Annual Report of Activities Sonatel 2014

annual report of activities Sonatel 2014

annual report foreword

This report is a reflection of our vision, full of

optimism and looking to the future. The African

hairstyle is a living art, constantly evolving.

As the continent itself, it is incredibly rich,

creative and varied. It feeds, influences and

reinvents itself every day to build a perfect

bridge between tradition and modernity.

Today, African hairstyle has managed to cross

borders to meet international recognition. No

wonder, that the photographs in this report are

derived from a cosmopolitan collaboration.

Summary letter from the Chairman p 06 message from the Managing Director p 08

1. good governance, pledge for transparency p 11

2. human Resources: transformation of human capital to meet Sonatel strategic challenges p 23 2.1 competency Development: more professional teams p 23 2.2 health: Welfare at Work :pledge of productivity p 24

3. Sonatel Citizen involvment p 29 3.1 Sonatel, operator engaged in the economic and social development in the countries of its presence p 29 3.2 philanthropy: 13 years of Sonatel Foundation’s commitment for the welfare of Senegalese population p 31 3.2.1 health: actions in six priority areas p 31 3.2.2 education: access and excellence for all p 32 3.2.3 promotion of culture in Senegal p 33

4. our activities p 35

the Senegalese market 4.1 mobile: Orange has captured over 76% of growth market in 2014 p 35 4.2 fixed-lines and Internet: development of usages p 37 4.3 corporate service p 38 4.3.1 better focus on SMIs/ SMEs with the multiplying of the number of Pro spaces p 38 4.3.2 launch of B2B structuring offers p 38 4.4 pursuit of customer service transformation project, a key factor of differentiation and customer loyalty p 39

our subsidiaries abroad 4.5 Orange Mali : Growth despite difficult economic and security conditions p 40 4.6 Orange Guinea : continued leadership and coverage of all sub-prefectures p 42 4.7 Orange Bissau consolidates its leadership through innovation p 42 4.7.1 significant investments to improve the service quality of the mobile voice network p 43 4.7.2 foundation for a strong CSR policy p 43

5. networks and information systems: Orange, leader on technical service quality p 45 5.1 mobile network modernization p 45 5.2 increase of 3G speeds p 45 5.3 4G test successfully managed in Senegal by Sonatel p 45 5.4 Evolution of IP core network, Voice, Mobile, national and international transmission and service platforms p 46

6. Sonatel in the world p 49

7. finance p 53 7.1 key figures p 54 7.2 Sonatel traded share p 61 7.3 financial report p 63

8. annexes - financial statements p 84 - general and special reports such as Auditors’ Reports p 117

5 Sonatel 2014 annual report of activities

n 2014, Sonatel Group has once again confirmed its leadership and good operating Iresults in all countries of its presence. The international subsidiaries, Orange Mali, Orange Guinea and Orange Bissau this year contribute for 56 percent to the consolidated net income and 48% to Group sales.

Senegal, with a weight of 44 percent remains the main contributor to the group’s net result in 2014 amounted to 218 billion XOF representing growth of 15.1 percent.

This year, the Group’s Turnover has maintained in a double-digit growth (10.5 percent) and reached 816 billion XOF. Marc Rennard It should be noted however a stagnation of activity in Senegal where the market matures. Chairman of the Board The intensification of competition, the regulatory and tax burden increasingly strong in the telecommunications sector also explain this situation.

6 annual report of activities Sonatel 2014

Chairman’s letter

Despite this, the Sonatel group continues to remain a key player in the creation of wealth in all countries of presence and particularly in Senegal.

Sonatel share price greeted this performance, reaching a record level of 24,600 XOF in continuous trading since 2013.

Moreover, Sonatel will continue its investment efforts to increase the coverage of population and accelerate the transition of network equipment to the latest technology. The successful testing of 4G in Senegal is a demonstration, pending his next commercial launch.

Along with the Managing Directorate, Sonatel Board of Directors extends its congratulations for these good results to all employees of Sonatel Group in the four countries, their commitment and mobilization have allowed these beautiful performances and all encouragement for the future.

Sonatel will have the support of the Board to remain a key player in the development of the digital economy in West Africa.

7 Sonatel 2014 annual report of activities

long with the good results recorded in the previous year, Sonatel Group was able in 2014 to confirm his leadership and its strong operational and financial performance in all Acountries of its presence through its capacity for innovation, its operational excellence, good sales momentum and the maintaining of a sustained level of investment.

The group’s turnover amounted to 816 billion XOF, up by 10.5 percent over 2013. The net profit amounted of 218 billion XOF representing an increase of 15 percent.

Compared to the year 2013, the growth in sales turnover (+ 78 billion XOF) is exclusively driven by overseas subsidiaries. Alioune Ndiaye However, Senegal still retains in a dominant Managing Director position with a contribution of 52 percent on turnover against 48 percent of turnover for the other subsidiaries.

In addition, Sonatel international subsidiaries account for over two thirds of the group’s clients whose number reaches 26 million in late 2014.

8 annual report of activities Sonatel 2014

Message from the Managing Director

The Ebitda margin remained stable (52 percent) of a customer service meeting the highest despite new unfavorable tax and regulatory international standards. measures, illustrating our efforts to control costs. The transformation projects will therefore The growth drivers such as mobile internet continue in the context of a permanent and or Orange money have experienced strong constructive dialogue with all our stakeholders dynamic: Orange Money turnover grew by 5 to adapt the company to the challenges it will billion XOF in Mali and has multiplied by 3.5 in face tomorrow. Senegal. For 2015, the Sonatel group already knows it can In 2014, Sonatel Group remains the main count on the commitment of its employees and contributor to budget revenues of countries the support of its key stakeholders such as the with presence with 374 billion XOF in various Government of Senegal and the Orange group. contributions. Sonatel intends to be the preferred partner of The regulatory and competitive environment the Government of Senegal for the emergence is getting tougher but the Sonatel Group will of the digital economy in the Senegal Emergent strengthen its investments in all countries of Plan (SEP) and the challenge of digital inclusion presence and deploy new innovative services in all countries of presence. so as to support its expansion and maintain its leadership in the telecommunications sector to face the competition.

The dynamics of conquest will be supported by the group including strengthening the quality of technical service, extension and modernization of the network and by the establishment

9 Sonatel 2014 annualrapport report annuel of activities

10 annual report of activities Sonatel 2014

GOOD GOVERNANCE PLEDGE FOR TRANSPARENCY

Few words on governance

>Since May 5, 2014, the date of entry into force of the new OHADA Uniform Act (Organisation for the Harmonization of Business Law in Africa) relating to Commercial Companies and Economic Interest Group (EIG), all corporations have a legal obligation to bring to the attention of their shareholders a certain amount of information including on the governance of their company.

These are the items 547-1, 831-2 and 831-3 of the above mentioned Uniform Act that determine the new rules.

Sonatel did not wait for the new arrangements to share with its shareholders its governance rules for since 2009, its governance is comprehensively presented in its annual report for its shareholders.

Here is the new version taking into account these new aforementioned legal provisions.

1.1 Shareholders’ participation modalities at the General Meeting

he right to attend General Meetings is subject to Regardless of the number of shares held, shareholders registration of the shareholder’s name on the share may participate in or be represented at the Extraordinary Tregister, five days before the meeting. General Meetings. The accounting entry of the shares on behalf of the Any shareholder may be represented by their spouse shareholder or the interim on his behalf, on the third or by an agent of his choice, shareholder or not a business day preceding the Meeting at midnight, local shareholder himself. time, in the share bearer records kept by the Stock Exchange Securities (BRVM) also justifies the right to Every shareholder has as many voting rights as shares participate in General Meetings. he owns and represents.

Any shareholder (or group of shareholders) representing The representative of a shareholder has the voting rights at least one hundred (100) shares may attend or be of its mandate under the same conditions and the same represented at Annual General Meetings. limit.

11 Sonatel 2014 annual report of activities

1.2 Update on the status of the employee participation in the capital as of 31 December 2014 onatel gives a special importance to the On 31 December 2014, the Sonatel Group has 2,700 shareholder of its staff and it is for this purpose employees, including 1,751 in Senegal. Sthat since its IPO in 1998, all staff is a shareholder. On 31 December 2014, 1,737 Sonatel employees are This staff shareholders in the Sonatel Group’s companies shareholders representing a stake in the share capital of is now cited as an example, each employee feeling to a up to 8.1 percent. higher level concerned with the future of his business.

This example is replicated elsewhere today in many companies.

