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UPDATE 1-Sonatel's regional market dominance helps lift 2012 profit
February 12, 2013 / 4:40 PM / 5 years ago

UPDATE 1-Sonatel's regional market dominance helps lift 2012 profit

* Sonatel’s rise in EBITDA meets market expectations

* Says results boosted by end to surtax in Senegal

* Looking for external growth in region in 2013 (Adds details, analyst comments)

By Bate Felix

DAKAR, Feb 12 (Reuters) - Senegalese telecommunications group Sonatel SA reported stronger full-year net profit on Tuesday, using its dominant market position to fight mounting competition from other West African providers, analysts said.

Sonatel’s EBITDA profit met market expectations with a 3.7 percent rise to 347 billion CFA francs ($707.75 million) while net profit jumped 11 percent to 171 billion CFA vs 154 billion in 2011, the company said in a statement on Tuesday.

It said turnover rose 4.3 percent to 663 billion CFA.

Profits were helped by an end to a surtax on international calls in Senegal, one of its main markets, it said.

Sonatel, part owned by France Telecom, operates in four countries in West Africa where its market share grew year-on-year by 4 percent in Mali and Guinea, and 2 percent in Senegal and Guinea Bissau respectively.

It has the biggest share of the market in two of the four countries where it operates: in Mali 64 percent, Senegal 63 percent, 34 percent in Guinea and 39 percent in Guinea Bissau.

“It’s quite simply due to their market position. They resisted competition better than some expected. They fought. They did what was necessary to keep their market share,” said Gabrial Fall, an Abidjan-based analyst who also chairs the board of the regional West Africa BRVM bourse.

The company said its EBITDA margin, a measure of operating profitability, was 52 percent, compared with 53 percent in the previous year, and in line with its target of above 50 percent for fiscal 2012.

Sonatel, one of the top companies on the regional bourse, said it plans to pay a net dividend of 1,350 CFA francs per share on May 3, 2013.

“We continue to like the story. They continue to generate a lot of cash flow and have a generous dividend policy,” said Binta Drave, London-based equity analyst at Exotix.

“The two key markets of Mali and Senegal were much in line with what we expected and, as we were expecting in Mali, we didn’t see any major drop in earnings,” he said.

Drave said Sonatel’s revenue growth year-on-year in Mali was flat as its business was hampered by political upheaval, following a Tuareg rebellion, a military coup and the occupation of the northern half of the country by Islamist militants.

For its 2013 outlook, Sonatel said it is focussed on controlling operational costs, while looking at external growth into other markets in the region. (Additional reporting by Joe Bavier in Abidjan; Editing by Louise Ireland and Daniel Flynn)

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