Itissalat Al Maghrib IAM S A : Maroc Telecom_PR-HY 2022 Results

PRESS RELEASE

Rabat, 26 July 2022

CONSOLIDATED RESULTS FOR THE FIRST HALF OF 2022

Operating results above target, driven by the performance of subsidiaries:

• Group customer base expands 1.9% to nearly 75 million customers, including 23 million in Morocco (-0.2%) and nearly 52 million for the Moov Africa subsidiaries (+2.8%);
• Slight decline in consolidated revenues (-0.6%*), due to the decline in Mobile in Morocco (-5.0%) and especially in Mobile Data (-9.9%);
• Revenue growth of Moov Africa subsidiaries (+1.6%*) driven by Mobile Data (+29%*);
• Sustained Fixed Data revenue growth in Morocco (+7.3%) thanks to the expansion of the FTTH customer base (+45%);
• Group adjusted EBITDA up 0.5%*, with almost stable adjusted EBITDA in Morocco (-0.5%) and 2.0%* growth in the adjusted EBITDA of Moov Africa subsidiaries;
• Adjusted Group share of net income up 1.7%*;
• High level of Group CAPEX maintained, representing 21.2% of revenues;
• Net debt down 17.7%* to 0.6x EBITDA.

Outlook for 2022 unchanged, at constant scope and exchange rates :

• Decrease in revenues;
• Decrease in EBITDA;
• CAPEX excluding frequencies and licenses of approximately 20% of revenues.

Maroc Telecom Group's achievements in the first half of this year are driven by the good momentum of the Moov Africa subsidiaries' activities and the constant efforts to optimize costs, despite an inflationary context and a competitive environment that are becoming more and more intense.

Maroc Telecom Group continues to deploy its investment plans in order to effectively support the development of Mobile and Fixed-line Data usage and to pursue innovation and digital transformation projects.

The Group's strategy is thus part of an inclusive approach to value creation for Maroc Telecom and its ecosystem both in Morocco and in the countries where it operates in Sub-Saharan Africa.

*Maintaining a constant exchange rate between the Moroccan dirham (MAD), the Mauritanian ouguiya (MRU) and the CFA franc

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Adjusted consolidated results* of the Group:

									Change at
(IFRS in MAD millions)		Q2 2021			Q2 2022		Change		constant
					exchange
									rates (1)
Revenues	8,866		8,798	-0.8%	-0.6%
Adjusted EBITDA	4,599		4,655	1.2%	1.3%
Margin (%)	51.9%		52.9%		1.0 pt		1.0 pt
Adjusted EBITA	2,825		2,928	3.6%	3.6%
Margin (%)	31.9%		33.3%		1.4 pt		1.3 pt
Adjusted net income Group share	1,359		1,371	0.9%	1.0%
Margin (%)	15.3%		15.6%		0.3 pt		0.3 pt
CAPEX(2)	1,697		2,583	52.2%	53.4%
Of which frequencies and licences	0		0
CAPEX/revenues (excluding	19.1%		29.4%		10.2 pt		10.4 pt
frequencies and licences)
Adjusted CFFO	2,797		2,175	-22.2%	-22.6%
Net debt	14,908		12,166	-18.4%	-17.7%
Net debt/EBITDA(3)		0.8x		0.6x

*The adjustments to the financial indicators are detailed in Appendix 1.

								Change at
	H1 2021		H1 2022			Change		constant
					exchange
								rates (1)
17,780	17,568		-1.2%	-0.6%
9,160	9,171		0.1%	0.5%
51.5%	52.2%			0.7 pt		0.6 pt
5,571	5,740		3.0%	3.3%
31.3%	32.7%			1.3 pt		1.2 pt
2,832	2,869		1.3%	1.7%
15.9%	16.3%			0.4 pt		0.4 pt
2,115	3,720		75.9%	77.0%
0	0
11.9%	21.2%			9.3 pt		9.3 pt
5,478	5,326		-2.8%	-2.5%
14,908	12,166		-18.4%	-17.7%
	0.8x		0.6x

• Customer base

As of June 30, 2022, the Group customer base comprised nearly 75 million customers, up 1.9% year-on-year, primarily driven by the increase in subsidiary customers (+2.8%).

• Revenues

The Maroc Telecom Group posted H1 2022 consolidated revenues(4) of MAD 17,568 million, down 1.2% (-0.6% at constant exchange rates(1)). The Mobile business in Morocco continued to be hampered by competitive and regulatory factors (-5.0%), partly offset by thriving international business (+1.6% at constant exchange rates(1)) and Fixed-line activities in Morocco (+1,6%).

• Earnings from operations before depreciation and amortization

H1 2022 Group consolidated adjusted earnings from operations before depreciation and amortization (EBITDA) rose 0.1% (+0.5% at constant exchange rates(1)) to MAD 9,171 million. This performance was driven by ongoing efforts to control operating costs, with an adjusted EBITDA almost stable in Morocco and a growth among the Moov Africa subsidiaries (+2,0% at constant exchange rates(1)).

The adjusted EBITDA margin rose 0.7 pt to a high 52.2%.

