Annual Investment Conference London March 2011

7/28/2019 Annual Investment Conference London March 2011

1/43

annual investors

London,

-

1


2/43

summary

1. general overview

2. economic environment and market overview

.

.

.

2


3/43

3


4/43

1993 1999 2004 February 2003 May 2007 November 2007

(Telecom Plus)

SonatelSonatel Sonatel Orange Orange Orange

4

100%

Multimedia

100%

Mobiles

Solutions

70%

Mali

90%

Bissau

90%

Guinea

100%


5/43

1.key considerations

an integrated, innovative operator, leading player in west African sub-

region

running fixed, mobile, Internet, TV and mobile payment activities

serving 11.2 million subscribers at the end of December 2010 stron mobile subscriber rowth of 27.4% in 2010 confirmed leadership in all its historical markets one of the highest profitability: Ebitda margin of 54% and net margin of 31% 42% owned by France Telecom (one of the largest worldwide operators) and backed up

listed on the Brvm in Cte dIvoire since 1998 and first value at Brvm stock exchange 70% pay-out ratio and a dividend yield of 10% for 2010

1st investor and biggest tax payer in Senegal and more than Fcfa.500 billion of Capex(over the past 5 years) in our markets (Senegal, Mali, Bissau and Guinea)

s rong grow prospec s

growth prospects thanks to new operations in Guinea and Guinea Bissau and otherregional players that could be added to Sonatels footprint

5


6/43

1.highlightsthe group continues to lead innovation in the subregion

Facebook version 0Pass Internet Everywhere

payment via the mobile phone prepaid Internetaccess to Facebook and Gmail via mobile phone

may june july august september october 2010

Adsl - prepaid

6

Iphone and 3G solutions promotions on

BTS area


7/43

1.development of data mobile and broadband offers

Internet broadband development (Wimax, Internet,prepaid, pack Internet: key + livebox)

top-of-the-range fixed and mobile handsets

(Iphone 4, Blackberry, Terminal plus)

Senegal: 3G in experimentation since 2008, fulllicense since march 2011 and since july 2010 in

7


8/43

1.commercial dynamism

promo flash: granted bonus

pack multimediareligious events Internet daynew offers

tombolasales promotion: new concepts

distribution: ganal, kirne mobile

offers: bonus zone, multiplay sa es: onus, om o a, sa es games, even s assoc a e games

sponsoring: wrestling matches associated to religious and cultural events

8


9/43

2 n mi nvir nm n nmarket overview

9


10/43

2.highlights

increased competition around abundance greater dynamism of the market with a penetration rate of 69% and astronger growth

Senegal 5 million Orange subscribers in spite of a market share decrease to 61% unfavourable tax and regulatory measures institution in june then suspension in november 2010 of the surtax on theentering international communications and the contract with Global Voice attribution of a license of infrastructure cables management in august 2010 increase in the Rutel tax from 2% to 5% in september 2010

Mali

maintaining leadership despite new competition maintaining 2 digit growth on turnover

improving the debt collection with competitors decline in domestic interconnection rates by 39%

improvement of debt collection with the competitor

10


11/43

2.highlights

normalization of the political climate

GuineaRepublic

macroeconomic environment remains difficult

improved market share (+4 points) 900 000 subscribers despite increasing competitive pressure

Bissau

consolidation of commercial dynamics driven in 2009 macroeconomic environment remains difficult improved operational performance

11


12/43

2.improved penetration rates and maintaining strong positions in allmarkets despite increased competitive pressure

Senegal Mali present in 18countries in AfricaGDP 5.1 %GDP 4%

inflation 2.1%

penetration 52%

position 1st/2

market share 69%

inflation 0.9%

penetration 69%

position 1st/3

market share 60%

Bissau Guinea

GDP 3%

inflation 15.4%GDP 3.5%

inflation 1.5%

position 2nd/6

market share 28%

position 2nd/3

market share 31%

activities

12

fixed line mobile internet TV adsl orange money


13/43

2.regulation

west african regulatory framework harmonization done in 5 countries: Burkina Faso, Sierra Leone,

Gambie, Cap Vert, Ghana and in progress in the other Ecowas members states

roadmap of telecom sector policy under study

numeric dividend: national committee be an worksho

new communication law adopted in Senegal in february 2011:

- setting up of an independent authority of regulation,

- separation of regulation and policy functions,- setting up of 2 decisional parties (collegiate management and general manager),

- , ,

- new regulatory issues: local loop unbundling, numbers portability,

- license for infrastructure.

