2018 0 consolidation scope general information The consolidated - - PowerPoint PPT Presentation

Financial Results 2018

The consolidated financial statements include the accounts of Sonatel and all its directly or indirectly controlled subsidiaries (see page 36). Subsidiaries are incorporated using the full consolidation method

• r the equity method of consolidation. Orange Sierra Leone owned at 50% is consolidated using the full

consolidation method in accordance with the shareholders’ agreement. Orange Services Group “OSG”

• wned at 47% by Sonatel and its subsidiaries is accounted for in the consolidation scope using the

equity method of consolidation as of June 2018. Transactions, balances and reciprocal incomes between integrated companies are eliminated. The consolidated financial statements are presented in XOF. Assets, liabilities and income statements

• f subsidiaries out of XOF zone are converted at the exchange rate prevailing at the closing period.

The Group’s consolidated financial statements are prepared in accordance with the West African System of Accounting (SYSCOA), with a revised version effective since January 1, 2018 (SYSCOHADA).

consolidation scope – general information

Sonatel 2018 Financial Results

1

This presentation contains information which may be deemed as forecasted information. Though the Company considers the statements and information rely on reasonable assumptions on the publication date of the present release, they are by nature subject to risks and uncertainties, which may give rise to a difference between the actual figures and those reported or induced in these statements

• r information.

Sonatel cannot guarantee, or be held liable for the accuracy, thoroughness, coherence and effectiveness of any of the statements or information presented in this release.

warning

Sonatel 2018 Financial Results

2

contents

Perspectives Operational results Highlights Financial results Appendices

Sonatel 2018 Financial Results

3

#1

Highlights

Key messages Key financial figures Key operational figures Environment and business Network coverage Highlights per country Contribution to the economy Corporate Social Responsibility Commercial ads

Sonatel 2018 Financial results

A continuously mutating environment with structuring evolutions in the telecom sector across all perimeters

Strong commercial positions preserved despite a slight decline in subscribers’ base growth due to recruitment based

• n value-oriented

subscribers in Mali

Net income preserved thanks to the growth relays despite an increase in amortizations

Continued growth in turnover and maintained EBITDA growth in absolute value

Continuing transformation of the business model, oriented data centric and

• n mobile

financial services

4 3 5 1 2

5

Key messages

Sonatel : 2018 Financial Results

Turnover

The bar for the 1 000 billion XOF turnover reached with a 5% evolution supported by data and Orange Money

268,4

Billion XOF

1 022

Billion XOF

462,6

Billion XOF

202,3

Billion XOF

EBITDA

A 9.8 billion XOF increase in terms

• f

absolute value but a slight decrease in EBITDA growth compared to 2017 (2.2% vs 2.8%). 1.2 basis points decrease

• f the EBITDA rate at

45.3%.

Net income

A 0.1 billion XOF increase in absolute value. Stabilization of net income following the 6.3% decrease recorded in 2017.

Free cash flow

0.7 billion XOF decrease in free cash flow (-0.3%) due to a higher growth of the investments compared to EBITDA (5.7% vs 2.2%)

+5% +2.2% stable

• 0.2%

Key financial figures

194,2

Billion XOF

CAPEX

10.6 billion XOF increase in investments (in absolute value). The CAPEX/Turnover ratio remains stable at 19%.

+5.7%

6

Sonatel : 2018 Financial Results

FMI subscribers

(Fixed lines + Mobile + Internet) Evolution of the FMI base mostly impacted by the slowdown in recruitments in Mali following the end of bonuses at activation and a refocus for base management around value

219.1

thousand

29.7

Million

29.1

Million

10.8

Million

Mobile subscribers

(voix, sms et SVA) 2% drop in the mobile subscribers’ base compared to 2017 due to a decrease in customer base in Mali with their new recruitment approach centered around value. Excluding Mali, the mobile subscribers’ base increased by +8.9%.

Data subscribers

(Internet Mobile) Strengthening contribution from data thanks to a competitive advantage

• n

connectivity notably with the 4G in Senegal, Mali and Bissau.

Internet subscribers

(ADSL + Fibre + Flybox +Wimax) Growth by +34% compared to 2017 largely drawn by the convergence and the attractiveness of offers around ADSL, the flybox and fiber.

• 1.7%
• 2%

+17.5% +34%

Key operational figures

5.6

Million

Orange Money subscribers

Continuously growing activity (+1.2 Million active subscribers, +36.1% increase in turnover compared to 2017) and improvement in profitability.

+26.1%

7

Sonatel : 2018 Financial Results

• Increase in investments within the Group
• Ongoing disbursement for license acquisitions (Sierra Leone,

Mali, Senegal)

• Sustained debt level (Senegal and Mali) related to external

treasury factors (short and medium term credit)

• Establishment of medium term financing for a coverage of

treasury needs accentuated by exceptional disbursements (licenses, frequencies, CAPEX)

Customer experience Revenues and charges Offers Economy CAPEX and financing Regulations

• 4G+ launch in Senegal and Mali
• Launch of Orange Energy (Mali, Guinea and Senegal)
• Launch of the optical fiber in Mali
• Launch of LTE/TDD in Mali
• Accompaniment in the digital emergence in Senegal,

deployment of Act II of the Internet revolution (engagement taken in 2017 for the decrease in mobile internet by 50% by 2019 was realized in 2018)

• Launch of international Orange Money transfer from France

to Guinea

• Development of data usage and voice bundles
• Finalization of TIGO Senegal takeover, acquisition of 4G

frequencies

• Strong commercial positions maintained (volume and value)
• Start of activities for the 3rd operator (QCELL) in Sierra

Leone

• Start of activities for the 3rd operator (TELECEL) in Mali
• 4G launch by the competitors in Mali and Sierra Leone
• Termination of activities of INTERCEL in Guinea
• Leadership conquest and confirmation of Orange in the area
• f domestic transfer (Senegal)

Competition Country

• Confirmation for the COPC certification in Senegal
• NPS leadership in Senegal and improving
• 4G coverage in all the regional capitals in Senegal
• Contract with the new MSP Huawei, improvement of the

NUR indicator (Mali)

• Revenues maintained
• Significant growth in turnover drawn by the strengthening of

the contribution from mobile data and Orange Money

• Regulatory and accounting impacts
• Savings on direct costs (international outgoing, distributor

commissions, terminals) thus allowing to maintain a sustained level in the EBITDA margin generated

• Proper management of direct costs, significant fiscal impacts
• n the evolution of indirect costs
• Security context still tense in the North of Mali, re-election of

the outgoing president, establishment of a new government

• Political stalemate in Bissau, governmental instability
• Political tensions and crisis in many social sectors in Guinea
• Democratic transition in Sierra Leone, establishment of a

new administration

• Significant increase in OTTs and the SIMBOX fraud
• 4G frequency allocation in Sierra Leone
• Retroactive decrease in tariffs for national interconnection in

Senegal with a return to symmetry (9F/11F to 6F/6F per minute)

• New interconnection tariff signed by the regulator in Mali: 11

XOF/Min in 2018 and 2 XOF/Text

• Sustainable development funds (0.5% of turnover) applicable

since mid-February 2018 in Mali

• Launch by the regulator in Senegal of the unbundling of the

local loop for other operators and ISPs to take advantage of Sonatel’s wired network.

• LTE/TDD frequency allocation (Senegal)
• Ongoing discussions in Guinea on 4G frequencies
• Establishment of the CST tax in replacement of the

CODETTE and PST taxes with an 1% increase in taxation (goes from 4% to 5% of turnover excluding interconnection fees – Senegal)

• Increased fiscal pressure all in the countries of presence
• Favorable economic climate in Senegal and Mali
• Economic gloom in Bissau
• Foreign exchange challenges with the Leone and the

Guinean franc

Environment & Context

8

Sonatel : 2018 Financial Results

SENEGAL MALI GUINEA BISSAU SIERRA LEONE

Mobile penetration 105% 106% 101% 79% 54% 2G Population coverage (%) 97.9% 94% 95% 90% 83.8% 3G Population coverage (%) 92.2% 66% 56% 69% 41% 4G Population coverage (%) 62.0% 31%

N/A

34%

N/A

3G Active subscribers (in million) 3.6 3.9 1.3 0.2 0.8 4G Active subscribers (in thousand) 708 229

N/A

27

N/A

Data penetration 40.7% 37.0% 18.4% 19.0% 41.0% 4G penetration rate 19.7% 5.7%

N/A

3.9%

N/A

Fiber (equipped households) 79 426 3 274

N/A N/A N/A

Network coverage

9

Sonatel : 2018 Financial Results

Senegal

Maintained turnover growth throughout 2018 thanks to the strengthening of the contribution from mobile data and Orange Money (leader in domestic transfer). Strengthening of investments on growing activities. Expansion of the competitive scope with mobile finances and ISPs (Internet Service Providers).