1.3 Composition of the Board of Directors

n 31 December 2014, the Board of Sonatel has • Mr. Thierry Breton, Director, 10 members (9 Directors and one representative • Mr. Fabrice Andre, Director, Oof the Financial Controller) • Mr. Mamadou Diop Aïdara, Director, • Mr. Hugues Foulon, Director, • Mr. Marc Rennard, Chairman of the Board of Directors, • Colonel Birane Diouf, Director, • Mr. Mamadou Sarr, Director, • Mr. Abdoulaye Kamara, representing the Financial • Mr. El Hadji Abdoul Aziz Mbaye, Director, Controller. • Mr. Cheikh Tidiane Mbaye, Director,

1.4 Mandates and functions held by each Director

s of 31 December 2014, the mandates and Mr. Cheikh Tidiane Mbaye functions are exercised by nine directors of • Mandates and functions within Sonatel: Director A Sonatel: • Other offices held in Senegal: Director in Grande Côte Operation Senegal, Societe Generale de Banques Mr. Marc Rennard au Senegal, Total Senegal and Senegal Chain Hotel • Actual mandates and functions within Sonatel: (Radisson) Chairman of the Board, • Other mandates held in Senegal: none Mr. El Hadji Abdoul Aziz Mbaye • Mandates and functions within Sonatel: Director Mr. Mamadou Aidara Diop • Other offices held in Senegal: Chairman of the • Mandates and functions within Sonatel: Director Supervisory Board of the Agency of Government • Other offices held in Senegal: Director at the Social Information Technology (ADIE) Security Fund Mr Mamadou Sarr Mr. Hugues Foulon • Mandates and functions within Sonatel: Director, • Mandates and functions within Sonatel: Director, Member of Audit Committee Member of Audit Committee • Other offices held in Senegal: Director within APIX, • Other offices held in Senegal: none ENA and BICIS,

12 GOOD GOVERNANCE PLEDGE annual report of activities Sonatel 2014 1 FOR TRANSPARENCY

Mr Fabrice Andre Mr. Birane Diouf • Mandates and functions within Sonatel: Director • Mandates and functions within Sonatel: Director • Other offices held in Senegal: none • Other offices held in Senegal: none

Mr Thierry Breton • Mandates and functions within Sonatel: Director • Other offices held in Senegal: none

1.5 Conditions of preparation and organization of the Board’s work

he rules governing the preparation and organization The Chairman of the Board of Directors may invite of the Board’s work are set by the Statutes and the members of the Sonatel management team, after TRules of Procedure of Sonatel. consultation with the Managing Director, according to the issues on the agenda. The President established at the beginning of each year the biannual schedule of meetings. The calendar of the In any event, the Board of Directors may, in each of its second semester is established before the end of the meetings, in an emergency and Chairman’s proposal, first semester. deliberate on any matter not included on the agenda presented to it. The notices of Board meetings specifying the agenda are sent by registered mail, e-mail the President, fifteen The Board’s deliberations are recorded in minutes drawn (15) days before the date of the meeting or three (3) days up by the Chairman of the meeting and the Secretary before the meeting date in case of emergency. and signed by the Chairman of the meeting and at least one Director. The urgency of the decision or decisions are left to the discretion of the Chairman of the Board of Directors.

The documents relating to the items on the agenda are sent to the Directors at least: • ten (10) days prior to any meeting when it comes to documents submitted for decision making, • five (5) days (including a weekend) before any meeting when it comes to documents provided for information purposes.

1.6 Applying governance codes of the ISA and the SCCP

onatel is referring since 2011 to Business We can mention among rules enacted: Governance Code developed by the Senegalese SInstitute of Directors (ISA). • the relationship between Sonatel and its shareholders resulting fair treatment of shareholders and the The purpose of this code is to promote good governance transparency and quality of information transmitted, practices in companies both in public and private • rules relating to the roles, missions, composition, sectors. functioning and the Board committees, • the relationship between the Council, the General The provisions of the Code, inspired by the OHADA law Management and Executives, are a set of rules of good conduct for companies. • the Council and the auditors, • the Council and other stakeholders. The Board of Sonatel has chosen to follow the rules defined by this Code because these texts highlight the code of good governance practices to know.

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Sonatel, since 2012, also refers to the Code of Conduct This Code is based on three guiding principles: for Private Sector Enterprises in Senegal developed • ethics in its definition and the implementation of by the Private Sector Coalition against Corruption (SCCP) policies and development strategies in line with ethical which was set up by the Government of Senegal and the principles, World Bank which see corruption as a limiting factor for • social responsibility with a commitment beyond the economic and social development of Senegal. purpose of profit, to build a responsible corporate citizen concerned about his social environment. Sonatel has adhered to the Code of Conduct which: • corporate governance by applying the basic principles of the Senegalese Institute of Directors (ISA) in • establishes guidelines and rules of conduct for the particular the integrity of leaders, and respected fight against corruption the clear definition of roles between the Assembly • promotes ethics and good corporate governance in of shareholders, the Board of Directors and General private sector companies, and in the relations between Management and finally the rights of shareholders and the private sector companies and between firms, equality in their treatment. administrations, customers and consumers. These codes are available from these institutions.

1.7 Principles and rules for determining compensation and benefits granted to corporate officers

he remuneration and benefits of Directors are This Committee had thus made a proposal to the Board determined in accordance with the provisions of which will make the decision. TAUSCGIE: it is an initial decision of the Board. The Board of Directors No. 141 dated on 2 February 2012 The allowances of the Directors set by the Board of Directors had set the duty allowances which are paid to the directors shall however be approved by the Annual General Meeting. present at the relevant meetings (Boards of Directors, the Audit Committee). Upstream of this legal procedure, Sonatel has set up since April 2008, a Nomination and Remuneration Committee An overall budget had been allocated by the Sonatel whose responsibilities include making such proposals to Ordinary General Meeting on 8 April 2009. the Council on: This envelope is equal to 65 million XOF per year. • duty allowances for directors, • the remuneration policy for Sonatel corporate officers • remuneration, mobility of executives and the Sonatel employee shareholding policy.

14 GOOD GOVERNANCE PLEDGE annual report of activities Sonatel 2014 1 FOR TRANSPARENCY

1.8 Total compensation and benefits of any kind paid to each Director

During 2014, the Board of Sonatel met five (5) times, the Audit Committee one (1) time.

During the year 2014, the duty allowances were paid to the directors present at meetings (Board of Directors and the Audit Committee) in the following proportions:

Audit Directors Board of Directors Total Committee

Mr. Abdoul Aziz Mbaye 4,000,000 XOF 4,000,000 XOF

Mr. Birane Diouf 1,600,000 XOF 1,600,000 XOF

Mr. Cheikh Tidiane Mbaye 3,200,000 XOF 3,200,000 XOF

Mr. Mamadou Diop Aidara 4,000,000 XOF 4,000,000 XOF

Mr. Mamadou Sarr 3,200,000 XOF 800,000 XOF 4,000,000 XOF

Mr. Bernard Ghillebaert *** 4,000,000 XOF 4,000,000 XOF

Mr. Hugues Foulon 3,200,000 XOF 800.000 XOF 4,000,000 XOF

Mr. Marc Renard 7,000,000 XOF 7,000,000 XOF

Mr. Thierry Breton 3,200,000 XOF 3,200,000 XOF

General 33,400,000 XOF 1,600,000 XOF 35,000,000 XOF

The above allocation is consistent with the overall annual budget of 65 million XOF.

*** Has been replaced by Mr. Fabrice Andre at the meeting of 23 December 2014. The mandate of Mr. Fabrice Andre thus took effect at the end of this meeting.

1.9 Commitments taken in favor of corporate officers

No commitment has been made by Sonatel in favor of its corporate officers for the year 2014.

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1.10 Limitations of the Managing Director’s powers

he Managing Director has the broadest powers to The Board, however, has since 1997 established a ceiling act in all circumstances on behalf of the company. for commitments of the Managing Director beyond which THe exercises his powers within the limits of the the prior approval of the Board is required. corporate purpose and subject to those that the law and rules of procedure of the Board of Directors will attribute This limitation of the powers of the Managing Director was to him. also enshrined in Article 13 bis of the Articles of Sonatel.