13


14/43

2.wealth creation: major contributor to the economies of the countries

Sonatel group, a key driver of economic development incountries of presence:

contributes significantly to job creation: +100 000 jobs in the sub-region (card vendors, call boxes managers) with 3 000 + direct jobs contributes significantly to job creation: +100 000 jobs in the sub-region (card vendors, call boxes managers) with 3 000 + direct jobs

vvalue (Fcfaalue (Fcfa billion)billion)re a ve par n ere a ve par n e

countrycountry

contributioncontribution on countryon country127127 10.410.4%%

contributioncontribution on countryon countrybudgetarybudgetary revenuesrevenues

175175 13.813.8%%

exportsexports

9595 9.79.7%%

contribution on countrycontribution on countryGDPGDP 251251 4.04.0%%

model of the future headquarters of Sonatel

contribution on private &contribution on private &generalgeneral investmentsinvestments

6464 7.87.8%%

14

investmentsinvestments

6464 10.710.7%%


15/43

15


16/43

GuineaGuinea

3.market trends and specifications

Subsidiaries Fixed Mobile Multimedia Integration Orange Mali Orange Bissau Orange Guinea

num er ooperators

2 3 5 5 2 3 6

position 1 1 1 1 1 2 2

-

market share(subscribers)

98% 60% 95% - 69% 28% 31%

market trend (vs2009)

- strong development of multisim and abundance offers onmobile - strong

- normalization ofpolitical andeconomic

marketspecifications

- development of Internet broadband

- growth in fixed lines due to prepaid offers et development

of internet

competition

- new competitor

(Maroc Tlcom)

-the economic andsocial environment

- market share

environment

- depreciation of

the GNFtaken from leader

- strongcompetition

16


17/43

3.subscribers: 11.3 million including 2 million new customers in 2010

growth in subscribers on all segments: fixed lines, mobile and Internet development of broadband Internet via prepaid

number of

subscribers2008 2009 2010 09/08 10/09

240 358 258 233 282 722 7.4% 9.5%Fixed line

6 971 710 8 884 735 10 905 583 27.4% 22.7%Mobile

52 836 64 052 91 854 21.2% 43.4%Internet

7 264 904 9 207 020 11 280 159 26.7% 22.5%

17


18/43

3.mobile subscribers: +23%

strong growth in Mali, Guinea and Bissau thanks to commercial animation and

expansion of network coverage

mobile2008 2009 2010 09/08 10/09

subscribers

Senegal 3 536 672 4 607 891 5 089 540 30.3% 10.5%

Mali 2 757 094 3 474 952 4 716 819 26.0% 35.7%

Guinea 617 896 684 211 907 038 10.7% 32.6%

Bissau60 048 117 681 192 186 96.0% 63.3%

total 6 971 710 8 884 735 10 905 583 27.4% 22.7%

18


19/43

3.arpu erosion linked to the progression of subscribers, development ofthe abundance and impact of regulatory measures

decline in arpu due to the development of abundance and decline in interconnection ratesbut slowing in Senegal

improvement in arpu in Guinea result of the revaluation rates

arpu* 2008 2009 2010

09/08

10/09

fixed lines 174 193 179 10,4% -7,0%

mobile prepaid 14 10 9 -25.9% -15.6%

USD mobile postpaid 117 97 83 -17.5% -14.4%

Mali mobile prepaid 10 9 7 -14.8% -17.0%

USDmobile postpaid 162 168 170 3.3% 1.0%

Guinea mobile prepaid 5 5 6 1.4% 20.1%

USD

mobile postpaid 61 76 106 24.6% 39.8%

Bissaumobile prepaid 7 8 7 7.1% -8.9%

USD

19

*exchange rate at 31/12/2010 1 XOF = 12.16 GNF

*exchange rate at 31/12/2010 1 USD = 493.0503 XOF/**arpu on a monthly basis in USD


