Société Nationale des Télécommunications du Sénégal (SONATEL), a firm majorly owned by French group Orange, marked the West African Monetary Union’s stock market by announcing a record XOF1,022 billion (about $1,76 billion) turnover for 2018.   

The firm which is also the largest on the Abidjan-based Bourse Régionale des Valeurs Mobilières by market capitalization with an important base of individual investors also suggested the distribution of XOF1,500 (about $2.5) dividend per share.

These two information seem not to have moved investors a bit if to consider the evolution of the company’s share (SONATEL) on the stock exchange. It started the week of March 4, 2019, with a slight 0.05% loss after a 1.48% loss on Friday, March 1, 2019.

Let’s note that before these losses, SONATEL recorded three consecutive gains that cumulated to more than 15.4%. In a market like the BRVM where transactions do not always follow usual investments logics, it is hard to provide a precise answer to these losses.

Slight signs of fragility

An analysis of SONATEL’s financial reports reveals some signs of fragility.  The first sign is that despite being a record number, the year on year growth of the turnover was 5% in 2018, lower than the 7.5% recorded in 2017.  

There is also the profitability ratio that represents the burden of some indicators on the turnover. That year, the EBITDA margin was 45.3%, the lowest recorded since 2016.

In the same wake, the operating profit and net margin respectively lost 5 and 4.1 percentage points.

That year also, the operator’s recovery claim also rose to XOF129.7 billion against XOF120.9 billion in 2017. SONATEL explained that this was due to difficulties to recover the debts operators owned it in Senegal.

That year also, the group’s subsidiary in Mali borrowed XOF45 billion, an amount which increased its debt to XOF185 billion. SONATEL will thus have to convince investors on the appropriateness of the investments it made till now.

Apart from Orange, Senegal, as well as some small investors, have shares in SONATEL. Senegal is the first market for SONATEL in terms of contribution to the turnover (42%) but there is also Mali and Guinea Conakry with their 17 million clients. The sociopolitical environment and competition in those two countries are two factors to be closely watched in the middle-term.

Idriss Linge