1.11 Internal control procedures and risk management in force

Sonatel has of course introduced a process of internal an Internal Audit Department to assess the control and risk management. The activities, the results internal control system (tests to ensure the correct of this process of internal control and risk management application and effectiveness of the internal control are monitored by the Audit Committee. system documented). Internal Audit has as main responsibilities: For effective and efficient management of this process, • lthe development and implementation of an annual structures and follow-up committees exist in Sonatel: audit program covering strategic directions and challenges of Sonatel in all areas including those exposed to criticism and unacceptable risks. a dedicated department for risk management and • monitoring the implementation of recommendations of internal control having as main responsibilities: internal and external audits • the development and regular updating of risk mapping linked to the activities of all processes Sonatel A Risk Committee chaired by the Managing Director (identification, treatment, assessment and prioritization and composed of all the Directors and Heads of of risks), Departments of Safety, Revenue Assurance and Risk • piloting the top risks (priority risks and unacceptable Management and Internal Control. This Committee, risks) defined by the General Management, which meets each semester, has for missions to: • risk analysis related to strategic deals and projects, • analyze the top risks (priority risks and unacceptable • systematic review of procedures to ensure the risks) defined by the Directorate General to ensure integration of the internal control systems covering their mastery, risks, • identification and impluse necessary synergies between • support for businesses for the development and the various functions involved in risk management, ownership of internal control, • the preparation of internal control reviews and the • the annual verification of compliance with financial monitoring of the conclusions of the review. security laws and the Sarbanes Oxley Act applicable to listed companies in the United States because of A Committee for Risks Review related to strategic the membership of the Orange Sonatel Group (review projects and offers of Sonatel with a veto on the of questionnaires on the internal control environment continuation or not of the project or the offer. review by the Statutory Accounts for validation, documentation and annual testing of the control The results obtained to date are positive and ongoing activities of the closing process). monitoring is carried out to effectively contribute to the sustainability of the activity of Sonatel.

Sonatel 2014 annual report of activities

>MEMBER OF THE BOARD OF SONATEL Mr. Marc RENNARD Chairman of the Sonatel TO 31 DECEMBER 2013 Board of Directors

Mr. Fabrice André Mr. Thierry BRETON Sonatel Director Sonatel Director

Mr. Mamadou Colonel Birane Diouf Aïdara DIOP Sonatel Director Sonatel Director

18 annual report of activities Sonatel 2014

Mr. Hugues FOULON Mr. Abdoulaye KAMARA Sonatel Director Representing the financial Controller

Mr. El Hadji Abdoul Mr. Cheikh Tidiane MBAYE Aziz MBAYE Sonatel Director Sonatel Director

Mr. Mamadou SARR Sonatel Director

19 Sonatel 2014 annual report of activities

>EXECUTIVE COMMITTEE GROUP

Mr.Alioune NDIAYE Managing Director Sonatel

Mr. Seydi Ahmed Sy SARR Mr. Alassane DIENE Mr. Jean Luc BOHE Managing Director Managing Director Managing Director Orange Bissau Orange Guinea Orange Mali

Mr. Birago Moctar BEYE Mr. Amadou DEME Mr. Aboubacar Sadikh DIOP International Operations Director of Purchasing Financial and Accounting and Operators Director and Logistics Director

Mr. Abdou Karim MBENGUE Mr. Gana NDOYE Mrs. Nogaye Corporate Communications and Human Resources Director Thérèse TOUNKARA External Relations Director Networks and Services Platform Director

20 annual report of activities Sonatel 2014

Mr.Jerôme HENIQUE Deputy Managing Director

Mr. Omar Gueye NDIAYE Mrs. Aminata NDIAYE Mr. Sekou DRAME Strategy and Development Director, Consumer Marketing Director Corporate Director Managing Director of Sonatel Managing Director of Sonatel Managing Director of Sonatel Multimedia Mobile Business Solutions

Mrs. Afissatou Sall GAYE Mrs. Gisèle Pouye GUEYE Mrs. Rokhaya GUEYE Audit Risk and Quality Customer Service Director Regulatory and Legal Affairs Director Director

Mr. Mamadou Mrs. Racky Sada WANE Ibrahima TRAORE Information Systems Executive Sales Director Director

21 Sonatel 2014 annualrapport report annuel of activities

22 annual report of activities Sonatel 2014

HUMAN RESOURCES

transformation of human capital to meet Sonatel strategic challenges

Sonatel has always made its human resources its first key success factor. The company plans to continue this >momentum for the development of its human capital, the base of its growth and of the satisfaction of its stakeholders. Thus, various actions have been carried out particularly in the areas of skills development of our employees, motivation and adherence of staff to achieve the strategic objectives of promoting well-being at work in favor of Group employees and their families.

2.1 Competencies development: more professional teams

onatel has still deployed significant resources In terms of career management: Launching the in 2014 for the development and strengthening repository of courses and the technical field of expertise. Sof its employees’ competencies. The Human Resources Information System (HRIS) Intelligent was also made available to employees to For this purpose, 338 trainings were conducted for enable them to simulate their development and mobility the employees’ benefit with 13,603 students /day opportunities, and analyze the impacts in terms of skills besides English training program specially held for to acquire / develop to access to target jobs. managers of the Coordination Committee. HRIS Intelligent is also in the will of Sonatel to give more 83,623 hours of training were carried out in 2014. visibility to employees about their careers, but also to accompany them to build and realize their career plans. In total, 1,438 employees have benefited from at least one training done during this year, including 110 In terms of mobility: the launch of «MERCATO of employees trained outside Senegal. mobility» was one of the highlights of 2014.

Professionalization certificate course was organized for the teams, to both technical, commercial, marketing and communication. This has significantly improved the service provided to customers.

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Many gains have been made among which we note: The theme of the 2014 annual visit, focused on the preservation of our health capital with the slogan: • The establishment of incentive scheme: distribution «For our health capital, a daily active lifestyle and a of Sonatel shares to all Group employees to achieve the healthy lifestyle.» With this device, all agents received a Corporate Project’s objectives, complete medical evaluation, including several reviews. • Free Internet for staff: establishment of a blocked 3GB package, A program called «lighten to be in top form» was also • Obtaining for the 2nd consecutive year of the Top launched with the support of many specialists. It allowed Employer label. employees through a diet and nutrition coaching and sports activities regularly carried out to feel at best, to correct nutritional imbalances and prevent the occurrence of metabolic diseases such as diabetes, obesity, high cholesterol and cardiovascular diseases in 2.2 Health: Welfare to Work pledge particular. of productivity Finally, awareness campaigns and training on the The corporate health service has yet worked this year particular virus «Ebola», the dangers of tobacco have to promote the comfort and well-being of workers in the also been widely conducted with staff. Not less than 11 practice of sport in the corporate world and health. campaigns that have been conducted by the internal health services with regular posting videos on safety, In terms of medical, significant curative activities and managing stress and musculoskeletal disorders. support for employees and families have been conducted in medical facilities, both external and internal. Internally, In terms of the management of Health and Safety for example, 28,528 medical acts were made between Committee, emergencies tests were also organized general consultations, antenatal care, nursing care, to familiarize officials with good behavior and useful immunizations, family planning, etc. and essential gestures to the control of risks and the assistance in case of discomfort or disaster on the Regarding prevention, many actions were also workplace. conducted including medical campaign in disease prevention and occupational risks (annual screening visit and worker monitoring) and the program of medical information, education and employees’ awareness on the various risks including Ebola.

So, many experts had been mobilized for this purpose: cardiologists, biologists, radiologists, ophthalmologists, oncologists, etc.

24 RESSOURCES annual report of activities Sonatel 2014 2 HUMAINES

Pursuit of the Enterprise Project sites «United toward 2016» to carry out the necessary Sonatel transformations

The Sonatel group launched in 2013 the co- • By our customers as best than all our competitors construction of a new Enterprise Project «United by offering services of quality among the best towards 2016» after «360° stakeholders vision of the international standards; Managing Director.» • By our shareholders as a successful player with a significant potential residual growth; In October 2014, it was organized the Year 1 • By institutional as a global operator backed by a Enterprise Project Convention to take stock of the world-class operator whose processes are trouble- achievements of the 2013/2014 year and announce free in view of international standards: Quality, priorities per site for 2015. Safety and Environment; • By the civil society as a socially responsible To this end, the Managing Director recalled that the company, among the top contributors to local business plan «United toward 2016» still requires development and preferred partner of public greater participation by all, so that in 2016, our authorities in the development of the digital company will be perceived as : economy.

• By our employees as the benchmark company Sonatel is already a long story, but it’s also a attracting the best skills; promise, it is a future.

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generalization Card O ‘: an innovation to facilitate access to care for employees

The «Card O’ « is a digital platform, developed by Orange Business Services, enabling secure, paperless exchanges between actors in the health sector: patients, health professionals (doctor, pharmacy, laboratory, etc.), financial organizations financing healthcare (Disease Provident Institution IPM, insurance, government, health mutuals, etc.).

Card O ‘, which facilitates the patient journey in access to care, has been successful in its pilot phase in 2013.

The generalization to all employees is effective since 2014.

a successful move to new headquarters on the “Voie de Degagement Nord” (VDN)

The Sonatel headquarters have moved from the downtown city of Dakar to VDN thus opening a new page in the life of our company. Sonatel thus marks its print, urban planning and heritage of the city of Dakar with the construction of an ultra modern headquarters, operational and reinforces its image by participating in the emergence of a new business district.

This new office marks a turning point in the way we work every day with a new work dynamic, more fluid, more effective. Thus, the office became a real part of development for staff.