20/43

3.maintaining the dynamics of growth with strong financialperformance despite unfavourable tax and regulatory environment

millions XOF 2008 2009 2010 10/09

revenue 529 552 562 626 599 002 6.46%

Ebitda 299 063 316 108 324 242 2.57%

Ebitda margin 56.5% 56.2% 54.1%

operating profit 194 104 223 884 228 044 1.86%

o eratin mar in 36.7% 39.8% 38.1%

net profit 156 825 185 028 184 760 -0.14%

net mar in 29.6% 32.9% 30.8%

Capex 133 061 92 163 118 139 28.18%

Ca ex rate 25.1% 16.4% 19.7%

20


21/43

3.consolidated revenues:+6.5%

growth driven by mobile activity, international balances and Internet

decrease in domestic interconnection is related to the impact of rate reductions (34%)in Senegal and Mali

400 60.9%

61.8%

other

200

250

300

.

Internet, leased lines and data

50

100150 11.2%

6.4%

19.7%

4.2%0.8%

7.5% 6.2%

19.8%

4.8%0.9%6.3% 5%

.

5% 0.7% domestic interconnetion

international balance

0

.

mobile

-40% -30% -20% -10% 0% 10% 20% 30%

fixed lines

21

2008 2009 2010variation 10/09 variation 09/08


22/43

3.maintaining a high level of margins

maintainin a ood level of mar in des ite the sli ht decline

margins in 2010 impacted by the effect of the surcharge on inbound international, unfavourableregulatory and tax measures and exceptionals*

in % of revenue 2008 2009 2010

Ebitda margin 56.5% 56.2% 54.1%

operating margin 36.7% 39.8% 38.1%

. . .

* exceptional acceleration provisions in 2009 (Ebitda impact) and accelerated depreciation of certain assets following the inventory of

22


23/43

3.a level of sustained investment: 19.6% of sales

an ncrease carr e y e pro ec o ca es an e ex ens on o e mo e ne wor o mprovequality of service and the rural area coverage

millions XOF 2008 2009 2010 10/09

mobile networks 100 087 65 814 87 699 32.25%

% 74.8% 71.4% 74.1%

fixed lines/Internet network 18 177 15 799 20 081 27.1%

% 13.6% 17.1% 17.1%

information system 6 858 5 958 6 480 8.76%

. . .

logistics buildings and others 8 568 4 590 3 826 -16.65%

. . .

total capex 133 690 92 161 118 139 28.18%

23

. . .


24/43

3.a positive contribution of all entities

still predominant contribution of Senegal

improvement in the performance of both Guineas and strengthening of the weight of Mali

millions XOF enega a u nea ssau

revenue 64.6% 29.6% 4.8% 1.0%

Ebitda 61.0% 35.1% 3.4% 0.6%

operating profit 57.5% 39.7% 3.0% -0.3%

net profit 49.7% 47.8% 2.9% -0.4%

x . . . .

rowth in revenue* 3.0% 9.4% 36.8% 57.0%

24* contributive revenue


25/43

3.good cash generation and debt level of 9%

Free Cash Flow

166

221204

billions XOF

508557

591

40%

50%

600

700

billions XOF

33.6%

- .

9.16%

20%

30%

200

300

400

24.7%

2008 2009 2010

1351 54

2.56%

.

0%0

100

2008 2009 2010

264280 280 25300

Debtbillions XOF

20.3

15

20

150

200

250 a significant and sustained generation ofcash

13

51 54

. .

0

5

0

50

100

cash flow from operations more than 5 timesthe financial liability

25

2008 2009 2010

Cash flow Financial debt Debt coverage ratio


26/43

3.a stock price growth of 25%

154 000

160 000

monthly average stock price pic of the month

144 707

149 474151 118

140 000

150 000

140 000 140 000 140 000

145 000

150 000150 000

138 435

135 263136 386

134 636 133 859 134 800

139 639135 000

135 000 135 000

130 000

140 000

123 800

127 687120 000

125 000

120 000

110 000

100 000

26

3 di id d


27/43

3.dividend

exercices 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

share price on31/12

21 000 20 000 20 000 22 500 36 030 67 015 91 000 175 000 130 000 120 000 154 000

dividend

(millions de Fcfa)29 000 29 000 29 650 44 000 56 500 69 000 88 300 110 000 130 000 135 000 140 000

