPT is a company incorporated under Moroccan law and controlled by Etisalat.

Contacts
Investor Relations
relations.investisseurs@iam.ma

 

 

 

 
Press Relations
relations.presse@iam.ma

Appendix 1: Change from adjusted financial indicators to published financial indicators

The adjusted operating income, group share of adjusted net income and adjusted CFFO, all non-IFRS measures, should be considered as additional information. They better illustrate the performance of the Group by excluding exceptional items.

  H1 2017 H1 2018
(in MAD million) Morocco International Group Morocco International Group
Adjusted EBITA 3,493 1,794 5,287 3,679 1,861 5,540
Exceptional items:
Disposal of a real estate asset
           
Restructuring charge -188 -47 -235 -2 +11 +9
Published EBITA 3,305 1,747 5,052 3,677 1,872 5,549
Group share of adjusted net income     2,923     2,991
Exceptional items:
Disposal of a real estate asset
           
Restructuring charge     -161     +10
Group share of published net income     2,762     3,001
Adjusted CFFO 3,092 1,435 4,526 3,186 1,044 4,230
Exceptional items:
Disposal of a real estate asset
           
Restructuring charge -573 -7 -580 -2   -2
Licenses' payment   -438 -438   -274 -274
Published CFFO 2,519 989 3,508 3,185 769 3,954

The first half of 2018 was marked by the payment of MAD 274 million for licenses in Ivory Coast and Gabon.
As a reminder the financial statements for the first half of 2017 included MAD 580 million disbursed under voluntary redundancy plans finalized during the same period. The first half of the year also included the payment of MAD 410 million corresponding to the second tranche of the overall license obtained in Ivory Coast in March 2016 for an amount of MAD 1.6 billion, and the disbursement of MAD 28 million under the second and final tranche of the 3G license in Togo.
Consolidated Statement of Financial Position

ASSETS (in MAD million) 12.31.2017 06.30.2018  
 
Goodwill 8 695 8 615  
Other intangible assets 7 485 7 690  
Property, plant and equipment 32 090 31 963  
Non-current financial assets 335 334  
Deferred tax assets 273 275  
Non-current assets 48 879 48 877  
Inventories 296 286  
Trade receivables 11 325 11 690  
Short-term financial assets 119 117  
Cash and cash equivalents 2 010 1 678  
Assets available for sale 54 54  
Current assets 13 803 13 825  
TOTAL ASSETS 62 682 62 701  
       
SHAREHOLDERS' EQUITY AND LIABILITIES (in MAD million) 12.31.2017 06.30.2018  
 
Share capital 5 275 5 275  
Retained earnings 4 854 4 430  
Net earnings 5 706 3 001  
Shareholders' equity - Group share 15 835 12 705  
Non-controlling interests 3 916 3 444  
Shareholders' equity 19 750 16 149  
Non-current provisions 570 573  
Loans and other long-term financial liabilities 4 200 3 718  
Deferred tax liabilities 244 233  
Other non-current liabilities      
Non-current liabilities 5 014 4 524  
Trade payables 25 627 25 341  
Current tax liabilities 563 614  
Current provisions 838 934  
Loans and other short-term financial liabilities 10 890 15 139  
Current liabilities 37 918 42 028  
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 62 682 62 701  

Statement of comprehensive income

(In MAD million) 06/30/2017 06/30/2018  
Revenues 17 091 17 939  
Cost of purchases -2 803 -2 983  
Payroll costs -1 553 -1 579  
Taxes -1 373 -1 375  
Other operating income (expenses) -3 237 -2 977  
Net depreciation, amortization, and provisions -3 072 -3 475  
Operating income 5 052 5 549  
Other income and expenses from ordinary activities -23 -6  
Income from continuing operations 5 029 5 543  
 Income from cash and cash equivalents 3 1  
 Gross cost of financial debt -196 -231  
Net cost of financial debt -193 -230  
Other financial income and expense 31 20  
Financial income -162 -210  
Income tax -1 644 -1 856  
Net income 3 223 3 477  
Translation differences resulting from foreign business activities 250 -113  
Other income (expense)   -7  
Total comprehensive income for the period 3 473 3 358  
Net income 3 223 3 477  
Attributable to equity holders of the parent 2 762 3 001  
Non-controlling interests 461 476  
       
Earnings per share 06/30/2017 06/30/2018  
 
 Net income attributable to equity holders of the parent (in MAD million) 2 762 3 001  
 Number of shares on June 30 879 095 340 879 095 340  
 Earnings per share (in MAD) 3,14 3,41  
 Diluted earnings per share (in MAD) 3,14 3,41  


Consolidated cash flow statement

(In MAD million) 06.30.2017 06.30.2018  
 
Income from operations 5 052 5 549  
Depreciation, amortization, and other restatements 3 073 3 476  
Gross cash flows from operating activities 8 126 9 025  
Other changes in net working capital -583 -1 117  
Net cash flows from operating activities before tax 7 542 7 908  
Income tax paid -1 651 -1 571  
Net cash flows from operating activities (a) 5 891 6 338  
Purchase of property, plant and equipment and intangible assets -4 039 -3 960  
Increase in financial assets 48 -589  
Disposals of property, plant and equipment and intangible assets 1 1  
Decrease in financial assets 43 163  
Dividends received from non-consolidated equity investments 5 1  
Net cash flows used in investing activities (b) -3 942 -4 383  
Capital increase 0 0  
Dividends paid to shareholders -5 588 -5 534  
Dividends paid by subsidiaries to their non-controlling shareholders -442 -401  
Changes in equity capital (c) -6 030 -5 935  
Proceeds from loans and increase in other long-term financial liabilities 1 617 1 315  
Payments on loans and decrease in other non-current financial liabilities 0 0  
Change in short-term financial liabilities 2 728 2 571  
Net interest paid (cash only) -208 -269  
Other cash items relating to financing activities 18 -15  
Change in loans and other financial liabilities (d) 4 155 3 602  
       
Net cash flows used in financing activities (e) = (c) + (d) -1 875 -2 333  
       
Translation adjustments (f) -162 47  
       
Total cash flows (a)+(b)+(e)+(f) -87 -331  
       
Cash and cash equivalents at the beginning of the period 2 438 2 010  
Cash and cash equivalents at the end of the period 2 351 1 678