Volume market share

2G 3G 4G 4G+

53%

• 1.4 pts

Position leader Network

Sonatel : 2018 Financial Results

Population

15.7 million

Orange Money base

2.0 million

Inflation

2.2%

CAPEX

84.7 milliards FCFA

• 1,5%/YoY

pénétration mobile

105%

penetration data

40,7%

penetration Orange Money

22,7%

Base mobile

8,7 million

+390,5 K (+4,7%)

Delta base mobile

Population

15.7 million

Orange Money base

2.0 million

Inflation

2.2%

CAPEX

84.7 billion XOF

• 1.5%/YoY

mobile penetration

105%

data penetration

40.7%

Orange Money penetration

22.7%

Base mobile

8.7 million

+390.5 K (+4.7%)

Delta mobile base 10

Mali

Strong commercial positions maintained in terms of both volume and value. Significant improvement in 3G coverage. Deployment of high speed internet via LTE solutions (4G. TDD) and fiber. Increasing fiscal pressure. Turnover growth impacted by the change in accounting method for the Orange Money activity.

2G 3G 4G

56%

• 4.5 pts

leader

Sonatel : 2018 Financial Results

Volume market share Position Network Population

19 million

Orange Money base

2.1 million

Inflation

1.6%

CAPEX

57.2 milliards FCFA

+13.3%/YoY

penetration mobile

106%

penetration data

37%

penetration Orange Money

19.9%

Base mobile

10.5 million

• 2.1 million (-16.5%)

Delta base mobile

Population

19 million

Orange Money base

2.1 million

Inflation

1.6%

CAPEX

57.2 billion XOF

+13.3%/YoY

mobile penetration

106%

data penetration

37%

Orange Money penetration

19.9%

Base mobile

10.5 million

• 2.1 million (-16.5%)

Delta mobile base

4G

11

Guinea

Consolidation of the strong commercial positions. Development of the Orange Money activity. Major stakes around the availability of resources (frequencies, numbering) and the finalization of negotiation on licenses (concession, 4G). Welcomed growth in financial results.

2G 3G

63%

+1.1 pts leader

Sonatel : 2018 Financial Results

Volume market share Position Network Population

11,9 million

base Orange Money

1,2 million

Inflation

8,5%

CAPEX

33,5 milliards FCFA

+22,6%/YoY

penetration mobile

101%

penetration data

32,9%

penetration Orange Money

16%

Base mobile

7,3 million

+485,2 K (+7,2%)

Delta base mobile

Population

11.9 million

Orange Money base

1.2 million

Inflation

8.5%

CAPEX

33.5 billion XOF

+22.6%/YoY

mobile penetration

101%

data penetration

32.9%

Orange Money penetration

16%

Base mobile

7.3 million

+485.2 K (+7.2%)

Delta parc mobile

3G

12

Bissau

Consolidation of the strong commercial positions in terms of volume and

• value. Pursued development of 4G coverage and Orange Money
• penetration. Participation of Orange to Guinea-Bissau major project to

connect to the ACE submarine cable. Financial results impacted by the weak economy.

2G 3G 4G

56%

+0.4 pts leader

Sonatel : 2018 Financial Results

Volume market share Position Network Population

1,5 million

base Orange Money

2 200

Inflation

2%

CAPEX

5,2 milliards FCFA

+12,8%/YoY

penetration mobile

79%

penetration data

19%

penetration Orange Money

3,3%

Base mobile

682,7 mille

+36,1 K (+5,6%)

Delta base mobile

Population

1.5 million

Orange Money base

2 200

Inflation

2%

CAPEX

5.2 billion XOF

+12.8%/YoY

mobile penetration

79%

data penetration

19%

Orange Money penetration

3.3%

Base mobile

682.7 thousand

+36.1 K (+5.6%)

Delta mobile base

4G

13

Sierra Leone

The dynamic of conquest maintained in the region with the

• pening of new sites. Discussions with the regulator (taxes …).

Acquisition of 4G license

2G 3G

45%

+4.5 pts Challenger second

Sonatel : 2018 Financial Results

Volume market share Position Network Population

7,8 million

base Orange Money

0,4 million

Inflation

6,3%

CAPEX

13,6 milliards FCFA

• 11,1%/YoY

penetration mobile

54%

penetration data

41%

penetration Orange Money

18,9%

Base mobile

2 million

+469,9 K (+40,1%)

Delta base mobile

Population

7,8 million

Orange Money base

0,4 million

Inflation

6,3%

CAPEX

13,6 billion XOF

• 11,1%/YoY

mobile penetration

54%

data penetration

41%

Orange Money penetration

18.9%

Base mobile

2 million

+469,9 K (+40.1%)

Delta mobile base

4G

14

thanks to a wide commercial distribution network and dynamic partners

• f turnover generated to the profit of

local businesses in the countries of presence

• f contribution to the balance of payments

from foreign telecom operators paid out as duties, taxes, royalties, social contributions, custom duties and dividends in the countries of presence

Contribution to the economy

Exports Contribution to the private sector Job creation Contribution to the budgetary revenues + 500 Billion XOF

+ 242

Billion XOF

+ 160 000

Indirect jobs + 4 500 Direct jobs

130

Billion XOF

15

Sonatel : 2018 Financial Results

Fight against plastic pollution: Inauguration of Récuplast booths by the Minister for the Environment Environmental education for 150 children of Sonatel employees during their stay in Saly with the expert Pr. Adams Tidjani Pursuit of the “Sonatel Clean Cities” concept or “And defar sunu gox” in the localities of Matam, Dabia and Grand Yoff Sonatel employees with their families planted close to 200 000 propagules with their partner Nebeday and with the support of Sonatel’s sports and cultural association Recruitment for the second cohort of learners (100 in class and 200 via online courses) for a training in jobs in digital technology. Let’s Meet up #3 held on October 18 at Sonatel’s headquarter under the theme: “APIs, business accelerators”. The “POESAM” prizes for Senegal were presented to the laureates. Awareness-building for children between the ages of 12 and 16 years old on digital literacy by initiating them to computer coding in a simple and entertaining manner. “Super coders” workshops for the children of Sonatel employees at Sonatel Academy, workshops animated by the learners from the 1st cohort Hosting at Sonatel of a workshop with the signatories

• f the Diversity charter: E-

Health and environmental actions

2018 Corporate Social responsibility

16

24th edition of the “Month of Solidarity”, the Orange Mali foundation invested 131 million XOF in partnership with the Ministry of Solidarity and Humanitarian Action. June 2018, Orange Bissau assists deprived children. Food donations were distributed to 6

• rphanages in 2018.

With the equipment provided to

• ur Digital Schools,

schoolchildren from around the African continent can participate to the Wiki challenge contest hosted in Guinea.

Sonatel : 2018 Financial Results

2018 Commercial ads

The KeurguiBox pack is:

• A 3G/4G WIFI modem and a dedicated SIM

card

• A 30 Go welcome pass with the « Satisfied or

your money back guaranteed » under 15 days model

• An initial credit of 2 500 XOF with the option

to call a fixed line

• An on-demand or subscription-based billing

system

:

35 000 F CFA

17

Sonatel : 2018 Financial Results

#2

Operational results

Customer base Mobile customers ARPU Mobile data Orange Money

Sonatel 2018 Financial Results

Customer base : fixed line, mobile and Internet

Subscribers base

2016 2017 2018 17/16 18/17 Fixed line

277 859 285 294 302 243 2.7% 5.9%

Mobile

27 319 568 29 736 083 29 146 650 8.8%

• 2%

Internet

143 620 144 753* 219 144 0.8% 51%

TOTAL 27 741 047 30 166 130 29 668 037 8.7%

• 1.7%

278

2016

285

2017

302

2018

Fined line Subscribers

(in thousand)

27.3

2016

29.7

2017

29.1

2018

144

2016

145

2017

219

2018

Mobile Subscribers

(in million)

Internet Subscribers

(in thousand)

• Mobile : 2% decrease in base due to the important drop in base in Mali (-16.5%) due to recruitment being

refocused on value, but attenuated by the increase in base in the other countries of presence Mobile : good performance with a +5.9% increase compared to 2017 and supported by connectivity via flybox an fiber

• High speed Internet : 51% growth compared to 2017, mostly drawn from the convergence and the

attractiveness of offers around ADSL, flybox and fiber notably in Senegal; and, the phased migration of subscribers (Mali, Guinea) from WIMAX to 3G (flybox), combined with a good recruitment dynamic in Bissau for the flybox.

