Research Paper-IAM H1-21

HALF YEAR RESULTS DOWN…, BUT NOT REFLECTING THE MT TREND

Unsurprisingly, Maroc Telecom's half-year achievements are down compared to 2020. On the basis of annual achievement rates, we have slightly revised our forecasts for the FY 2021.
However, we maintain a positive outlook over the MT justified by the Group's investment effort, which remains significantly higher than that of local competitors. In fact, we believe that the incumbent telecommunication operator is best positioned in three strategic levers, namely: (1) Network coverage, (2) Technology and (3) Quality of the services.

Morocco : A sharp decline in revenue, to be normalized from 2022
At the end of H1-21, Maroc Telecom shows a significant drop in its revenue in Morocco i.e. -7.1% at MAD 9.8 Bn. This decline is mainly justified by the introduction of new call termination rates in December 2020 (-35% IAM; -25% Orange; -22% Inwi) which had stimulated the competition’s level within the sector.
We believe that the magnitude of the decline in domestic revenue in 2021 is temporary. From 2022, the operator would benefit from: (1) a neutral base effect relating to the call termination rates , (2) the structural increase in Mobile Data consumption and (3) the new dynamic in the Fixed Broadband activity which rose by 7.7% in H1-21.

Africa : Better than expected dynamics of Mobile Data and Mobile Money
During H1-21, the Group’s international revenue increased by 2.0% to MAD 8.5 Bn, representing almost 48% of consolidated revenue. As expected, this growth level is supported by the solid growth of Data Mobile and Mobile Money services, which posted increases of 15.4% and 28.4% respectively over the same period.

Dividend : An undeniable financial capacity to return to a DPS of MAD 6
In a highly competitive environment, Maroc Telecom manages to maintain an EBITDA margin above 50%. This proven ability to optimize costs have positive impact on its results during 2021- 2023 period. The resilience of the operator's profitability combined with the sector's positive outlook over the MT would be reflected positively on the payout policy through the return to a DPS of at least MAD 6 from 2021, i.e. a D/Y of 4,4%. Finally, we maintain our target price of the stock at MAD 160 offering an upside of 18%.

Read more.