Sonatel 2014 annual report of activities annual report of activities Sonatel 2014

SONATEL’S CITIZEN ENGAGEMENT

Sonatel had been engaged for several years now in a process of Social Responsibility (CSR) and sustainable development, to integrate the social, societal and environmental aspects of its activities and interactions with stakeholders.

It is for this reason that Corporate Social Responsibility has been raised to the rank of strategic pillar.

Citizen engagement of the Sonatel group allows: • Meet the expectations and demands of customers and users • Mobilize and involve staff • Improve relationships with suppliers • Install a climate of trust.

3.1 Sonatel, operator engaged in the service of economic and social development in all countries he Sonatel group is still engaged this year in several The Ministry of Education and Sonatel thought, through actions and initiatives as part of its Corporate Social this agreement, that the improvement of the quality of TResponsibility policy (CSR), both in Senegal and in education in public educational institutions of primary, the countries of presence. Among the actions carried out junior and secondary in Senegal by ICT passes through, in Senegal in 2014 we note: inter others, free access to the Internet for all public educational institutions. So the school offered Internet School internet agreement: partnership with the Ministry access includes: of Education for the free internet in public educational • a high speed internet access of 1 megabit, institutions of primary, junior and secondary in Senegal. • the «My Orange Office» service to each institution with a domain name, 100 email addresses and web space for a website.

SMS awareness and information: a partnership with the Ministry of Health and Social Welfare to improve the means of communication of Senegal Health services. It is for Sonatel, to make freely available to the Ministry of Health and Social Action of diffusion spaces for sms messages of awareness and prevention of the population. The Ministry of Health and Social Action defines upstream relevant awareness messages and transmits them to Sonatel which broadcasts on its mobile network.

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D4D: Orange big data competition open to the scientific community Fifteenth Summit of the Francophonie: Dakar hosted this year the second edition of the Sonatel, the first partner for challenge «Data for Development» in Africa. The D4D telecommunications services challenge, organized by Sonatel and Orange Group, in collaboration with the ICT business incubator, Upstart and under the supervision of the Personal Data Protection Commission (HRC) was to make available to the scientific community and IT developers, statistical data and samples from the Orange mobile network to enable them to develop research projects and ICT applications with a high social impact for Senegal. D4D mainly aims at the development and improvement of living conditions of populations. Thus, five priority areas were identified where needs were expressed in collaboration with line ministries and / or the partner institutions: • health, • agriculture, Sonatel, with its Orange brand, Telecommunica- • transport and infrastructure, tions Partner of major events in Senegal contri- • energy buted to the success of the fifteenth World Sum- • production of national statistics. mit of the Francophonie housed in Senegal from 29 and 30 November 2014.

Sonatel has indeed mobilized substantial financial and human resources to meet the telecommunications needs of the General Delegation for the organization of the XV Summit of the Francophonie (DGF) and allow a smooth running of this international meeting.

As a technical partner of the telecommunications services of the summit of the Francophonie in Dakar, Sonatel Group generated additional network investments of 254 million XOF, excluding taxes, for comfort in the use of different telecommunications services by members of the delegations.

Telecommunications innovation of the summit in Dakar has been arguably the 4G access of Orange network in a pilot phase.

The accompaniment is also done through sponsorship with four projects supported by Sonatel Foundation: The D4D challenge illustrates both the Orange open • «Words, diversity, Art and Dialogue» of Ago- innovation strategy and its approach to corporate social ravia; responsibility which ensures to make digital a lever for • «Franco Phonons» of the GIE Goorgoorlou; development and progress for all: individuals, territories • the preparatory forum of youth and women and communities. of the United childhood in the heart of Sine- Saloum in Djilor Djidiack; • Exposition of the tapestries of the Senegalese Manufactures of Decorative Arts in Thies. An exhibition and artistic and scientific activities have been designed on the premises of Sonatel Foundation. Major works have been exhibited in this space.

30 SONATEL’S CITIZEN annual report of activities Sonatel 2014 3 ENGAGEMENT

«a student - a computer» program to connect the students’ computers The «students’ computers» project had incorporated • The 21 Megabytes key at a discount price of this year a connectivity component (Internet access) 10 000 XOF TTC through a partnership between the Ministry of Higher Education and Research (MoR) and Sonatel. The Ministry of Higher Education and Research expressed his satisfaction for this contribution. In Thus, Sonatel, through its subsidiary Orange fact, Sonatel allows the Government of Senegal to Business Services (OBS), has made available to the meet the challenges of student access to a quality beneficiary students, an appropriate Internet access higher education through the support of Information solution which consists of a high speed broadband Technology and Communication (ICT). Internet key and a mobile Internet package.

The amount of the contribution of Sonatel to the program «one student - one computer», amounted to 20,000 students to about 1,750 billion XOF, made up of 80% reduction on the fee of 3GB Internet package and a subsidy granted on the key.

Orange Business Services thus offers to students receiving two types of Internet Key packaged with a 3GB package: • The 7 Megabytes key offered;

capacity of 30 seats to the staff of Diamniadio Children’s 3.2 Sponsorship: 12 years of Hospital. commitment Sonatel Foundation Five medicalized ambulances to different regions for the well-being and 01 transportation bus of students with disabilities: five medicalised ambulances were awarded this Sonatel Foundation, investing since its creation in 2002 year to the Minister of Health and Social Welfare, Dr. in the economic and social development of Senegal, Awa Marie Coll Seck. They are intended for the following participates through its actions to improve population li- structures: Health Post Agnam Liboudé (Matam region), ving conditions for a «better be» sustainable social. Health District of Podor (Region of Saint-Louis), Koki Sa- nitary District (Region of Louga), Birkilane Sanitary Dis- Among the actions carried out this year by Sonatel Foun- trict (Kaffrine Region) and Medina Yoro Foulah Sanitary dation included: District (Kolda Region).

3.2.1- Health: actions in six priority areas Similarly, a bus with 30 seats to transport students with disabilities for the Grand Yoff Talibou Dabo specialized Having at heart the preservation of the health of popula- center was also offered during this opportunity to im- tion, the Foundation has once again focused its efforts prove their conditions of study. on six areas: • Raising the medical technical tray; • The fight against malaria; • Support for children with disabilities; • Free medical care for older people (the third age); • Support for research; • Solidarity.

Some major achievements in 2014:

Two buses for the Diamniadio Children’s Hospital: Sonatel Foundation used the occasion of the presentation of his Annual Report to provide two buses with a

31 Sonatel 2014 annual report of activities

giving free medical care for 1,502 elderly people in state of the art equipment for the health district of Dakar and regions in 2014 ... Mekhe The Sonatel Foundation, a pioneer in free medical care Sonatel Foundation has equipped this year the health for people aged 65 and over, assisted them again in district of Mekhe in state of the art medical devices with 2014 through free medical care sessions. The medical clinical chemistry analyzer, power vacuums mucus, team of Sonatel Foundation led by geriatrician Dr. Ous- a color doppler ultrasound system, delivery tables, seynou Ka proceeded to chronic disease screening and delivery boxes and metal speculums. consultations with 1,502 older people in mainly in Dakar, Ndiassane, Affe Djoloff and Diourbel. These donations were made in the presence of the These consultations beyond screening, first aid, oriented Mayor of Mekhe Mr. Maguette Wade. and treated ongoing disease, while providing practical advice for active aging. Sonatel Foundation has focused this year on rural communities where seniors have more 3.2.2. education: access and excellence difficult access to medical specialists. for all

These medical expenses are supplemented by a device The access and retention of girls in school, excellence called «Kepaaru mag gni», awareness and exchanges in academic achievement, support for the illiterate or afternoons on chronic diseases as a theme and whose illiterate children, support for disadvantaged children target is the elderly community and their families. and early childhood are the Foundation’s priorities in the field of education. The various specialists present on this occasion gave some tips and recommendations. The theme developed support to the Contest «Miss Mathematics and Miss this year has raised awareness among participants on Sciences» nutrition for the elderly and monitoring its treatment, healthy lifestyle, sport and play to keep the memory, For the 3rd consecutive year, Sonatel Foundation funded among others. the organization of the contest «Miss Mathematics» for the fourth class and «Miss Science» for second class. This support which aims to promote science subjects mobilization against Ebola for girls has for objective to increase the skills and the number of girls and to inculcate a taste for mathematics and science across the colleges in Senegal.

support to the General Competition 2014 Edition True to its policy of promoting excellence in schools, Sonatel Foundation has awarded for the 13th consecutive year the best students, winners of the 2014 General Competition.

The Sonatel group has mobilized a lot to improve the response capacity of the Ministry of Health and Social Action dealing with the Ebola disease that has wreaked havoc in our subregion. Sonatel has strengthened the media means of Senegal Health services particularly in terms of raising public awareness, risk prevention of diseases and emergency management and, through its Foundation, has made available to the health authorities, 7,500 protection kits for the Senegalese pilgrims to Mecca.