19

Sonatel : 2018 Financial Results * Excluding WIMAX and flybox subscribers

Mobile subscribers base

Subscribers base 2016 2017 2018 17/16 18/17 Senegal

7 900 150 8 344 083 8 734 542 5.6% 4.7%

Mali

11 262 654 12 539 918 10 468 834 11.3%

• 16.5%

Guinea

6 032 667 6 783 073 7 268 259 12.4% 7.2%

Bissau

600 384 646 573 682 701 7.7% 5.6%

Sierra Leone

1 523 713 1 422 436 1 992 314

• 6.6%

40.1%

TOTAL 27 319 568 29 736 083 29 146 650 8.8%

• 2%
• Senegal : Back to a subscribers’ base from prior to the identifications thanks a better control of the churn, an increase in acquisitions and a good commercial dynamic

around 4G, thus explaining the 4.7% growth.

• Mali : 16.5% decrease in base as a result of the end of the massive recruitments to the profit of acquiring value-oriented subscribers.
• Guinea : Maintained recruitment pace thanks to the opening of new sites combined with 3G coverage in all 304 sub-prefectures and sustained commercial animations

despite customer identification constraints.

• Bissau : Evolution of the base (+5.6%) thanks the dynamism in the new offers in mobile data and Orange Money usages.
• Sierra Leone : The subscribers’ base increased by +40.1% thanks to a coverage extension, a new dynamic of conquest leaning on the expansion of network of agencies

and on innovative offers (bundles)

30% 36% 25% 2% 7%

Senegal Mali Guinea Bissau Sierra Leone

20

Sonatel : 2018 Financial Results

ARPU

Average monthly ARPU Segment 2016 2017 2018 17/16 18/17 Senegal XOF

Fixed line 95 084 94 838 73 579

• 0.3%
• 22%

Mobile prepaid 2 661 2 794 3 063 5% 9.6%

Mali XOF

Mobile prepaid 1 912 1 618 1 930

• 15.4%

19.3%

Guinea GNF

Mobile prepaid 26 006 26 448 26 452 1.7% 0.0%

Bissau XOF

Mobile prepaid 2 842 2 832 2 701

• 0.4%
• 4.6%

Sierra Leone SLL

Mobile prepaid 18 230 19 542 18 729 7.2%

• 4.2%

21

• Senegal : Appreciation in Senegal related to the important increase in mobile top ups thanks to the revenues generated by mobile data, the strengthening of the

contribution from Orange Money usages, value-added services and thanks to the sale of terminals, despite a decrease in international incoming revenues.

• Mali : Progression in ARPU mostly pulled by stable revenues in the face of a significant decrease in base (preservation of the value-oriented and top up oriented base)
• Guinea : Stable ARPU following a growth in base and revenues in the same proportions, translating a good management of the number of offers.
• Bissau : Decrease in ARPU mostly related to a higher increase in subscribers’ base than in revenues, the level of gratuity associated with the explosion in offers and

the decrease in international incoming traffic.

• Sierra Leone : Decrease in ARPU due to a more significant growth in base than in revenues.

Sonatel : 2018 Financial Results

Mobile Data

Turnover Mobile data ARPU Weight on group turnover Contribution to turnover growth Active mobile data subscribers Customer base delta Active 4G subscribers

192

Billion XOF

+41.3%

1 483

XOF

+20.3%

18.7%

+4.8 pts

114%

+1.9 pts

10.8

Million

+17.5%

1.6

Million

+17.5%

1 328

thousand

+88.2% 22

Sonatel : 2018 Financial Results

Orange Money

Turnover Value of transactions Weight on group turnover Contribution to turnover growth

62.8

Billion XOF

+36.1%

8 000

Billion XOF

+53.8%

6.1%

+1.4 pts

33.9%

+5.8 pts

Subscribers

13.1

Million

+11.6%

Active subscribers

5.6

Million

+26.1%

Volume of transactions

800,6

Million

+70.6%

Value of transactions / GDP

24.5%

+4.1 pts 23

Sonatel : 2018 Financial Results

#3

Financial results

Financial results Turnover Margins CAPEX

Sonatel 2018 Financial Results

Financial results

Solid financial performances despite the slowing impact from unfavorable fiscal and regulatory measures. Stabilization of free cash flow compared to 2017 (pro forma).

* Nominal 2017 Pro forma following the SYSCOHADA reform

25

In billion XOF 2016 2017 2017 PF* 2018 17/16 18/17 18/17 PF* Turnover 905 972.9 972.9 1022

7.5% 5% 5%

EBITDA 440.5 452.8 451.9 462.6

2.8% 2.2% 2.4%

EBITDA margin 48.7% 46.5% 46.4% 45.3%

• 2.1 pts
• 1.3 pts
• 1.1 pts

Operating results 323.2 307.8 306.9 312.3

• 4.8%

3.3% 3.6%

Operating margin 35.7% 31.6% 31.5% 30.6%

• 4.1 pts
• 1 pt
• 0.9 pt

Net income 215.9 202.2 201.5 202.3

• 6.3%

0.0% 0.4%

Net margin 23.9% 20.8% 20.7% 19.8%

• 3.1 pts
• 1.0 pt
• 0.9 pt

CAPEX 153.9 183.7 183.7 194.2

19.4% 5.7% 5.7%

CAPEX rate 17% 18.9% 18.9% 19% 1.9 pts 0.1 pt 0.1 pt

Free Cash Flow 286.6 269 268.2 268.3

• 6.1%
• 0.2%
• 0.04%

Sonatel : 2018 Financial Results

Turnover

Maintained presence in Senegal and the strengthening in Guinea of the main consolidated financial indicators of the Group. Mali’s contribution slowing due to the change in accounting method in the calculation of turnover and Orange Money. 49.1 billion XOF turnover growth, mainly thanks to Senegal and Guinea. The growth is supported by mobile data and Orange Money, ADSL and integration, despite the decrease in international incoming and fixed voice.

Weight in activity Growth Fixed line Mobile Mobile data VAS Orange Money International Wholesale Others

3% 41% 36%

• 20%

1% 5% 7.1% 19% 6% 13.% 49% 4%

42% 34% 18% 2% 4%

Senegal Mali Guinea Bissau Sierra Leone

Contribution to turnover per country Contribution to turnover by activity

1.5% 11%

26 Group Turnover

Sonatel : 2018 Financial Results

Margins

Average 1 basis point decrease in margins as a result of fiscal and regulatory impacts as well as the strengthening of low margin revenue lines (mobile data, Orange Money and value-added services).

27

35.7% 31.6% 30.6%

2018 2017 2016

23.9% 20.8% 19.8%

2018 2017 2016

48.7% 46.5% 45.3%

2018 2017 2016

Net margin Operating margin EBITDA margin

Sonatel : 2018 Financial Results

Investments

2018 investments for the Sonatel Group totaled 194.3 billion XOF with a 5.7% growth (+10 billion XOF) with a CAPEX/Turnover ratio stable at 19%. 2018 CAPEX focused mainly on network, particularly in Mali, Senegal and Guinea with the aim to improve the quality of service and extend our strategic advantage on fixed and mobile very high speed connectivity. CAPEX in areas outside

• f network increased by 30.9% thanks to IT (8.8%), services platforms (48.8%) and other assets (50.8%).