• Earnings from operations

Consolidated adjusted earnings from operations (EBITA)(5) for first half 2022 rose to MAD 5,740 million, up 3.0% (+3.3% at constant exchange rates(1)). The operating margin rose 1.3 pts to 32.7%.

2

• Group share of Net income

Adjusted Group share of net income for first half 2022 amounted to MAD 2,869 million, up 1.7% at constant exchange rates(1).

• CAPEX

CAPEX(2) excluding frequencies and licenses amounted to MAD 3,720 million representing 21.2% of Group revenues, in line with guidance.

• Cash flow

Adjusted net cash flows from operations (CFFO)(6) amounted to MAD 5,326 million, down 2.8% versus H1 2021 (-2.5% at constant exchange rates(1)), mainly due to the increase in capital expenditure.

As of June 30, 2022, Group consolidated net debt(7) was down 18.4% at MAD 12,166 million, representing 0.6 time annualized EBITDA(3).

• Events after the end of the reporting period

Notification on July 22, 2022 of the decision of the ANRT's Management Committee relating to the liquidation of the penalty imposed on Maroc Telecom in the context of January 17, 2020's decision relating to unbundling. The amount of the penalty is set at 2.45 billion MAD, and Maroc Telecom has 30 days to appeal to the Rabat Court of Appeal.

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Review of the Group's activities:

The adjustments to the "Morocco" and "International" financial indicators are detailed in Appendix 1.

Morocco

(IFRS in MAD millions)		Q2 2021		Q2 2022		Change
Revenues	4,884	4,805	-1.6%
Mobile	3,018	2,868	-5.0%
Services	2,891	2,795	-3.3%
Equipment	127	73	-42.3%
Fixed-Line	2,332	2,383	2.2%
Of which Fixed Data*	928	987	6.4%
Elimination and other income	-466	-446	-
Adjusted EBITDA	2,718	2,753	1.3%
Margin (%)	55.6%	57.3%		1.7 pt
Adjusted EBITA	1,780	1,887	6.0%
Margin (%)	36.4%	39.3%		2.8 pt

H1 2021	H1 2022	Change
9,774	9,561	-2.2%
5,985	5,684	-5.0%
5,766	5,497	-4.7%
218	187	-14.4%
4,702	4,778	1.6%
1,838	1,973	7.3%
-913	-901
5,390	5,363	-0.5%
55.1%	56.1%	1.0 pt
3,524	3,626	2.9%
36.1%	37.9%	1.9 pt

CAPEX(2)	1,092	1,032	-5.4%	1,299	1,758	35.4%
Of which frequencies and licences	0	0		0	0
CAPEX/revenues (excluding	22.3%	21.5%	-0.9 pt	13.3%	18.4%	5.1 pt
frequencies and licences)
Adjusted CFFO	1,516	1,271	-16.2%	2,737	3,190	16.5%
Net debt	9,888	6,522	-34.0%	9,888	6,522	-34.0%
Net debt/EBITDA(3)	0.9x	0.5x			0.9x	0.6x

*Fixed Data includes the Internet, TV on ADSL and Data services to companies

Morocco revenues posted a limited decline versus first half 2021 (-2.2% in H1 2022 compared to -7.1% in H1 2021) and amounted to MAD 9,561 million. Fixed Data revenues continue to benefit from the FTTH boom, offsetting the decline in the Mobile Data business still hampered by competitive and regulatory factors.

Adjusted earnings from operations before depreciation and amortization (EBITDA) amounted to MAD 5,363 million, down 0.5% versus H1 2021. The adjusted EBITDA margin remained high at 56.1%, up 1,0 pt.

Adjusted earnings from operations (EBITA)(5) amounted to MAD 3,626 million, up 2.9% year-on- year. The adjusted EBITA margin rose 1.9 pts to 37.9%.

First half 2022 adjusted cash flows from operations (CFFO)(6) rose 16.5% to MAD 3,190 million.

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Mobile

	Unit	06/30/2021		06/30/2022		Change
Customer base(8)	(000)	19,633		19,682		0.3%
Prepaid	(000)	17,303		17,285		-0.1%
Postpaid	(000)	2,329		2,397		2.9%
Of which Internet 3G/4G+(9)	(000)	10,979		10,334		-5.9%
ARPU(10)	(MAD/mois)	48.8		45.5		-6.7%

During first half 2022, the Mobile customer base(8) grew by 0.3% year-on-year to 19.7 million customers, driven by the postpaid segment, which expanded by 2.9%.

Mobile revenues fell 5.0% versus H1 2021 to MAD 5,684 million due to the decline in revenues from outgoing and incoming services amid a persisting adverse competitive and regulatory environment.

Blended ARPU(10) amounted to MAD 45.5 for first half 2022, down 6.7% year-on-year.

Fixed-line and Internet

	Unit	06/30/2021	06/30/2022	Change
Fixed line	(000)	1,999	1,942	-2.9%
High Speed Access(11)	(000)	1,745	1,709	-2.1%

The Fixed-line customer base shrank 2.9% year-on-year to nearly 2 million lines as of June 30, 2022. The broadband(11) customer base has 1.7 million subscribers with a strong increase in the FTTH customer base (+45%).

Fixed-line and Internet revenues were up 1.6%. The Data revenue growth of 7.3% driven by FTTH services offsets the decline in Voice revenues.

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