"Sonatel's strategy has always been based on innovation"

Sonatel, the sub-regional leader in telecoms, is testing its signature on the market. The €100 billion bond issue, with a subscription period spread from June 15 to July 15, is in itself a strong signal from the financial market, as stated by Sékou Dramé, CEO of Sonatel, in this exclusive interview that will be followed, tomorrow, the presentation, through an interview, of the characteristics of the operation by Ababacar S. Diaw, DG Iimpaxis Securities.

Mass Ceo, the Sonatel group is requesting a loan of 100 billion FCFA on the WAEMU financial market. Beyond the mobilization of funds, what are the main objectives of the operation?

Sonatel's strategy has always been based on innovation at the service of our customers to whom we are always committed to guaranteeing a quality of service at the level of the best international standards. Investment is a key factor in our sector to continually deliver on these promises and consolidate our leadership. However, this must be done without forgetting any other stakeholder, especially our shareholders who have trusted us and who must continue to benefit from a good dividend policy. Sonatel is also a major player in the sub-region and should be able to participate strongly in its dynamism. The main objective of this loan is therefore to enable Sonatel to diversify its sources of financing in a context of scarcity of liquidity to continue to finance the investments necessary for its development while maintaining a dividend policy adapted and up to the expectations of its shareholders.

This is the largest fundraiser on the WAEMU regional market. Does the post-covid timing and market conditions lend themselves to this?

This question may legitimately arise today but it should be noted that the process has been launched since 2019 with the solicitation of a rating from Wara, which was obtained in the last quarter of 2019 with an "Investment Grade" rating. The Covid-19 pandemic, in a sense, has reinforced our ambition to be a privileged partner in the digital transformation of our societies. We have all been able to measure how covid19 has accelerated the digitalization of several parts of our economies with increased needs in terms of connectivity, but also in terms of security and openness of our assets for the benefit of the digital ecosystem.

We therefore believe that this is, more than ever, the time to deploy the investments that will allow us to prepare our networks and service platforms to flow even more traffic with an excellent quality of service, but also to deploy new offers and innovations to accelerate our transformation into a multi-service operator. It should therefore be remembered that this type of operation targets the savings of a category of investors who have medium- and long-term expectations and who are looking for opportunities with a good balance of risk versus return. Sonatel has a strong ability to service debt and has a very low credit risk that I believe will reassure investors in these uncertain times.

Does this mean that the option of investment by equity and bank loans favoured until now has shown its limits and that Sonatel must now solicit the regional and, tomorrow, international financial market?

Everything to do. For a long time Sonatel did not really take advantage of its sub-regional influence to address the financial market of the area; this is what we are trying to correct by also taking into account the evolution of the regulation on the prudential ratios of banks. The entry into force of Basel 2 and 3 will lead to a reduction in the commitment capacity of banks in the region with the reduction of the single bond to 25% in 2021, combined with a relatively low level of capital in the region. It therefore seemed necessary to us to diversify our sources of funding. This option to use the bond market also contributes to our desire to optimize the structure of the Balance Sheet with a replacement, in the capital employed, of part of the equity by debt. Our low level of debt allows us to do so, while remaining on a Net Debt/EBITDA ratio below the average of our peers in Saharan Africa.

How does the Sonatel Group envisage the second half of 2020 in its own growth and that of its sector in particular?

The group will certainly be confronted with the effects of the economic decline experienced by the countries where we operate. This crisis has indeed reached such a level that, regardless of the upstream preparation, it is destabilizing for all sectors, including telecommunications. However, we remain hopeful that the easing of travel restrictions but also the stimulus measures decided by the various governments in our countries of operation will make it possible to mitigate the impact that has been observed in the first months. We have implemented various optimization actions on expenses in all Group operations and the first results obtained make us confident in our ability to achieve our earnings forecasts despite the risk of delay in revenue.

Beyond this historic bond issue, Sonatel's share price remains a barometer closely followed by foreign investors to the BRVM and also by resident individuals, good fathers (BPF) and institutional investors. What message do you have to convey to them?

We hope that this transaction will help strengthen the value of Sonatel shares and thus reassure the holders of the stock. It allows us to communicate in a very detailed way on the fundamentals of the Sonatel Group, which remain very good. The financing of the investment continues, which augurs for a more optimistic future for the achievement of our objectives and this financing is done in a diversified way under less restrictive conditions in terms of repayment period; This makes it possible to consolidate our dividend policy, which remains rather attractive.

Your closing remarks.

We invite investors to participate massively in this public offering while reassuring them that the Sonatel Group is continuing its dynamic of growth and profitable development.