Sonatel in H1 2024: Another Strong Showing By Giant Telco

Despite facing various challenges, including energy crises and political instability, the telco has shown impressive resilience and growth.

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The Sonatel Group, a leading telecommunications company in francophone West Africa, has released its financial results for the first half of 2024.

Despite facing various challenges, including energy crises and political instability in some of its operating countries, the group has demonstrated remarkable resilience and growth.

Let’s dive into the key highlights of their performance.

Operational Highlights: Expanding Customer Base and Services

Sonatel Group continues to strengthen its position in the telecommunications market across its five countries of operation: Senegal, Mali, Guinea, Guinea-Bissau, and Sierra Leone.

The group has maintained its leadership in all these markets, with market shares ranging from 51.3% to 68.3%.

Key operational figures show significant year-on-year growth:

• Mobile customers increased by 5.9% to 41.4 million
• Mobile data users grew by 23.4% to 21.1 million
• Active 4G users rose by 13.8% to 16.6 million
• Fixed broadband customers surged by 49.1% to 811,000
• FTTH (Fiber-to-the-Home) customers increased by 27.7% to 372,000
• Active Orange Money users grew by 7.8% to 12.1 million

These figures demonstrate Sonatel’s success in expanding its customer base and driving the adoption of advanced services like 4G and fiber broadband.

Financial Performance: Double-Digit Growth Across Key Metrics

Sonatel Group’s financial results for H1 2024 show impressive growth across all key metrics:

• Revenue: XOF 877.7 billion, up 10.5% year-on-year
• EBITDAAL (EBITDA after Leases): XOF 407 billion, up 17% year-on-year
• EBITDAAL margin: 46.5%, an increase of 2.6 percentage points
• Net Result: XOF 192.6 billion, up 29.6% year-on-year
• Net margin: 21.8%, an increase of 3.1 percentage points

The group’s revenue growth was primarily driven by strong performance in mobile data, voice services, Orange Money, and fixed broadband.

The significant increase in EBITDAAL and the net result demonstrates the company’s ability to translate top-line growth into improved profitability.

CAPEX Investments for Future Growth

Sonatel Group continues to invest heavily in its network infrastructure and service quality. In H1 2024, the Senegalese group invested XOF 134.5 billion, representing 15.3% of its revenue. Key investment areas included:

• Network modernization and expansion
• Deployment of new mobile sites
• Extension of FTTX (Fiber-to-the-X) networks
• Quality of service improvements

These investments are crucial for supporting the group’s growth and maintaining its competitive edge in the rapidly evolving telecommunications market.

Stock Performance: A BRVM Bellwether

Sonatel Senegal (ticker: SNTS) continues to be a standout performer on the BRVM stock exchange. As of the latest data (August 2, 2024):

• Market capitalization: XOF 2.06 trillion (Most valuable listed company)
• Weight in BRVM: 23.3% of the entire equity market
• Year-to-date performance: +14.6% (ranked 16th on BRVM)
• 4-week performance: +6% (ranked 12th on BRVM)

Starting the year at XOF 17,980 per share, Sonatel’s stock has shown significant appreciation, reflecting investor confidence in the company’s performance and future prospects.

Challenges and Outlook

Despite its strong performance, Sonatel Group faces several challenges in its operating environment:

• Persistent energy crises in some countries, leading to power cuts and fuel shortages
• Political instability and regulatory changes in certain markets
• Increased competition from fintech companies in the mobile money sector
• Need for continuous investment in network infrastructure to meet growing demand

Looking ahead, Sonatel Group remains optimistic about maintaining its growth momentum in the second half of 2024. The company plans to focus on:

• Completing network deployment projects
• Sustaining performance across key operational and financial indicators
• Continuing cost optimization efforts
• Accelerating digitalization to improve customer and employee experiences

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For investors interested in gaining exposure to Sonatel’s strong performance and the broader West African telecommunications sector, Daba app enables easy investing and trading of BRVM stocks, including Sonatel. You can also sign up for Daba Pro, a premium service with advanced tools and insights, to help you navigate the complexities of the West African stock market.

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Also Read: Investing in Telecom Industry: Insights from Sonatel’s Q1 2024 Report

Sonatel Group’s H1 2024 results demonstrate the company’s ability to deliver strong growth and improved profitability despite challenging operating conditions.

With its continued focus on network expansion, digital services, and customer experience, Sonatel is well-positioned to maintain its leadership in the West African telecommunications market.

For investors, Sonatel represents an attractive opportunity to participate in the region’s digital transformation and economic growth. Tools like the Daba app make it easier than ever for both local and international investors to access this market, potentially benefiting from Sonatel’s continued success.

As always, investors should conduct their own research and consider their risk tolerance before making investment decisions. However, Sonatel’s strong financial performance, market leadership, and commitment to sustainable growth make it a company worth watching in the dynamic West African business landscape.

US$1 = 605.72 XOF