Similarly, thousands of antiseptic hand gels were distributed in various events promoting a clustering of populations in Senegal: back to school, national football team competitions, Magal of Touba, Maouloud in Tivaouane, etc.

32 SONATEL’S CITIZEN annual report of activities Sonatel 2014 3 ENGAGEMENT

digital education: 72,000 beneficiaries, 30 schools in producers, development agents and universities, ena- Senegal bling them to benefit from the scientific community to get La Fondation Sonatel s’est impliquée davantage cette a better return on their work. Sonatel Foundation has become more involved this year in the field of digital education with the launch of a encouragement of vocations in the mathematical program set up by the Orange Foundation in Africa. and telecommunications sciences Sonatel Foundation granted scholarships to 03 students This digital education project is deployed in four pilot in 2014 AIMS-Senegal (African Institute for Mathematical countries: Cameroon, Niger, Madagascar and Senegal Sciences) which is a non-profit center of excellence for by the Orange Group Foundations in the country to higher education, research and public engagement in complement the curriculum of African States in primary mathematical sciences for African students. Its mission and secondary schools by providing free educational is to identify and train the best students from the African content in digital form. continent to prepare them to become leaders of African development in academic, industry and governance. The schools selected for this program start accessing content via Wi-Fi connection and a browser. They have Sonatel Foundation has contributed to actions to encou- the ability to connect to the Internet to make automatic rage vocations among students in the field of telecom- updates of content: Encyclopedia (Wikipedia), munications. Mathematics and Science (Khan Academy), digital books (excluding school books). 3.2.3 promotion of Culture in Senegal With Sonatel Foundation, the Digital Education program began in Senegal, benefiting about 72,000 beneficiaries Sonatel Foundation participates in the promotion and in 30 primary and secondary schools, chosen in Dakar spread of culture in Senegal by supporting related ac- and regions by the Ministry of Education. tions: • training for careers in Culture; • preservation of heritage and memory; •regional cultural festivals and vocal music.

project Village of Sonatel Foundation

Sonatel Foundation undertook the construction «of a school, a health center and a water point» in favor of the village of Thicate Wolof, non-electrified village of Birki- lane department in Kaffrine region (245 km from Dakar).

The village of Thicate Wolof which polarizes other 14 villages with a total population of about 3,000 inhabitants has been designed with the following components:

• education: a school of 06 classrooms, an administrative block, a block of latrines, a fence wall, equipment for the Thus, 1,500 tablets, 60 servers and 30 digital paintings principal, teachers and students. are available to primary and secondary schools already chosen in Dakar and in the regions by the Ministry of • health: building a health station with an infirmary with a Education. consulting room, a treatment room, a waiting area, two watching rooms, a pharmacy depot, motherhood with equipment of the PEMEL center: technology at the a desk for midwife, a work room, a delivery room, a service of the population of Podor corner for newborn, a housing for the nurse, a housing Sonatel Foundation supported the Podor PEMEL Center for the mid-wife - woman and the boundary wall. for the purchase of equipment to transmission system, studio equipment of a community radio and a multimedia room. This support aims to popularize science among the population and around Podor, to contribute to the education and cultural development of the entire community. It aims to facilitate exchange between farmers,

33 Sonatel 2014 annual report of activities annual report of activities Sonatel 2014

OUR ACTIVITIES > the Senegalese market

4.1 mobile Orange has captured over 76% of market growth in 2014

he year 2014 was marked by growth in mobile cus- Orange loyalty program Sargal tomer base by 9%. At the end of the year, Orange To thank its customers for their loyalty, Orange launched Tsubscribers’ base has more than 8,097,000 cus- this year, its new loyalty program «Orange Sargal» to all tomers. customers Diamono and accessible free via USSD code # 221 #! Orange has captured over 76% of the growth of the mobile market in 2014, the rest is shared by its two compe- Sargal Orange is the first loyalty rewards program in titors. telecommunications in Senegal: once it falls, the customer earns points for each top (100 Xof = 1 point). Thus, the mobile penetration rate of the population is at He consults his points balance via the # 221 #. 106% at end-December 2014.

According to the report of the Regulatory Authority for Telecommunications and Postal in Quarter 3 of 2014, Orange has consolidated its leadership in the mobile internet with a market share of 70% on internet keys and 62% on the mobile phone.

The value added services showed during this year their potential for growth because their turnover is up by + 51%.

This growth of the Orange mobile subscribers’ base reflects the many innovations to benefit customers noted during the year include:

35 Sonatel 2014 annual report of activities

Customers may, at 50 points, convert them into internet Revolution key 2 (42Mbs) products Orange (call minutes, SMS, Internet pass, Orange has enriched this year’s key Internet everywhere unlimited numbers, illimix) or valid voucher at Orange range with the launch of the revolution key 2 of 42 Mega. and among many partners from various sectors (list available on www.orange.sn/sargal). The package 42 mega is an internet key ready to connect, a prepaid Sim and Internet Pass of one month And for the best customers, in addition to the points offered limited to 10 GB. program, Gold and Platinum status are set up, evidenced by Gold and Platinum cards, which are entitled to The internet key 42 Mega supports the HSPA+ network. It exclusive benefits: allows access to the internet from a computer anywhere in Senegal on the best 3G network in Senegal and can • The Aïcha personal assistance to meet all demands, reach a theoretical maximum debit up to 42Mbit / s in from the everyday to the exceptional, available at download and 5.76 Mbit / s in upload. The key 42 Mega 600,221; is compatible with any operating system (Windows, • Exclusive benefits from local and international Linux, Android, iOS). partners; • A dedicated support and priority customer service and the Sonatel Cheikh Anta Diop and Almadies agencies.

new features Dalal Tones Dalal Tones Orange is a service that allows customization of the ring waiting for calls. To enrich the service, in order to better satisfy customers and meet their expectations, the following new features were launched towards the end of the year:

• Dalal Group: Dalal to assign a contact to a group (family, office, friends ..); • Dalal selection: enables a selection of 5 Dalal tones at a flat rate; • Dalal status: informs correspondents according unavailability (in a meeting, driving, class, ...); • Dalal dedication: to dedicate a dalal to someone special; • OBD (Out Bound Dailing) can easily and simply upload the tops of time listening and automatically choose the desired Dalal.

The principle and the price of the service do not change.

And if the customer does not have enough credit for the monthly billing, he may benefit from the daily billing for both the subscription as well as the dowloading .

36 OUR annual report of activities Sonatel 2014 4 ACTIVITIES

Mobile banking: Orange Money is pursuing its development and innovation

Sonatel continued his innovations in the field of mobile banking especially in terms of payment of utility bills and merchant payment

bill payment: Payment of Senelec bills, SDE, Canal horizons, EXCAF, Sonatel ...

• customer benefit: pay bills with ease and without moving at any time of day. • partner benefit: no more counterfeit money or pos- sibility of diversion. • country benefit: increase of banking rate and reducing money laundering risks.

merchant payment: fuel purchases at TOTAL and EDK, bill payments in various restaurants, shopping in Casino and Citydia Express ... • client benefit: securing money no more cash in the pocket • partner benefit: over counterfeit money or possibi- lity of diversion, better accounting, innovation. • country benefit: increased banking rate and reduction of risks of money laundering

money transfer: • customer benefit: send money across Senegal, PAM : food distribution scholarships via Orange Mali, Ivory Coast safely without moving Money: 1.5 billion to 25,000 • country benefit: traceability of sending operations and receipt of money throughout the country and insurance offers via the mobile in partnership part of the international. with Allianz • customer benefit: I insure myself and my entourage mobibank: pay money from his Orange Money ac- • partner benefits: insurance more accessible count to their account BICIS and vice versa. • income countries: developing savings and insu- • customer benefit: fill its OM account or BICIS ac- rance count without moving. • partner benefit: transaction flows. • country benefit: increase of banking rate

These two innovative offerings will enable to democratize 4.2 fixed-lines and Internet: and standardize the triple play on ADSL access in Senegal development of uses with an attractive price from 29,900 XOF / month. home and Home + The new Orange TV also allows an unprecedented TV Orange under its ADSL subscribers’ reorientation strategy experience in Senegal with innovative features such as to up to the market, launched in the month of April 2014, Direct Control, the Digital Recorder or the Electronic two new multiplay deals: Home and Home +. Programme Guide; all these features create a totally new rich and interactive experience.

37 Sonatel 2014 annual report of activities

8th edition of Orange day: all mobilized for our service stations, emergency, hotels etc ...), the ability customers to perform all the orange money transactions from an android mobile compatible terminal,, online purchase of newspapers etc ...

4.3 business service: proximity and B2B structuring deals

The corporate services were strengthened in 2014 with a proximity approach vis-à-vis SMEs and SMIs, added to the launch of structuring B2B deals.