share2 610 2 610 2 668 3 960 5 085 6210 7 947 9 900 11 700 12 150 12 600

dividend 2% 0% 2% 48% 28% 22% 28% 25% 18% 3,85% 3,7%

dividend

yield12% 13% 13% 18% 14% 9% 9% 6% 9% 10% 8%

distribution rate

(%)61% 55% 57% 69% 66% 65% 68% 65% 73% 73% 74%

27

3 lth ti j t f th t l i ti t


28/43

3.wealth creation:major actor of the telecommunication sector

project to build new submarine cable ACE*

The submarine cable ACE (Africa Coast to Europe) will

of Africa to access the network high-speed world.

This new optic cable fiber, length 17 000 km in its currentconfiguration, will be put into service in the first half of 2012.It will serve 23 countries, either by direct access to countriesalong the coast or through a connected countryfor countries with no access to the sea.

The cable construction re resents an investment of aboutU.S. $ 690 million for the consortium, of which about 180

million U.S. dollars which should be supported by thevarious subsidiaries. For these major investments, FranceTelecom-Orange embodies two components of its strategy

broadband) in Africa where the group operates in fifteencountries and contribute to developing the quality of service.It provides connectivity to the foreground and opens a new

range of innovative services to promote economic and socialdevelopment of the continent.

28

*source: France Telecom


29/43

29

4 prospects


30/43

4.prospects

ur mar e s are s c arac er ze y ncrease compe on, eve opmen o

abundance and multisim. The group has maintained its strong position on all its markets and maintain itsmarket share value. On the new subsidiaries of Guineas, the commercial and financial performance have beengreatly improved.

Competition should remain strong but the group should maintain its strong position in its marketsby continuing its policy focused on:

providing a high quality technical service and commercial

development of innovative and appropriate offers to customer needs, easy to access and use improving customer relationship around the values of the Orange brand with the set up of our new CRM

than 2010. Tax and regulatory pressure is however an element of concern in our environment.

Our growth outlook is supported by:

development of broadband, mobile data and X play offers

development of value added services and contents

improving macroeconomic and institutional environments of our guinean subsidiaries and their commercialposition

development of the coverage of our networks to get the residual potential penetration in Mali, Guineaand Guinea Bissau

the continuation of our develo ment throu h external rowth

30

4 other issues/Brvm situation


31/43

4.other issues/Brvm situation

the subregion

transfer of offices and staffs of the Brvm and DC/BR in Bamako Mali due tothe situation in Ivory Cost

trading on the Brvm was closed on february 11th then opened march 1st withnew Brvm offices in Mali

31


32/43

appendix

32

5 Senegal


33/43

5.Senegal

overview of country economic evolution

- GDP 12.7 billion $, GDP growth: 3.5% (2010)

- GDP by sector: agriculture 13.8%, industry 23.3%and services 62.9%

- population below poverty line: 54%

- inflation rate 2010: 0.9%

overview of population dynamics

- population: 12.3 million, growth rate: 2.5%

- ur an popu a on: o o a , ur an za on ra e:3.1%

- literacy: 39.3% of total population

specificities of the telecom market

- fiber-optic network

- 2/3 of fixed line service connections are in Dakar

- -

- mobile-cellular service is expanding rapidly

- international: SAT-3/WASC fiber optic (Europe andAsia), Atlantis-2 (South America) and satellite earth

-

33

5 Mali


34/43

5.Mali


- GDP 8.9 billion $, GDP growth: 5.1% (2010)

- GDP by sector: agriculture 45%, industry 17% andservices 38%

- population below poverty line: 36.1%

- inflation rate 2010 : 2.1%


- population: 13.7 million, growth rate: 2.6%

- ur an popu a on: o o a , ur an za on ra e: .