Investment

In Million XOF

2017 2018 Variation 2018/2017

Network

156 171 158 176 1.3%

Others

27 573 36 115 30.9%

TOTAL

183 744 194 291 5.7%

CAPEX rate

18.9% 19% 0.1 pt

85 57 33 5 14

Senegal Mali Guinea Bissau Sierra Leone

Investment breakdown per country

In Billion XOF

28

Sonatel : 2018 Financial Results

Investment breakdown per activity

#4

Perspectives

2019 Perspectives

Sonatel 2018 Financial results

2019 Perspectives

• 2018 has been marked by a favorable economic environment in the XOF zone diluted by impacting

fiscal and regulatory measures

• Despite growing competition in our main markets (Senegal and Mali), the Group has been able to

maintained its strong commercial positions in terms of both volume and value thanks to a good recruitment dynamic and control over the churn

• The Group will pursue with the development of very high speed internet through all the fixed line and

mobile technologies as well as the enrichment of its mobile financial services offer; and, will take part in the digital transformation and in the strengthening of our contribution for an emerging digital economy in

• ur countries of presence.
• Securing core revenues through the acceleration in the penetration of special offers and the expansion
• f corridors on the wholesale segment, a strong target on value and costs optimization should allow the

Group to enhance its trajectories of profitability.

• The Group reaffirms its ambition to offer to its customers an incomparable experience, through a

recognized technical and commercial QoS for quality (NPS leader).

30

Sonatel : 2018 Financial Results

#5

Appendices

2018 Financial statements Statement of conformity 2018 dividend draft resolution

Sonatel 2018 Financial results

31

32

33

2018 Consolidated financial statements

• 1. Note to readers
• 2. Consolidation scope
• 3. Consolidated financial statements
• 4. Notes on consolidated accounts
• 5. Accounting methods and principles

34

Sonatel : 2018 Financial Results

• The consolidated financial statements include the accounts of Sonatel and all its directly or indirectly controlled
• subsidiaries. Subsidiaries are incorporated using the full consolidation method. Orange Sierra Leone owned at 50% is

consolidated using the full consolidation method in accordance with the shareholders’ agreement.

• Orange Services Group is accounted for in the consolidation scope using the equity method of consolidation.
• Transactions, balances and reciprocal incomes between integrated companies are eliminated.
• The consolidated financial statements are presented in XOF. Assets, liabilities and income statements of subsidiaries
• ut of XOF zone are converted at the exchange rate prevailing at the closing period.
• The Group’s consolidated financial statements are prepared in accordance with the Revised West African System of

Accounting (SYSCOA).

• With the implementation of the reformed SYSCOHADA as of January 1st 2018, the accounts closed on December

2017 have been re-accounted for in compliance with the new reform and thus allow for comparability between the two accounting years. On the presentation of the financial statements of December 31, 2018, 2017 is represented on 2 columns: R = Nominal 2017, P = 2017 Pro forma, in other words re-accounted for according to the SYSCOHADA reform.

Note to the reader – consolidation scope

35

Sonatel : 2018 Financial Results

36

Note to the reader – consolidation scope

Entry in 2018

Sonatel : 2018 Financial Results

Assets (in million XOF)

37

ASSETS GROSS AMORT/PROV NET 12/31/18 NET 12/31/17 P NET 12/31/17 R FIXED ASSETS FIXED CHARES 898 INTANGIBLE ASSETS 501 831 214 258 287 573 296 394 297 606 GOODWILL 73 983 11 919 62 063 72 781 72 781 OTHER INTANGIBLE ASSETS 427 848 202 339 225 509 223 612 224 825 TANGIBLE ASSETS 1 844 087 1 137 289 706 798 652 255 652 255 ADVANCES AND INSTALLMENTS FINANCIAL ASSETS 164 282 930 163 352 155 950 155 950 DEFERRED TAXES 18 741 18 741 19 393 19 393 EQUITY AFFILIATES 3 995 3 995 PARTIPATION AND LINKED DEBTS 5 686 583 5 103 9 416 9 416 LOANS AND OTHER FINANCIAL ASSETS 135 860 348 135 513 127 141 127 141 TOTAL (I) 2 510 200 1 352 478 1 157 722 1 104 599 1 106 709 CURRENT ASSETS INVENTORY 14 345 1 188 13 157 14 238 14 236 RECEIVABLES AND ASSIMILATED FUNCTIONS 315 602 30 548 285 054 275 081 243 380 RECEIVABLES 160 039 30 303 129 735 121 237 120 951 OTHER RECEIVABLES 155 564 245 155 319 153 844 122 428 TOTAL (II) 329 948 31 736 298 212 289 319 257 616 ASSETS - CASH FLOW TOTAL (III) 317 439 317 439 231 339 231 339 TOTAL FIXED ASSETS 3 157 587 1 384 214 1 773 373 1 625 257 1 595 664

Sonatel : 2018 Financial Results

Liabilities (in million XOF)

38

LIABILITIES NET 12/31/18 NET 12/31/17 P NET 12/31/17 R EQUITY EQUITY 50 000 50 000 50 000 ADDITIONAL PAID IN CAPITAL AND CONSOLIDATED RESERVES 403 276 407 353 407 353 CONVERSION VARIANCE 819

• 3 688
• 3 688

NET RESULT (part of the consolidated company) 172 467 171 801 172 454 OTHER EQUITY PART OF THE CONSOLIDATED COMPANY 626 561 625 466 626 119 PART OF MINORITY 90 865 89 752 89 822 EQUITY OF TOTAL CONSOLIDATED TOTAL (A) 717 426 715 218 715 941 FINANCIAL DEBTS AND ASSIMILATED RESSOURCES DEFERRED TAXES 649 661 661 LOANS AND FINANCIAL DEBTS 190 053 158 329 158 329 FINANCIAL PROVISIONS FOR CONTINGENIES AND CHARGES 72 293 61 020 59 694 TOTAL (B) 262 995 220 010 218 685 TOTAL STABLE EQUITY I = (A + B) 980 421 935 229 934 626 CURRENT LIABILITIES ACCOUNTS PAYABLES AND RELATED ACCOUNTS 264 233 273 017 273 017 OTHER DEBTS 304 730 270 056 241 065 TOTAL (II) 568 963 543 072 514 082 LIABILITIES - CASH FLOW TOTAL(III) 223 989 146 956 146 956 TOTAL LIABILITIES 1 773 373 1 625 257 1 595 664

Sonatel : 2018 Financial Results

Income statement (in million XOF)

39

CONSOLIDATED INCOME STATEMENT 12/31/2018 12/31/2017 12/31/2017 R TURNOVER 1 021 956 972 905 972 905 STOCKED PRODUCTION

• IMMOBILIZED PRODUCTION

2 040 4 687 4 687 OTHER OPERATING REVENUE 37 175 21 602 16 800 I - PRODUCTION FOR THE YEAR 1 061 170 999 194 994 393 CONSUMED PURCHASES 63 338 61 746 61 237 EXTERNAL SERVICES AND OTHER CONSUMPTIONS 416 938 390 339 390 869 II - CONSUPTION FOR THE YEAR 480 276 452 085 452 106 VALUE-ADDED OF THE ACTIVITIES 580 895 547 109 542 287 STAFF COSTS 108 417 94 069 93 625 GROSS OPERATING PROFIT 472 477 453 040 448 662 DEPRECIATION AND PROVISIONS 168 955 161 192 160 593 REVERSALS PRODUCTS 8 764 15 088 19 718 OPERATING PROFIT 312 286 306 936 307 787 FINANCIAL REVENUES 11 236 10 312 10 312 FINANCIAL EXPENSES 24 753 18 962 18 971 ORDINARY ACTIVITIES RESULT 298 769 298 285 299 128 O.O.A. RESULTS

• 3 380
• 1 662
• 1 662

RESULTS BEFORE TAX 295 390 296 624 297 467 TAXES DUE ON RESULTS 95 567 93 502 93 622 DEFERRED TAX 2 474

• 1 659
• 1 659

NET RESULT OF INTEGRATED COMPANIES 202 297 201 463 202 186 SHARE IN NET INCOME OF EQUITY AFFILIATES

• 46
• NET RESULT OF THE INTEGRATED COMPANY

202 251 201 463 202 186 PART OF MINORITY 29 784 29 662 29 732 PART OF THE CONSOLIDATED COMPANY 172 467 171 801 172 454

Sonatel : 2018 Financial Results

Sonatel : Résultats Financiers 2018

TAFIRE I (in million XOF)