4.3.1 better addressing SMI/SMEs with the doubling of the number of spaces Pro

In 2014, the number of Pro spaces increased from four Orange day has become a familiar annual ap- to eight for a closer commercial presence in the SME pointment for our customer. This edition, very PMI target, Pro. The purpose of these spaces is to sim- special because it was the 8th edition and it was plify the customer experience in receptions with strong under the seal of the celebration of 8 million cus- representation of clients or business prospects. Cus- tomers, great occasion to get even closer to our tomers pro and consumers have different queues. customers, increase Orange brand awareness, innovation and put in illustration our value. This strengthening of Pro spaces was accompanied by a field presence with shares of promotions and anima- Thanks to the digital activation associated with tion during the year including seminars and afterworks this day, we also became the first Facebook page customers, business tours, etc. of Senegal across all pages.

Sonatel staff have been all transformed on this 4.3.2 launch of B2B structuring deals occasion as ambassadors of Orange offers to develop and enhance the reputation of our offers and encourage customers to make our brand blocked mobile packages their preferred one. This is a hybrid offer to help control costs for pro customers because it allows them to control their consumption with a blocked package on the voice. They have the ability to recharge credit in excess of the amount innovation subscribed to continue to consume. • camp code: making co-innovation services, by en- couraging local initiatives to create innovative services cloud Pro Orange and supporting their implementation. The students were involved for the first edition and a pair one from Orange Business Services has launched this year the Thies and another from Dakar were winners. They have first cloud computing offer to the Senegalese market subsequently benefited from long paid internships to and the sub-region. Orange Cloud Pro enables compa- allow them to finalize their products / services. nies to connect via a portal and access web services to a variety of applications: ERP with Sunu ERP, collabo- • challenge API: through which the Orange Group has ration solutions with My Office, schools management or decided to open the billing API, USSD and SMS to 10 the real estate applications, etc. startups so that they will develop services. The company MLouma was awarded through its project de- Orange Cloud Pro is one of the first services embodying signed to facilitate farmers’ selling their agricultural Sonatel will to make the cloud a real growth driver. products ...

• mobile applications (Senmap, Senkiosk, etc.) pour permettre aux populat(Senmap, Senkiosk, etc.) to enable people the geolocation of services (pharmacy,

38 OUR annual report of activities Sonatel 2014 4 ACTIVITIES

Sen Health Pharmacy: an innovative solution for access by SMS to pharmacies on-duty

To save time spent searching for nearby pharmacies on duty and given the very high penetration rate of mobile phones in Senegal, Sona- tel Group, in partnership with the Union of Pharmacists, designed the Sen Health Pharmacy service.

Sen Health Pharmacy is a solution available to the populations to facilitate their access to information on pharmacies on-duty via the mobile. This is a mobile portal dedicated to health accessible by SMS with the dedicated number 22100.

The solution also includes an application accessible to pharmacists allowing them to dynamically manage the planning of pharmacies on- duty on their area.

certification of 45 coordinators approved COPC (COPC 4.4 pursuit of the customer service RC), the implementation of Happy communication plan transformation project: key and the starting of training on customer culture (Orange Way). differentiation and customer loyalty the deployment of contact centers high- tech tools: including WFM (forecast on call flows), Year 2014 was marked Verint (transaction monitoring), Hot Survey (hot-satisfac- by the acceleration in tion survey), Proactive Contact Voice (recall of clients), the implementation of the InfoMart (Reporting), Knowledge Base, Portal (Front Of- Orange Customer Service fice applications interface), Full SIP. Transformation Program named Happy, with the implementation in 2014 strengthening of prevention of the malfunc- of the certification project tioning approach: with the Steering of 4 Groups for to the COPC (Customer Quality Improvement on the impinging on malfunctions Operations Performance and / or recurring, entertainment prevention device (pi- Center), which is a prio- lot phase conducted over 2 months for a generalization rity project of Happy pro- from January 2015) and the monthly monitoring of the gram. top 5 complaints «Fixed-lines, Mobile, Internet TV».

Notable progress was strengthening of the monitoring of customer noted this year with the level of implementation of the satisfaction with the implementation of the orders closure program Happy and the COPC Project reflecting encou- platform, shipping and production of a monthly report on raging progress towards the achievement of high-per- customer satisfaction. formance target benchmarks referred by Sonatel’s Customer Service for Markets related to Consumer, Pro- fessional and Enterprise.

We can mention among the major and structuring actions undertaken in 2014 by customer service: awareness program to quality customer relationship: with the progress of the outreach plan to the COPC standard for nearly 450 people, the implementation of COPC communication plan, training and

39 Sonatel 2014 annual report of activities

Our subsidiaries abroad

investments into the economy of Mali >4.5 Orange Mali: growth despite a There are more than 93 billion XOF have been paid this difficult economic and security year to the Treasury in respect of taxes, duties and dues. Supporting local suppliers was reflected in the payment context of more than 30 billion XOF for bills and 22 billion XOF for commissions paid back to distributors. In 2014, Orange Mali has experienced a year of growth, despite a difficult economic and security situation in Mali. development of financial inclusion Less than 7% of the Malian population has a bank ac- Orange Money has experienced an exceptional growth. count. Orange Money has enabled many Malians to be- The distribution of refills has continued to be strengthe- nefit from financial services through: ned to ensure that everywhere and all the time the availa- • Accessibility and the strength of our distribution bility of refill cards. The corporate market opened up new network opportunities by expanding the bandwidth to the «data» • Rich range of services available solutions. At the end of 2014, Orange Money in Mali has more than 2.4 million accounts and an effective presence of more 4.5.1 a company at the heart of Mali than 10,000 points of deposit-withdrawal spread across the country from North to South. investments in the sector of activities valued solutions to 15 million of customers, indivi- Orange Mali has invested more than 398 billion XOF of duals or businesses which 43.5 billion in 2014 in the densification and improvement of the quality service of its network, bringing to • Prepaid and postpaid offers for voice and «mobile 1,300 the total number of site radios built to date. Orange data» Mali is the first network of Mali: • Internet offers for all, both for home and for businesses: the first Fiber Optics access to the subscriber have • Over 83% of the territory coverage; nearly 16,000 vil- been deployed with speeds exceeding 100 Mbits lages covered over the 18,000 Mali counts. • A catalog of offers and services with all integrated so- • 1,300 site radios built to date. lutions for professionals and businesses, SMEs, NGOs • 3,000 km of optical fiber deployed to the improved ac- and institutional institutions. cess of Mali mobile: nearly 19% increase in CA Voice • Deployment of 3G in all the regional capitals With a country coverage rate of over 83%, we are wor- • $ 15 million invested to ensure the access of Mali to the king to ensure that every Malian is an offer tailored to its submarine cable ACE which Orange is co-owner needs. We therefore propose to our customers a wide • Reconstruction of almost all of the sites destroyed du- range of products and services. ring the security crisis in the north of the country an Internet solution for each Malian investments in human resources • 3G +: access via smartphones and tablets, 3G + keys, the Orange Mali is constantly investing in developing the Wimo (portable WIFI for all), the Flybox skills of all its employees. Through sustained training • Wimax: unlimited offers for public customers programs, the company professionalizes each of its e • Radio links: speeds of up to several Mbits possible all ployees and also prepares them for new growth of the across Mali businesses of its activities. Orange Mali also invests in • Optic fiber: access of several mbits over 100 Mbps for bu- security and medical coverage for each employee and siness his family.

40 OUR annual report of activities Sonatel 2014 4 ACTIVITIES

fixed-lines: Call at lower costs Sini Tonon: savings accessible to all • The Livebox and Flybox also allow the homes’ equip- • remunerated savings proposed by NSIA in partnership ment with a landline at very competitive prices (calls to with Orange Money; fixed-lines in US, Canada and Europe at 50F / min, calls • A life insurance available from 40,000 XOF of savings; to Orange fixed-lines at 10F / min and free between li- • Medical coverage in case of difficult childbirth. vebox phones) enterprise solutions: focus on innovation • Integrated Services: turnkey solutions from start to finish (engineering, links, equipment, services ...) • Interconnection offer for international site (RAFIA) • Enterprise Telephony offer with Micro PBX functionality (Business Orange Box) • Offer Machine 2 Machine: geolocation offer and security • information and alerts offer via SMS (SMS Web) terminals: more than 600,000 smartphones connected to our network in 2014 • Orange Mali has a wide range of tablets and smartphones: iPhone 6, iPhone 6 plus, Samsung Galaxy, Tablets, Pixi 2, Pixi 2 Max, mini Idol, Idol Alpha, YUV smart, Pop 7, Pixi 7 ...