- domestic system unreliable but improving, provide onlyminimal service

- fixed lines availability is gradually increasing, number

of subscribers remains under 1 er 100 ersons

- mobile-cellular number of subscribers has increasedsharply over the last years

- international: satellite earth stations-2 intelsat (Atlantic

34

5 Guinea


35/43

5.Guinea


- GDP 4.394 billion $, GDP growth: 3% (2010)

- GDP by sector: agriculture 24.2%, industry 38.5% andservices 37.3%

- population below poverty line: 47%

- inflation rate: 15.4% .


- population: 9 million, growth rate: 2.6%

- urban o ulation 34% of total, urbanization rate: 3.5%



- inadequate system of open-wire lines, small radiotelephonecommunication stations and new micro wave radio relaysystem

- Conakry reasonably well covered, coverage elsewhereremains inadequate

- mobile-cellular number of subscribers has increasedsharply over the two last years

- 6 competitors in mobile service

- international: Satellite earth stations-1 intelsat (Atlantic

35

Ocean)

5 Guinea Bissau


36/43

5.Guinea Bissau


- m on , grow : .

- GDP composition by sector: agriculture 62%,industry 12% and services 26%

- inflation rate 2009: 1.5%


- population: 1.5 million, growth rate: 2%

- ur an popu a on o o a , ur an za on ra e:3.2%



- small system

- ,lines

- radiotelephone and cellular communication fixed lineteledensity under 1 per 100

36

5.board of directors


37/43

5.board of directors

members

Marc Rennard, Chairman

Christophe Eouzan, Administrator, FT representative

, ,

Jean Paul Cottet, Administrator, FT representative

Cheikh Sidya El Moctar Bye, Administrator representing the State of

Senegal (Department of Economics and Finances)

Thierno Ousmane Sy, Administrator representing the State of Senegal

Moustapha Sarr, Administrator representing the State of Senegal (Ministry of

the Army) Abdoulaye Camara, representing Financial Control of the State of Senegal

Ibrahima Kont, Administrator representing the staff of Sonatel

37

Victor Gorom Ndiaye, independant Administrator


38/43

5.Senegal - competitors


39/43

Sentel 3rd license in Sene al

g p

Millicom International ownership

License of 20 years in July 1998

3rd global license (fixed, mobile and

international) for Sudatel on September 2007 for

-

Parent co. etbrand

Rebranded in Tigo on December 2005

Financial data (Millicom Africa 2010)

Revenues: US 905 million

,

- US$ 105 million)

Sudatel began its operations at the beginnings

of 2009 throu h Ex resso brandEbitda margin: 39.6%

GSM Subscribers

31% market share

Subscribers

9% market shares

Financial data Africa GSM 900 Network

Operating revenues : US$ 550,340,082 2010Sentels brand

Sudatel

7 operations 5 operations

39

5.Mali - competitors


40/43

Ownership

State of Mali (49%) Maroc Telecom bought 51% stake in Maliphone company Sotelma for 275 millions euros

set up in 1989

Commercial launch in 1990

.8th 2009

Malitel as mobile operator (1999)

GSM subscribers

,

France's Vivendi and 30% by the MoroccanState, has expanded into Mauritania, BurkinaFaso and Gabon since 2006 throu h

o mar e s are

GSM 900 network

acquisitions

launched a 56 billion investment program inprivatization 2009 in order to renew their infrastructures.

certified ISO 9001 (2008version) the February

40

24th ,2011

5.Guinea - competitors


41/43

ownership

State of Guinea ownershipIntercel now owned by Expresso

30% in 30th June 2010- 100% b

(100%)

commercial launch in

MTN (75%)

commercial launch in April 2005

28th Feb 2012)

ownership Teylium (100%)

launched in 20061993

GSM subscribers

GSM subscribers

36% market share 5% market share

Privatization

forecasted and will be

MTN21 operations

directed by Gide

Loyrette Nouel law firm Cellcom

440 871 subscriberslaunched in 2008

17% market share6th operator coming

41

5.Guinea Bissau - competitors


42/43

Shareholding Shareholding

State of Bissau (90%)

Staff (10%)

MTN (100%)

Commercial launch in June

GSM Subscribers

4.1% market share

GSM subscribers

64.9% market share

42


43/43

thank ou

43

Annual Investment Conference London March 2011

Documents

Transcript of Annual Investment Conference London March 2011