40

AMOUNT AMOUNT (million XOF) (million XOF) GOP 470 137 (SA) FINANCIAL FEES 16 976 (TT) OPERATING EXPENSE TRANSFER 2 340 (SC) EXCHANGE RATE LOSS 5 880 (UA) FINANCIAL INCOME 5 531 (SL) EXPENSES OUTSIDE ORDINARY ACTIVITIES 320 (UE) FINANCIAL EXPENSES TRANSFER 1 (SQ) PARTICIPATION (UC) EXCHANGE RATE PROFIT 5 329 (SR) INCOME TAX 95 567 (UL) O.O.A PRODUCTS 1 875 (UN) O.O.A EXPENSE TRANSFER Total (I) 118 743 Total (II) 485 214 CAFG: Total(II) - Total(I) 366 471 FINANCING FROM CASH FLOW Dividends distributed during the fiscal year 195 404 AF = GCF – Dividends distributed during the fiscal year 171 067 WORKING CAPITAL NEED CHANGES (N.W.C) Change N.W.C = Inventory Changes + Debt Changes + Notes Payable Changes Inventory Changes Uses Resources N - (N-1) (increase +) (decrease -) (BC) Goods (BD) RAW MATERIAL AND OTHER SUPPLIES 1 103 (BE) IN PROGRESS (BF) MANUFACTURED PRODUCTS (A) INVENTORY GLOBAL NET CHANGES 1 103

TAFIRE I – next (in million XOF)

41

CHANGE IN RECEIVABLES Uses Resources (increase +) (decrease -) SUPPLIERS, ADVANCES PAID 5 718 CUSTOMERS 55 479 OTHER RECEIVABLES 60 352 CONVERSION GAP - ASSETS 1 583 TOTAL 66 070 57 063 (B)GLOBAL NET CHANGE IN RECEIVABLES 9 008 DEBT CHANGE Uses Resources (increase +) (decrease -) CUSTOMERS, ADVANCES PAID 589 TRADE SUPPLIERS 63 445 TAX LIABILITIES 32 526 SOCIAL LIABILITIES 3 108 OTHER LIABILITIES 66 739 CONVERSION GAP – LIABILITIES 36 PROVISIONS FOR CONTINGENCIES 171 TOTAL 66 761 99 854 (C)GLOBAL NET CHANGE IN DEBT 33 094 VARIATION DU BFE= A + B- C 25 188 OPERATING CASH SURPLUS OCS = GOP – N.W.C CHANGE – IMMOBILIZED PRODUCTION 2018 2017 GOP 470 137 448 662

• CHANGES IN NWC (NETWORKING CAPITAL)

25 188 16 943

• IMMOBILIZED PRODUCTION
• 2 040
• 4 687

GOP 493 286 460 919

Sonatel : 2018 Financial Results

TAFIRE II (in million XOF)

42

2018 2017 Uses Resources U - ; R + I-INVESTMENTS AND DISINVESTMENTS Fixed charges (increase during period) Internal growth Acquisition/Transfers of intangible assets 22 042

• 187 002

Acquisition/Transfers of tangible assets 195 562 7 784

• 176 612

External growth Acquisition/Transfers of financial assets 24 835 21 430

• 4 416

TOTAL INVESTMENTS 213 225

• 368 031

II-CHANGE IN OPERATING WORKING CAPITAL NEED 25 188 16 943 A-ECONOMIC USES TO BE FINANCED FF+GG 188 037

• 351 087

III-USES/RESOURCES (B.F.; O.O.A) 8 365 35 414 IV-RESTRAINED FINANCIAL USES 12 510

• 25 388

Refund (based on payment schedule) of loans and financial debts B-TOTAL USES TO BE FINANCED 208 912

• 341 061

V-INTERNAL FINANCING Dividends (uses) / CGF (resources) 195 404 366 471 159 534 VI-EQUITY FINANCING Increase in capital by new contribution 2 322 7 700 Investments from grants Equity withdrawals

Sonatel : 2018 Financial Results

2018 2017 Uses Resources U - ; R + VII-FINANCING BY NEW LOANS Loans 44 403 206 198 Other financing debts

• 1

C-NET FINANCING RESOURCES 217 792 373 430 D-EXCESS OR SHORTAGE OF RESOURCES FUNDING (C-B) 9 067 32 369 VIII-CASH VARIATION Net cash At the end of the period + or - 93 450

• 84 383

At the beginning of the period + or - 84 383

• 52 014

Cash change (+ if uses; - if resource) 9 067

• 32 369

CONTROL (Based on N and N-1 balance sheet volumes) Uses Resources 12/31/201 8 12/31/201 8 Working Capital change: WC (N) – WC (N-1) 5 990 Working Capital Need change: WCN (N) – WCN (N-1) 15 057 Cash change (T): T(N) – T(N-1) 9 067 TOTAL 15 057 15 057

TAFIRE II – next (in million XOF)

43

Statement of changes in equity (in million XOF)

44

Balance Social equity Other Count Final Before Issuance of share to Balance after Distribution Cash In-kind Incorporated Decrease Increase Decrease Conversion Account Distribution distribution distribution reserves variance Transfer

Equity 50 000

• 2 385

2 385 50 000 Issuance, merger, contribution premium 3 320 69 3 388 Re-evaluation variance

• 3 689

4 507 819 Legal reserve 22 709 106 222 23 036 Statutory and contractual reserves Other reserve 462 063

• 4 486

1 338 1 747 460 662 Carried over balance

• 20 648
• 3
• 2 079
• 22 730

Previous year result not yet allocated Result for the year 202 186 202 251

• 195 404
• 6 782

202 251 Investment grant Regulated provisions TOTAL 715 941

202 251

• 199 890
• 876

717 426

Table of changes, consolidated debts and off balance sheet consolidated commitments (in million XOF)

45

Balance Incurred Incorpo- Net Other Balance Collateral beginning debts Payments rated conversion movements end of

• f secured
• f year

to equity variance year debts (1) (2) (3) (4) (5) (6) (7) Convertible bond debts Other bonds debts Loans and debt credit institutions

156 492 43 185 14 775 51 184 954

Various financial loans and debts

1 837 3 329 57

• 10

5 099

TOTAL 158 329 46 514 14 832 41 190 053 OFF BALANCE SHEET CONSOLIDATED COMMITMENTS Engagements Given Received (1) (1) Secured commitments With real collaterals 743 Other secured commitments 6 047 5 082 Mutual commitments In terms of leasing Definite orders

Sonatel : 2018 Financial Results

Turnover breakdown table (in million XOF)

46 2018 2017 Turnover % of turnover Turnover % of turnover A)Sales allocation by activity Fixed lines 28 854 2.82% 30 202 3.1% Mobile lines including data 733 481 71.77% 670 788 68.95% Orange Money 62 793 6.14% 46 149 4.74% Fixed internet line 43 560 4.26% 39 979 4.11% National interconnection 29 943 2.93% 34 427 3.54% International interconnection 97 357 9.53% 124 580 12.80% Other wholesale (LL, Roaming, Operators) 10 762 1.05% 13 124 1.35% Data and integration 11 593 1.13% 11 219 1.15% Other income 3 613 0.35% 2 437 0.25% Total 1 021 956 100% 972 905 100% B)Sales allocation by geographic areas Africa (ECOWAS) 723 106 70.76% 693 550 71.29% Africa (outside ECOWAS) 214 448 20.98% 162 101 16.66% Asia 2 051 0.2% 2 025 0.21% America 1 092 0.11% 1 779 0.18% Europe 81 258 7.95% 113 450 11.66% TOTAL 1 021 956 100% 972 905 100%

Workforce per category

47 2018 2017 Workforce Payroll Workforce Payroll Staff under payroll 3 133 101 194 3 035 87 715 Manager and senior executives 1 587 61 870 1 473 50 201 Middle managers 1 046 28 044 1 022 26 982 Foremen 381 9 105 476 9 577 Employees and workers 119 2 175 64 955 Temporary staff 1 483 7 223 1 309 5 910 TOTALS 4 616 108 418 4 344 93 625

Sonatel : 2018 Financial Results

48

Notes on the consolidated accounts (in million XOF unless otherwise specified)

1- Immobilized charges 2018 2017 898 They correspond to the acquisition cost of fixed assets. With the SYSCOHADA reform, the balance was transferred to the transitional account 475100, then spread accross expense accounts by origin. 2 - Intagible assets Gross

• Amort. Net 2018

Net 2017 Software licenses, Patents, Trademarks 424 756

• 202 917

221 839 221 747 Business intangibles 3 092 578 3 670 3 077 Goodwill 73 983

• 11 919

62 063 72 781 501 831

• 214 258

287 573 297 606 This item is constituted of licenses to operate telecom networks for the mobile and the fixed lines, software licenses, patents and trademarks, as well as assets for Sonatel Mobiles, Sonatel Business Solutions and Orange Guinea. The increase is due to the acquisition of licenses and software by Sonatel, Sonatel Mobiles and Orange Mali. The 73 983 million in goodwill corresponds to the difference between the acquisition cost of Orange Sierra Leone and our shares in

• wnership in the mentioned subsidiary. In gross value, it decreased by 6 389 million, corresponding to the discount on the acquisition

price received from Bharti.

