EXECUTIVE SUMMARY
The confirmation by the Court of Appeal of the fine worth MAD 6.4 Bn payable to Wana Corporate, then the disbursement of this amount by Maroc Telecom, constitute, in our opinion, the end of a long regulatory episode which weighed on the stock’s performance.
To the extent that the effect of this historic fine is already integrated into the market price, we believe that
Maroc Telecom stock would begin a new phase on the Equity market which is relatively more favorable compared to the 2022-2024 period.
At the end of our valuation exercise for Maroc Telecom stock, we come out with a target price of MAD 117, offering an upside potential of +24%. Our positive opinion towards the stock’s future behavior is supported by the following arguments:
- Maroc Telecom's operational achievements confirm the resilience of its Business Model, despite the visible tightening of regulatory and competitive contexts observed since 2019.
As a matter of fact, the historic operator has managed to sustain a consolidated EBITDA margin above 51% and a recurring profit of MAD 6.0 Bn during the 2019-2024E period ;
- Sector’s trends are reassuring. In Morocco, the good performance of optical fiber and the arrival of 5G should offset the downward trend in Mobile revenue. In Africa, Moov subsidiaries, whose contribution to revenue exceeds 50% in 2024, should display a more attractive growth profile. This is attributed to the strong momentum of Mobile Data, Fixed Internet and Mobile Money;
- Maroc Telecom's proven ability to overcome exogenous shocks while ensuring theretribution of its shareholders is reflected in its debt repayment capacity (ND/EBITDA of 0.8x), its capacity to generate cash (CFFO/Revenue of 30%) as well as its sustained investment effort (CAPEX/Revenue of 20%);
- Starting Q4-24, Maroc Telecom's share price should benefit from an improvement in its risk profile through better investor visibility on the future evolution of results and dividends. In this perspective, we expect the stock’s price to rise in order to adjust in the long term with the expected normalization of its dividend;
- Bank Al-Maghrib's turnaround towards an accommodative monetary policy in 2024 should attract investors’ interest in yield stocks. Taking into account the surge in market valuation levels, Maroc Telecom becomes the leading yield stock among large
capitalizations with a recurring D/Y 25E of 6.0%, far ahead of the Cement (3.8%), Banking (3.5%), Agri-business(3.4%) and Energy (3.0%) sectors.
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