Maroc Telecom : PR-Q1 2019 Results_EN 22/04/2019

PRESS RELEASE

Rabat, April 22, 2019

CONSOLIDATED RESULTS FOR Q1 2019

Continued growth in results:

»Close to 62 million Group customers, up 4.8%;

»Consolidated revenues growth of 0.8% at constant exchange rates, thanks to the sustained dynamic momentum of Mobile Data;

»Increased profitability with an EBITDA margin of 50.6% (excluding the impact of IFRS 16), 0.7 pt up at constant exchange rates;

»Group share of adjusted net income up 0.5% at constant exchange rates;

»Strong growth in adjusted consolidated CFFO.

Maroc Telecom Group outlook for 2019 maintained at constant scope and exchange rates:

►Stable revenues;

►Stable EBITDA;

►CAPEX of approximately 15% 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:

«Driven by the expansion of Mobile Data in all of the markets in which it operates, the Maroc Telecom group ended the first quarter with results beyond the objectives.

This dynamic benefits also from the continuous efforts to optimize costs, allowing the Group to maintain a strong profitability despite the increase

in tax and sector-related pressure in some countries of our subsidiaries.

Based on these credits and its proven expertise in high-potential markets, Maroc Telecom is pursuing its investment policy to support government strategies to encourage digital technology and reduce the digital divide. »

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GROUP CONSOLIDATED ADJUSTED* RESULTS
						Change
	IFRS in MAD million	Q1-2018		Q1-2019	Change	at constant
						exchange rates(1)
	Revenues	8,994	8,948		-0.5%	+0.8%
	EBITDA	4,482	4,649		+3.7%	+4.8%
	Margin (%)	49.8%	52.0%		+2.1 pt	+2.0 pt
	Adjusted EBITA	2,862	2,904		+1.5%	+2.3%
	Margin (%)	31.8%	32.5%		+0.6 pt	+0.5 pt
	Adjusted Group share of net	1,582	1,583		+0.1%	+0.5%
	income
	Margin (%)	17.6%	17.7%		+0.1 pt	-0.1 pt
	CAPEX (2)	1,483	2,194		+48.0%	+51.9%
	o/w licenses & frequencies		1,334
	CAPEX/revenues (excluding	16.5%	9.6%		-6.9 pt	-6.8 pt
	frequencies & licenses)
	Adjusted CFFO	1,800	2,773		+54.0%	+55.6%

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

►Customer base

The Group's customer base reached nearly 62 million at the end of March 2019, up 4.8% year-on-year, driven by the 5.7% growth in the subsidiaries' Mobile customer base and the 5.1% growth in the Fixed-line (+5.1%) and Mobile (+2.8%) customer base in Morocco.

►Revenues

At March-end 2019, the Maroc Telecom group's consolidated revenues (3) amounted to MAD 8,948 million, slightly down by 0.5%. At constant exchange rates, the revenues were up 0.8% thanks to the sustained growth in Mobile Data in Morocco (+18.5%) and in subsidiaries (+23.9%) that more than offset the drop in incoming revenues.

►Earnings from operations before depreciation and amortization

In the first quarter of 2019, Maroc Telecom Group earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 4,649 million, up 3.7% (+4.8% at constant exchange rates). This change includes the impact of the application of IFRS16 (see Appendix 2). Excluding this impact, the Group would have posted a 1.3% EBITDA improvement (+2.3% at constant exchange rates).

The EBITDA margin rate reached the high level of 52.0%, up 2.1 pt (+2.0 pt at constant exchange rates), mainly due to the favorable impact of the decline in mobile termination rates in the subsidiaries and operating costs control. Excluding the IFRS16 impact, the EBITDA margin improved by 0.2 pt (+0.7 pt at constant exchange rates).

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►Earnings from operations

At the end of March 2019, Maroc Telecom Group's adjusted consolidated earnings from operations (4) (EBITA) amounted to MAD 2,904 million, up 1.5% from the previous year (+2.3% at constant exchange rates). The adjusted operating margin increased by 0.6 pt to reach a high level of 32.5%. Excluding the IFRS16 impact, adjusted EBITA increase by 1.0% (+1.8% at constant exchange rates).

►Group share of net income

Despite the tougher fiscal and regulatory environment in Morocco and in subsidiaries, the Group share of the adjusted net income rose by 0.5% at constant exchange rates, compared to the same period of the previous year.

The impact of IFRS 16 on the Group share of net income remains very limited (see Appendix 2).

►Investment

Consistent with the yearly forecast, the CAPEX excluding frequencies and licenses amounted to MAD 860 million at end of March 2019, down 42.0% (-40.9% at constant exchange rates). They represent 9.6% of revenues.

►Cash flow

The adjusted cash flow from operations (CFFO(5)) amounted to MAD 2,773 million, up 54.0% compared to the same period in 2018, due to the combined effect of the increase in EBITDA and the optimization of CAPEX that began in 2018.

►Highlights

In March 2019, Maroc Telecom's subsidiary in Burkina Faso has been granted a global Mobile license for MAD 1,334 million, paid in full in the first quarter of 2019.

On March 14, 2019, Maroc Telecom signed an agreement with Millicom to acquire all the shares of its subsidiary Tigo Tchad, the leading mobile operator in Chad. The closing of the transaction (and consequently its final approval) is subject to certain conditions, in particular the approval of the Chadian authorities.

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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	Q1-2018	Q1-2019	Change
Revenues	5,255	5,382	+2.4%
Mobile	3,364	3,472	+3.2%
Services	3,284	3,338	+1.6%
Equipment	80	134	+67.9%
Fixed-Line	2,322	2,356	+1.5%
Of which Fixed-Line Data*	728	773	+6.1%
Eliminations and other	-431	-446
income
EBITDA	2,771	3,028	+9.2%
Margin (%)	52.7%	56.3%	+3.5 pt
Adjusted EBITA	1,850	2,055	+11.1%
Margin (%)	35.2%	38.2%	+3.0 pt
CAPEX	591	351	-40.6%
o/w licenses & frequencies
CAPEX/revenues (excluding	11.2%	6.5%	-4.7 pt
frequencies & licenses)
Adjusted CFFO	1,139	1,773	+55.7%

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

Activities in Morocco continued to grow and posted a 2.4% increase in revenues to MAD 5,382 million, due to the combined increase in Mobile and Fixed-line revenues, which continue to benefit from the Data market fervor.

Earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 3,028 million, up sharply by 9.2% compared to the same period last year, due to the increase in revenues, decrease in operating costs and the impact of IFRS 16. The EBITDA margin increased by 3.5 pt to reach a high level of 56.3%. Excluding IFRS 16, EBITDA would have increased by 7.4%, and the margin rate by 2.5 pt.

Adjusted earnings from operations (EBITA) were MAD 2,055 million, up a solid 11.1% thanks to the increase in EBITDA. The EBITA margin increased by 3.0 pt year-on-year, to 38.2%. Excluding the impact of IFRS 16, EBITA increased by 10.6% with a corresponding EBITA margin of 38.0% (+2.8 pt vs. Q1 2018).

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As of March 31, 2019, adjusted cash flow from operations in Morocco improved by 55.7% to MAD 1,773 million, due to the optimization of CAPEX and good management of Working Capital Requirements (WCR).

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