Sonatel : 2018 Financial Results

49

Notes on the consolidated accounts (in million XOF unless otherwise specified)

3 - Tangible assets

Gross Amort Net 2018 Net 2017

• Land and enhancement work

8 045

• 19

8 026 6 506

• Buildings and facilities

90 462

• 72 853 17 609

18 974

• Operating equipment: switching, transmission lines and networks, energy

1 630 299 -978 560 651 739 605 881

• Office furniture and equipment

87 211

• 66 985 20 226

13 091

• Vehicles

28 070

• 18 871

9 199 7 803 1 844 087

• 1 137 289 706 798

652 255 The increase in tangible assets from 2017 to 2018 is related to the strengthening of the investment programs thus resulting in the advancement of the following items (netted):

• Land and development work: +1 520 million,
• Buildings and installations: -1 365 million,
• Transmission: +46 702 million,
• Switching: +2 417 million,
• Data networks: -1 367 million,
• Energy: +5 016 million,
• Lines and networks: -17 million,
• Others: -6 893 million,
• Vehicles: +1 396 million,
• Office furniture and equipment: +7 135 million.

Sonatel : 2018 Financial Results

4 - Advances and installments on Fixed Assets 2018 2017 Advance payments are paid amounts to suppliers at the start of work. 5 - Financial Assets Gross Prov. Net 2018 Net 2017

• Non-consolidated securities

5 686

• 583

5 103 9 416

• Investment in equity affiliates

3 995 3 995

• Staff loans

127 377

• 347

127 031 123 404

• GOS loan

2 2

• Bonds

16 16 688

• Deposits and guarantees paid

8 466

• 1

8 465 3 048

• Deferred taxes - Assets

18 741 18 741 19 393 164 282

• 930

163 352 155 950 Change in non-consolidated securities (see detail for 6th point - non consolidated securities) is due to integration of GOS (Orange Services Group) in the consolidation scope. The item Staff loans correspond to loans granted to employees. The decrease in bonds is explained by coupons reimbursement on government bonds in Senegal. Deposits and guarantees increased by 5 417 million due to the security deposits transferred to Huawei by Orange Mali for the project to outsource network maintenance; and security deposits transferred by Orange Guinea to Total (supply in fuel) and IPT Powertech Guinea SA (ESCO project) for the amount of 2 742 million. Deferred taxes – assets are a result of the temporary differences between the accounting and tax results. 50

Notes on the consolidated accounts (in million XOF unless otherwise specified)

51

Notes on the consolidated accounts (in million XOF unless otherwise specified)

6 - Non-Consolidated securities Gross Prov. Net 2018 Net 2017 SCGB SA 3 3 AMC (OSL) 1 1 Canal Horizons 5 5 5 Rascom 794 794 794 Ico 533

• 533

Technopole 8 8 8 Jeune Afrique 100

• 50

50 50 Orange Services Group 4 420 Guilab 3 785 3 785 3 681 Teranga Capital 446 446 446 GIM UEMOA 12 12 12 5 686

• 583

5 103 9 416 7 - Net inventory Gross Prov 2018 2017 14 345

• 1 188

13 157 14 236 Gross inventory essentially consists:

• fuel: 8 million
• lines and networks supplies : 3 322 million
• terminals for subscribers: 4 866 million
• phone cards: 2 651 million
• peritelephony: 1 106 million
• internet keys: 226 million
• office furniture: 132 million
• in-route inventory: 2 040 million

The decrease is explained partly by the disposal of terminals (-1 584 million), phone cards (-763 million), and peritelephony (-200 million), and the

• ther hand by the storage of lines and network supplies (+840 million) and of in-route inventory (+840 million).

Inventories considered dead (disqualified), dormant (unused for a year) and defective are depreciated at a 100%.

52

Notes on the consolidated accounts (in million XOF unless otherwise specified)

8 - Net Accounts Receivable Gross Prov 2018 2017

• Receivables residential customers

53 643

• 27 156

26 487 34 562

• Receivables Clients State

10 958 10 958 13 196

• Receivabless Clients Operators

67 500

• 3 148

64 352 43 542

• Services to be billed

27 938 27 938 29 652 160 039

• 30 303

129 735 120 951 The decrease in residential clients receivables is a result of an improvement in collection. Receivables state (Government of Senegal) is still decreasing with the government plans to decrease its phone bill. The increase in receivables operators results from a collection problem with the operators TIGO, EXPRESSO and HAYO in Senegal. Services to be billed take into account billing for December or the fourth quarter for 2018 for mobile and fixed lines, internet, business solutions, hubbing, roaming, as well as national and international interconnection. Doubtful debts are 100% provisioned based on seniority:

• fixed line residential clients for over 6 months,
• mobile clients for over 90 days,
• operators (Africa, Latin America and Asia) for over 12 years and on a case-by-case basis for other countries.

Receivables are considered as bad debts and written off after 5 years apart for operators subject to the discretion of the portfolio managers.

Sonatel : 2018 Financial Results

53

Notes on the consolidated accounts (in million XOF unless otherwise specified)

9 - Other Net Receivables Gross Prov 2018 2017

• Advances and payments to suppliers

10 701 10 701 5 472

• Advance and payments to staff

600

• 53

547 685

• State taxes and taxes receivable

86 416 86 416 75 297

• Current accounts of the group's companies

1 658 1 658 5 966

• Other debtors

53 662

• 192

53 470 32 379

• Regulatory account - Asset (conversion differences)

2 528 2 528 2 629 155 564

• 245

155 319 122 428 The increase in advances and payments to suppliers is attributable to credit notes accounted for from international operators by Sonatel Mobiles (2 963 million), Orange Guinea (1 363 million), suppliers advances for OSL (8 931 million), plus an advance of 1 168 paid by Sonatel to Main One for the project for the submarine cable. The considerable increase in taxes is largely due to IS and IRVM advances paid in the different countries of presence and to tax credits. The payment by Orange SA of an old receivable on Sonatel justifies the decrease in the balance in the Group’s companies current accounts. The increase by 21 091 million in other debtors is explained by the acquisition of shares to be distributed to the staff in Senegal (+1 865 million), the increase in CSM receivables (+1 417 million) due to rejected settlements that were to the profit of Sonatel, because of issues related to bank details (resolution in-progress), the transitional account associated with the SYSCOHADA reform (1 706 million), operators netting in OSL (8 945 million) as well as ATD. NB: Foreign currency receivables are valued at closing price.

Sonatel : 2018 Financial Results

54

Notes on the consolidated accounts (in million XOF unless otherwise specified)

10 - Net Cash Assets 2018 2017

• Banks

218 856 157 578

• UV Orange Money in circulation (electronic money)

88 780 66 286

• Cash register

1 216 534

• Treasury

5 465 3 386

• Investment assets

3 123 3 556 317 439 231 339 There is a increase of 61 091 million in bank balances. UV Orange Money in circulation is growing thanks to the development of e-money issuance and distribution to satisfy demand. The increase in balance in Treasury results from an outsourcing of the collection for roaming to the clearing house. The decrease in investment assets is explained by the evolution of the equity portfolio mechanism.