4.5.2 Mali Orange encourages innovation

Our ambition is to improve the everyday lives of Malians by creating simple and innovative services that help and also ... them communicate and share better. • launch of the first Malian smartphone: YUV Smart; • learn English: a sms alerts service; First edition of the Orange Innovation Exhibition • HD Voice: HD voice accessible to all. The first edition of the Orange Innovation exhibition held in Bamako hosted 5,000 visitors. Orange Mali offered visitors rich moments in discovery and experience. Were 4.5.3 citizen actions: transform the lives of exposed innovative products and services projects to the visitors for the future. Malians

Senekela: technological innovation at the service of volunteering and demanding corporate social res- agriculture ponsibility policy • a service that works in partnership with the Institute of The Corporate Social Responsibility reflects our Rural Economy, IICD and Rongead; consciousness, our desire to ensure the most positive im- • a call center for farmers; pact possible on the people, society and the environment. • Calls are supported by agricultural engineers; • More than 350 solar sites installed to prevent thou- • The service relies on a network of information collec- sands of tons of CO2 emissions each year; tors in two regions, which data back every day on the • 1,879 remote villages connected through community price of 12 agricultural products; phone Djamaa Phone; • Farmers can have the information in French and Bam- • Support of the development of ICT: GSM equipment bara on all their queries daily: planting methods, seed donations for the opening of 2 GSM laboratories in sowing time, fertilizer ... schools UFTI and ENI; • Number: 37333, price: 50 XOF / min; • Entrepreneurship Support: 62 Malian files were sub- • USSD menu: # 222 #, fee: 75 XOF / query. mitted to the Orange Prize for Social Entrepreneurship in Africa, launching an incubator project; • Dialogue with the people of the Diaspora «connected migrant « in Bamako, Kayes and Paris.

41 Sonatel 2014 annual report of activities

Orange Mali Foundation: 10 years of social needed This performance is based on the extension of coverage actions to create more solidarity ... into new areas, densification in urban areas and business momentum. At the end of 2014, Orange covers all ... in the field of health the sub-prefectures of Guinea in 2G and all main towns 300 million XOF invested in 2014 for: of prefectures in 3G. • The campaign against the Ebola virus; • Ophthalmologic caravan for older people (5,623 The mobile subscribers’ base at end 2014 amounted to consultations, 877 cataract surgeries); over 4.5 million against 3.2 million at the end of 2013, • Dialysis kits for the Point G Hospital (over 200 users); an increase of 1.2 million. This performance is based on • Constructions of maternities; the commercial dynamism with the launch of innovative • Oral Screenings for the benefit of diabetes patients; offers: • Cervical cancer screening of the uterus; • Merchant payment with Orange Money; • Fight against malaria: distribution of treated nets; • No credit beep; • The World Day against Leprosy; • Facebook via USSD; • The contribution to the fight against obstetric fistula; • KDO promo Orange. • The gift of a dental chair for Kayes hospital. At the end of 2014, the Orange Guinea Internet Mobile … in Education: subscribers’ base amounts to about 650,000 (including In 2014, Orange Mali Foundation has contributed 200 63,000 active keys). This subscribers’ base increases million XOF to education: 63% compared to 2013. This growth was supported by investments in 3G and in the ACE submarine cable and • Construction of schools; also by attractive offers with the launch of the Flybox, • Management of costs of birth certificates to enhance Domino modem and Pixi. the education of poor children; • Excellence scholarship program for students from disadvantaged backgrounds; • Support for the literacy project of 540 women in Yeli- 4.7 Orange Bissau consolidated its mane; leadership in innovation • Support for the education of underprivileged children. 2014 was a year of innovation for Orange Bissau. It was marked by the launch of iconic deals with a very positive ... and also: impact on the business and the image of the brand as: • Distribution of food and essential products in structures • No Credit Beep that support disadvantaged children; • Nomad • Mills Donations to support women’s groups; • Pass illimitados (bundle) • Assistance to street children. • My Orange, • Transfer Country Orange first supporter of sport in Mali • Orange WiFi For 10 years, Orange supports the sport in the country • SMS Chat through the support of several sports federations, local clubs, sporting events and various sponsorships. About The organization of pilot 3G + enabled to introduce of 800 million has been invested in sport by Orange in 2014 this technology to its customers and its partners. (Visual support for the Eagles, First Supporter, basket- ball players ...) 4.7.1 significant investments to improve the quality of mobile network services 4.6 Orange Guinea: continued leadership (voice and data) and coverage of all sub - prefectures More than 5.7 billion XOF of investments were made in 2014, the cumulative investments since the inception of Orange Guinea maintains its leadership in 2014 with a Orange Bissau in 2007 amounted to more than (33.7) market share at year-end of 50.6 percent (an increase of billion XOF. 3.3 points compared to 2013).

42 OUR annual report of activities Sonatel 2014 4 ACTIVITIES

These investments have mainly allowed: 4.7.2 The basis of a strong CSR policy • To develop the network coverage by opening up several regions and cities; As in previous years, Orange has been the sponsor of • To deploy innovative new offers; the biggest cultural event in the country: the Carnival. • To improve the quality of voice and data services; The company is regarded as the main patron of the • To reduce our energy costs; country, leading partner of culture. It helped to show- • To deploy 3G in a pilot phase in Bissau, Gabu and case the Carnival beyond the borders, in webcasting the Bafata; highlights of the event.

The development of consecutive market to these invest- Orange Bissau has also strengthened its civic activities. ments enabled Orange Bissau: Through various initiatives it has supported important • To strengthen its contribution to state revenue: programs in the fields of health, education and social • + 5.01 billion XOF were paid for taxes, taxes, fees, so- peace: cial security contributions and customs duties, repre- • free WiFi : free WiFi deployment at the national stadium senting about 4.1% of the state budget 2014. for the inauguration of President of the Republic and in • To contribute to the creation of wealth for the benefit of hotels such as Azalai and Malaika for international ob- local private enterprises: servers during the election campaign. • + 4.2 billion XOF paid to local suppliers • social welfare activities for underprivileged child- • + 1.7 Billion XOF commissions paid to our partners’ ren: distribution of toys and food to SoS villages, in the refills distributors. accompanying childhood center «Nino Criancias». • To contribute more significantly to job creation with 151 • prevention against Ebola: donations of equipment direct jobs created (85 permanent and 66 temporary (wheelbarrows, shovels, bleach, etc.) to the Ministry of employees) and more than 17,576 indirect jobs (whole- Health, in the city of Gabu border with the Republic of salers, semi-wholesalers, retailers). Guinea. • To generate more export earnings of 4.8 Billion XOF • launch of Orange price of social entrepreneur in paid by foreign telecommunications operators for the Africa to encourage private initiatives for using ICT in year 2014, thus contributing positively to the trade ba- the service of population. lance of Guinea Bissau. • school supplies collection campaign (notebook, pen, pencil, etc.) in partnership with the Club RFI Bissau.

43 Sonatel 2014 annual report of activities annual report of activities Sonatel 2014

NETWORKS AND INFORMATION SYSTEMS

Orange, leader on technical service quality

The measurement campaign of the quality of voice and data carried out by the Regulatory Authority for >Telecommunications and Post (ARTP) in 2013 had named Orange leader on the quality of technical service in Senegal in both coverage and quality service voice & data 2G & 3G.

2014 was a year of consolidation and improvement of the results of the year 2013 obtained after the implementation of an ambitious program of densification and extension of coverage of the mobile access network.

5.1 modernization of the mobile network 5.2 flow rates increase for 3G onatel anxious to have a mobile network at the 2014 was the HSPA + development year with coverage cutting edge of technology has launched major that goes from 50 to 550 sites. This technology allows upgrades and expansion of the mobile access multiplying by 3 the flow rate compared to 3G +, with network through an ambitious project called speeds of up to 42 Megabits per second. RAN Renewal. With the latest generation of RAN SRENEWAL, equipment of last generation is ready to support the 4G. These new facilities have reduced the energy consumption to contribute to Sonatel’s environmental po- 5.3 4G test in Senegal succeeded in licy. Sonatel

This project also allows the introduction of 3G technology The pilot LTE (4G) was held in 2014 consolidating Sona- 900 that favors the development of the mobile data network. tel leading position in the Data Mobile and corporate on the cutting edge of telecommunications technology. 641 sites were able to be upgraded in 2014 mainly in the regions of Ziguinchor, Sédhiou, Kolda, Tambacounda, Ké- LTE is present in 30 locations in Dakar and 10 on the dougou, Kaolack, Louga, Saint Louis, Thies and Kaffrine. small coast of Saly and the CICAD site in Diamniado The program will continue until 2016 and will cover the en- which hosted the summit of the Francophonie. Sonatel tire Sonatel mobile network. has also deployed six sites during the Touba Magal.

Sonatel is the only operator to have deployed 4G in 3 major cities of Senegal (Dakar, Saly and Touba).