Sonatel : 2018 Financial Results

55

Notes on the consolidated accounts (in million XOF unless otherwise specified)

11 - Equity 2018 2017

• Capital

50 000 50 000

• Unavailable reserves

23 037 22 710

• Other reserves

412 178 413 579

• Regulated reserves

48 484 48 484

• Share premium, issuance and fusion

3 387 3 319

• Conversion gap

819

• 3 688
• Retained earnings
• 22 730
• 20 648
• Profit attributable to parent company

172 467 172 454

• Quote minority

29 784 29 732 717 426 715 941 Unavailable reserves correspond to the legal reserve capped at 20% of the social capital of each company. Other reserves are free reserves amounted annually during profit allocations. Regulated reserves only account for the provision for the renewal of tools and equipment. The exchange differences are due to the impacts in conversion of the opening capital of Orange Guinea (Guinean Franc) and of Orange Sierra Leone (Leone). The balance for retained earnings corresponds to the net losses of Orange Finances Mobiles Senegal and Orange Sierra Leone. Overall, change in equity from 2017 to 2018 results from the allocations of profits in reserves and a non-Group dividends distribution for the amount of 195 404 million.

Sonatel : 2018 Financial Results

56

Notes on the consolidated accounts (in million XOF unless otherwise specified)

12 - Financial liabilities and Assimimilate Ressources 2018 2017

• Deferred taxes - liabilities

649 661 Deferred taxes – liabilities are generated by the tax adjustment of the gains to be reinvested from the disposal of buildings. 13 - Loans and Financial Debts 2018 2017

• Bank loans

185 506 152 043

• Security deposits

1 912 1 837

• Accrued interest

2 634 4 449 190 053 158 329 The increase in bank loans is due to subscription to new funding in Mali (+45 billion), in Sierra Leone (Orange shares) and to the reimbursements paid by Sonatel for 14 745 million. Security deposits consist of payments made by clients as an advance on consumption for taken subscriptions.

Sonatel : 2018 Financial Results

14 - Provisions of risks and charges 2018 2017

• provisions for disputes

9 989 3 270

• provisions for risks

3 635 4 232

• pension provisions

20 915 18 517

• provisions for other charges

37 754 33 674 72 293 59 694 Provisions for risks and charges increased due to:

• provisions for fiscal risk at Sonatel;
• change in calculation method for retirement provisions following the SYSCOHADA reform that calls for the evaluation of the

retirement commitments using the actuarial method. An actuarial firm accompanied the entities of the Sonatel Group in the before mentioned process;

• provisions for the spread of the acquisition costs for the complementary shares distributed to the staff.

15 - Accounts payable 2018 2017 Trade suppliers 199 630 199 801 Invesment suppliers 64 603 73 216 264 233 273 017 Trade payables globally decreased with reliability works notably in Senegal with the switch to unconfirmed long-outstanding balances. NB: The contract term for supplier credit is on average 60 days upon receiving the invoice.

57

Notes on the consolidated accounts (in million XOF unless otherwise specified)

Sonatel : 2018 Financial Results

58

Notes on the consolidated accounts (in million XOF unless otherwise specified)

16 - Other liabilities 2018 2017

• Social and tax liabilities

161 589 131 560

• Current accounts

3 127 1 460

• Customers - advances received

7 886 7 269

• Other payables

131 880 100 500

• Regulatory account liabilities (conversion differences)

249 277 304 730 241 065 The decrease in social liabilities by 3 073 million is mainly due to full payment of December performance bonus, contrary to previous years during which only advances were paid. Tax liabilities comes up to 149 720 million. The increase in the current accounts is attributable mainly to the Orange SA account balance in Sierra Leone. Payables Clients increased by 1 649 million as credits granted to operators decreased following the implementation of net rates. The increase in other liabilities results from Orange Money's payables with the emission of electronic money and the operators netting in OSL. 17 - Treasury Liabilities 2018 2017 Banks 223 989 146 956 The increase in bank credit balance 77 032 million results from a recourse to spot credit.

Sonatel : 2018 Financial Results

59

Notes on the consolidated accounts (in million XOF unless otherwise specified)

18 - Turnover Turnover is comprised of: 2017 2018 Var.

• Fixed line

28 854 30 202

• 4,5%
• Mobile (data included)

733 481 670 788 9,3%

• Orange Money

62 793 46 149 36,1%

• Internet fixed lines

43 560 39 979 9,0%

• National Interconnection

29 943 34 427

• 13,0%
• International interconnection

97 357 124 580

• 21,9%
• Other wholesale (LL, Roaming, Operators)

10 762 13 124

• 18,0%
• Data and Integration

11 593 11 219 3,3%

• Other revenues

3 613 2 434 48,4% 1 021 956 972 902 5,0% The consolidated turnover increased by 5% as a result of:

• 4.5% decrease in the fixed line due to a continuous drop of its activities;
• 9.3% growth with the mobile thanks to a sustained strong commercial position, the development of usages (data, VAS);
• powerful growth of Orange Money by 36.1%; veritable growth relays, growth in Orange Money compensate for the loss in Voice and Text;
• 9% progression of the internet fixed line through the development of Internet offers;
• 13% decrease in national interconnection pushed by the retroactive decrease in tariffs in Senegal and Mali;
• stronger decrease in international interconnection (21,9%) linked to the decrease in international incoming traffic with the augmentation
• f OTT;
• 18% decrease in other wholesale products driven by operator’s Roaming in Senegal and Sierra Leone, and leased lines in Senegal;
• 3.3% hike for integration;
• increase in other revenues +48.4%.

Sonatel : 2018 Financial Results

60

Notes on the consolidated accounts (in million XOF unless otherwise specified)

19 - Consumptions Consumptions for the year are:

2018 2017 Var.

• Purchases

61 094 59 122 3%

• Transport

2 244 2 114 6%

• External services

345 745 335 081 3%

• Taxes

46 093 39 746 16%

• Other expenses

25 099 16 042 56% 480 276 452 106 6%

The increase in purchases is attributable mainly to the increase in consumption fuel and electricity in the technical sites in Guinea, Mali and Senegal to a lesser

• extent. The purchase of terminals increased in Senegal to accompany the development of fiber, as well as the vulgarization of data usage; same goes for the

modems (livebox, flybox). The purchase of phone cards decreased notably in Senegal, Mali and Guinea with the development of e-charge. The development of the integration offer also brought an increase in the purchase of lines and network supplies. The small increase in transport costs is due to travel expenses. The variation in external services is a decrease in relative terms (+11% in 2017 and +3% in 2018). The significant activities that explain the increase in external services are:

• an increase in the outsourcing and maintenance of the networks following the externalization of some activities: ANO royalties in Mali, ANO and GNOC royalties in

Guinea and the deployment of fiber in Senegal,

• an increase in commercial fees, notably those related to Orange Money (service fees on transactions, distributor service fees indexed on turnover),
• a decrease in international revenues with the decline in international incoming traffic and volume as a result of the OTT,
• a decrease in expenses for leased satellites with the optimization of bandwidth,
• repayments for VAS to SMS+ partners and other service platforms increased following the development of value added services and the growth of data,
• an increase in guarding and security charges, notably in Mali with an on-site management of security with the transfer of ANO to Huawei,
• an increase in honorary paid to computer experts,
• an increase in other charges indexed on turnover notably management fees paid to Orange, brand fees.

The increase in taxes is explained by a boost in the following charges indexed on turnover: TARTOP in Mali, TARTEL in Guinea and CST in Senegal (1% rate increase) despite the gain realized in Senegal on the deductibility of V.A.T for OFMS. The increase in other expenses is due to a depreciation of "para official" clients and receivables on the CSU operator in Senegal.

61

Notes on the consolidated accounts (in million XOF unless otherwise specified)

20 - Other charges 2018 2017 Var.

• Staff costs

108 417 93 625 16%

• Depreciation, amortization and provisions

168 955 160 593 5%

• Financial expenses

24 753 18 971 30%

• Expenses excluding Ordinary Activity of Corporation tax

13 084 19 168

• 32%

315 210 292 357 8% The increase in staff expenses comes mainly from Senegal and is due to a three-year increase in salaries, retirement and pre-retirement benefits. Correlatively, career-end special bonus equivalent to the complementary shares for career-end increased, as well as performance bonuses and provisions for vacations calculated on payroll. Depreciation increased in all countries of presence. This can be explained by a sustained level in investments in these last years to support growth in data and meet the requirements for quality of service in the different countries. The increase in provisions is due to a change in the evaluation method for the retirement provision with the SYSCOHADA reform (actuarial method), the provision for fiscal risk in Senegal, and attenuated by the provision for the loyalty bonus (impact

• f the regulation effect on "PE" shares in 2017.

Financial expenses increased by 5 782 million due to the bank loan taken in Mali, loans granted by Orange SA to OSL and the recourse of Sonatel to spot credits. O.O.A expenses went down by 6 084 million after the strong increase recorded in 2017.

Sonatel : 2018 Financial Results

62

Notes on the consolidated accounts (in million XOF unless otherwise specified)

21 - Other income 2018 2017 Var.

• Other operating income

37 175 16 800 121%

• Reversals of provisions and expense transfers

8 764 19 718

• 56%
• Immobilized production

2 040 4 687

• 56%
• Financial income

11 236 10 312 9%

• Products out of Ordinary Activity

9 659 17 507

• 45%

68 874 69 024 0% The increase in other operating income is due to numerous adjustments completed during the year, and effects from the decrease in 2017. Reversals of provisions corresponds to the annulment of redundant provisions from 2017. The can be explained by their significant level in 2017. The decrease in immobilized production is a result of charges related to information technology project no longer being systematically immobilized . Financial income comes from financial investments. Revenue outside the Ordinary activity decreased with the decline in income from sales of fixed assets.

Sonatel : 2018 Financial Results

63

Notes on the consolidated accounts (in million XOF unless otherwise specified)

22 - Off-balance sheet commitments In 2018, the Group received and distributed off balance sheet commitments as follows: a) - Guarantees received 2018 2017

• Guarantees from providers

5 082 2 843

• Staff pledged shares

743 843 5 826 3 686 b) - Guarantees given 2018 2017

• Blocked term accounts for AFD Dakar 94

300

• Customs credit deposits

1 400 700

• Market bid deposits

4 647 1 007

• Irrevocable lease term deposit

795

• Certificate of financial standing

5 400 6 047 8 202 23 - Events after balance sheet date NRT

Sonatel : 2018 Financial Results

• Consolidation principles

Subsidiaries under exclusive control are consolidated using the full consolidation method.

• Cf. page 5: consolidation scope
• Financial statements presentation

Financial statements are prepared in accordance with the SYSCOA method: balance sheet, income statement, cash flow statement (TAFIRE), notes, appendices.

• Basis of preparation of financial statements

Financial statements are prepared on a historical cost basis and presented according to the principles and methods accepted in the countries of presence. They comply with the West African Accounting System (SYSCOA) in place since January 1st, 1998.

• Intangible assets

They are amortized over a five-year period. Disassociated software (invoiced separately from the computer equipment) are capitalized and amortized on a estimated useful life of 3 years. Exchange differences to distribute are evaluated in accordance with foreign currency

• perations principles.

64

Accounting methods and principles

Sonatel : 2018 Financial Results

• Tangible assets

They are evaluated at their acquisition cost which consists of the purchasing price and approach expenses and amortized under the straight line approach over the below specified estimated periods: Fixed assets in progress are recorded at their acquisition cost and re-classed as tangible once in service.

• Other current assets

They consist of home loans and personnel vehicles, government loans to the staff to acquire shares of the group (10%), security and guarantee deposits paid on water and electricity subscriptions as well as prepaid rents and equity. The assets are recorded and evaluated at their historical cost. On securities, depreciation provisions are taken into account when the closing value is inferior to the historical cost. Closing value is either the stock price of the listed securities; or net asset value for the unlisted securities.

65

Accounting methods and principles

Sonatel : 2018 Financial Results

• Inventories

Inventories are evaluated at the weighted average cost of purchase. Retained value for local purchases corresponds to the non-revisable historical cost cited as annex in the market contract. Purchasing cost

• f

imported products corresponds to market plus customs duties and transit fees. Depreciation provisions are applied at a 100% on defective, dormant (inventory that registered no activity for a year) and dead (declassified or unused inventory for 3 years) inventories.

• Receivables

 Accounting services to Local customers Services to local customers are invoiced in XOF

• n the issue date of the bill and recorded in the 41
• accounts. Unbilled services by the closing date are

recorded in the 418 accounts (Accrued income). Sold top-up cards that are unused are recorded as deferred revenue. Doubtful debts from residential clients are depreciated at a 100% when: left unpaid for more than 6 months for the fixed line; left unpaid for more than 90 days on the mobile

66

Accounting methods and principles

Sonatel : 2018 Financial Results

 Accounting for revenue from International traffic

• Traffic balances are recorded on a monthly, bi-

monthly or quarterly basis depending on the account balance for the month, two-month period or quarter, as a credit or debit line once accepted by the concerned foreign correspondent. A provision is calculated year-end for all traffic balances not yet accepted. They are recorded in 418300 accounts (Accrued income) when the balance is in favor of Sonatel and as Accrued liabilities otherwise in the Accrued expenses payable account (408400). Exchange rate gains and losses are recorded in the balance sheet in accounts 478 and 479 “conversion variance”. Receivables from the foreign correspondent are depreciated on a case-by-case basis depending on the creditworthiness of the correspondent.

• Foreign currency transactions

Foreign currency operations are converted at the exchange rate prevailing on the date they are recorded. Foreign exchange differences are recorded as currency gains or losses on the settlement date. Foreign currency accounts are converted at the exchange rate prevailing on closing date. Potential currency gains are recorded as exchange rate gains or losses rather than as revenues. Unrealized exchange rate losses give rise to a provision for risks.

67

Accounting methods and principles

Sonatel : 2018 Financial Results

 Income statement Unrealized exchange rate losses on operations

• ver a year old are recorded as liabilities in the

“Provision for exchange rate losses” account and the counterpart is reported to the assets in account 478 “Exchange rate differences”. Unrealized exchange rate losses on less than a year-old operations are recorded in 679 with a credit to account 499. Losses in the cash accounts are reported in the income to offset the Cash account.

• Investment grants

They are transferred to the Accruals and deferred liabilities. The offset is recorded on the income statement.

• Provisions for risks liabilities and charges

 Disputes

All potential risks associated with litigations with third parties are provisioned according the information provided by group’s legal services. Unjustified provisions are accounted for in the income statement.

 Retirement benefits

Due employee benefits at the time of retirement or in the case of a contractual framework are subject to a provision for expenses. With the SUSCOHADA reform effective since January 1st, 2018, the provision was evaluated according to the actuarial method. Deferred taxes Deferred taxes are recorded to offset to the temporary effect

• f

revenues and expenses due to tax

• considerations. The liability method is applied.

68

Accounting methods and principles

Sonatel : 2018 Financial Results

Accounting methods and principles

• Electronic money

Orange Money is a mobile payment offering marketed by e-money institutions “EMI” certified by BCEAO or the central bank of Guinea It consists of issuing and distributing electronic money or units of value that can be used for commercial transactions. Currency in circulation is recorded in the 514xxx cash account and offset as debts posted to the 472xxx accounts by category (vendors, biller, merchants and end-consumer). Issued money not distributed stay in the “EMI” main cash account. Paid commissions are posted as expenses and offset as revenues.

69

Sonatel : 2018 Financial Results

Sonatel : 2018 Financial Results

2018 Dividend draft resolution

DRAFT RESOLUTION : FISCAL YEAR 2018 INCOME ASSIGNMENT

• The Shareholders’ Assembly approves the proposal of the Board of

Directors and will allocate the entire profit of SONATEL SA for the year ended December 31st, 2018 to dividends.

• In addition, the Shareholders’ Assembly decides to take XOF

59,727,203,951 from free reserves for dividends pay-out.

• Consequently, the Ordinary Shareholders’ Assembly sets the gross dividend

due on each share at XOF 1,667.

• After deduction of the IRVM withholding tax of 10%, XOF 1,500 net dividend

will be paid per share from May 14th, 2019.

70

t h a n k y

• u