45 Sonatel 2014 annual report of activities

HD for example videoconferences on your mobile, with excellent image quality and sound and the option premium in view documents directly on mobile screens.

Moreover, all Orange mobile data offers are already 4G compatible and will be used by clients that meet the pre- requisites: mobile TV, mobile Internet (browsing, strea- ming), E-mail on the move, Business Everywhere, Inter- net Everywhere BlackBerry , etc.

5.4 evolution of IP core network, mobile voice, national and international transmission and service platforms

The network has experienced many other important developments during this year: • Modernization of multiservice IP core network in all areas with high traffic potential for migration or strategic «all IP». • Modernization of the Network of heart Datamobile to support traffic growth and evolution toward LTE (4G) With the pilot of the Orange 4G, Sonatel have covered • Introduction of new platforms bringing much more major events such as the Summit of the Francophonie flexibility for new offers (Dalal, Seddo, Sargal, USSD, and the Grand Magal of Touba, which had strengthen Orange Money) the brand image of our country in the field of technologi- • Gradual migration of subscribers to the new TV plat- cal innovation. For example, we equipped all the Franco- form with advanced features and a full IP headend. phonie delegations with 4G terminals in partnership with • Modernization of the transmission network with repla- the Government of Senegal. cement of aging fibers on the North / South Loop in order to increase from 2.5 Gb / s to 10 Gbit / s; and By bringing the flow rates ten (10) times higher on rising a cable 36 FO Koumpentoum between Tambacounda or falling links on 3G + and greater flexibility in terms of and Goudiry a distance of about 220 km was laid down traffic capacity, 4G will revolutionize the customer expe- and the project FO Tamba Kédougou, Musala is un- rience on mobile broadband. For example, downloading derway on 371 km. a 5MB music file is 2 minutes on 3G, 8 seconds on 3G + • Expansion of capacity of switching centers and mail and 1 second on 4G. To download an album of 50 MB, it centers, with a doubling of capacity is necessary and 19mns30 on 3G, 1mn15 on 3G + and 10 seconds with 4G. Ditto for the movie download: for a film with a capacity of 650 MB, the client will wait over 4h on 3G, 16mn on 3G + and 2mn only with 4G. Sonatel has launched the construction of a It is to note that Orange customers will access this 4th tier-1 data center generation network can indeed: • To benefit from the essential functions of today, com- Sonatel this year launched the construction of its bining quality and speed: consult a website, listen to Rufisque Datacenter. This project will promote online radio, watch a video, upload a file or application, the development of cloud in Senegal and in the etc. sub-region with a «green» solution that optimizes • To simultaneously access to multiple Internet services the use of energy and enables companies to ac- without quality degradation, such as: watch a video cess at lower cost to a range of rich Cloud ser- while browsing the Internet; vices. • To explore new uses such as: mobile cloud computing that provides the ability to work while you’re on the Sonatel respectful of the recommendations of the go, like being in the office; the cloud gaming that can ARTP also started the number portability project. play games in HD consoles on your mobile or tablet anywhere and on any device; video mobile to mobile

Sonatel 2014 annual report of activities annual report of activities Sonatel 2014

SONATEL ABROAD

securing bandwidth

As part of its bandwidth Internet security policy, Sonatel This commission has developed numerous recommen- has participated in the Upgrade 4 of SAT3 with an in- dations including those that: vestment of 1 Million Dollars for a capacity increase of • On the frequency of RTI (every 8 years); 7 new STM 16. The commissioning was conducted in • On alternative call procedures allowing recognized May 2014. operators to take action on the types of calls that have a negative impact on the quality of service or income; Sonatel also actively involved in the Working Group for • On the strengthening the role of ITU on issues of inter- upgrades 1 of Atlantis 2 and upgrade 5 of SAT3. national public policy issues pertaining to the internet and the management of internet resources, including ITU: the Senegal re-elected as member domain names and addresses; of the Council of the Union • On the strengthening the role of ITU in building confi- dence and security in the use of ICTs; Sonatel attended the Plenipotentiary meeting was the • On the protection of children while on-line; renewal of the management team of the Union with the • On the 2020 Connect Program for the development of election of Houlin Zhao (China) as the new Secretary Ge- ICT in the world whose objective is to connect the re- neral to replace Hamadoun Touré. Mr Malcolm Johnson maining 1.5 billion users by 2020. (United Kingdom) was appointed Vice-Chairman. He was replaced as Director of TSB by the Korean Chaesub fight against fraud by-pass SIMBOX Lee. The year 2014 was also marked by a resurgence of SIM Mr Brahim Sanou (Burkina Faso) and Mr. François Ran- box fraud. cy (France) retain their posts respectively Director of the Office of Development of Telecommunications and Di- The implementation of effective tools and the deploy- rector of the Office of Radio communication. ment of considerable means to fight against this crime with effective coordination of Sonatel competent teams The 48 seats of the Council of the Union have been re- helped dismantle criminal networks with the support of newed and Senegal was re-elected as a member of the security forces (police, national security guard). Council of the Union in the quota of 13 seats for Africa. The struggle continues, fraudsters adapting themselves In the Delegation of Senegal led by the Ministry of Tele- and also going through the competition networks. Effec- communications, Sonatel was represented by Mr. Birago tive collaboration with other operators and ARTP is more Beye and Mr. Saliou Toure who hold the Co-chair of the relevant than ever to sustainably eradicate this harmful Africa Group of the Working Commission 3 of the ITU. practice for the ecosystem and income of the country. The Senegalese delegation participated in the work of the Commission 5 for Political and legal aspects.

49 Sonatel 2014 annual report of activities

digital Passage TNT Project

Sonatel accompanies the Group Excaf in the implemen- In 2014, Sonatel, in collaboration with its partner STC tation of TNT with the provision of telecommunication of (Saudi first network), was able to launch innovative offers transmission links and national and international publi- on roaming calls with call and reception rates very com- city, and co-localization / sharing sites. petitive. Quality service is expected in the very short deadlines The same model was also deployed on all countries of the so that Senegal meets the deadline in June 2015 for the Christians Pilgrimage roadmap (France, Italy and Israel) passage of broadcasting from analog to digital. in collaboration with our partners.

pilgrimage to the holy places A powerful tool was acquired to test the level of real-time (Mecca and Christians). quality of service throughout the duration of these pilgrimages. Sonatel as every year accompanied the Senegalese pilgrims to the pilgrimages to holy places.

Sonatel 2014 annual report of activities annual report of activities Sonatel 2014

FINANCES

key figures and Sonatel share in > the stock exchange

53 Sonatel : integrated telecommunications operator

Orange Guinea

Orange Mali

70.05% 89.37%

Orange Bissau

90% mobile, Internet, data

Sonatel SA (fixe, data, Internet)

float 23% employees 8%

Republic of Senegal Orange 42% 27%

54 annual report of activities Sonatel 2014

100%

Mobile

Internet Sonatel Mobiles Business Solutions

Sonatel Sonatel Business Multimedia Solutions

strong and dynamic market positions: strengthened positions in all our markets

GDP 4% GDP 2,9% inflation 1.6% inflation 11.8% penetration 105.7% penetration 73% st nd

position 1 /3 Guinea position 2 /6 Senegal market share 58% market share 51%

GDP 4.8% GDP 3.5% inflation 1.8% inflation 1.7% penetration 122% penetration 60% Mali position 1st/3 position 2nd/2 market share 54% market share 48% Guinea Bissau

fixed line– mobile – internet – leased lines – TV adsl – Orange Money strong and dynamic market positions : strengthened positions in all our markets (next)

Sonatel

Orange

strong growth still driven by the mobile business

subscribers 2012 2013 2014 r 2013/2012 r 2014/2013

fixed line 281 762 293 063 284 306 4% -3%

mobile 17 911 057 22 000 003 25 942 396 23% 18%

internet 108 351 126 310 120 247 17% -5%

Sonatel 18 301 170 22 419 376 26 346 949 23% 18%

56 annual report of activities Sonatel 2014 sustained development of mobile subscriber base

2012 2013 2014 r 2013/2012 r 2014/2013 subscribers per country Senegal Senegal 7 118 160 7 462 438 8 097 673 5% 9% 31.2%

Mali 8 581 888 10 821 677 12 825 680 26% 19% 2% Bissau Guinee 1 850 059 3 239 141 4 506 012 75% 39% 17.4% Guinea Bissau 360 950 476 747 513 031 32% 8% Mali total 17 911 057 22 000 003 25 942 396 23% 18% 49.4%

base (thousands) more than million 26 subscribers

12 826 10 822

8 582 8 098 7 462 7 118

4 506 3 239 1 850 282 361 293 477 284 513

2012 2013 2014

fixe mobile Senegal mobile Mali mobile Guinea mobile Bissau turnover breakdown per activity

contribution & evolution in 2014

evolution 2014/2013 30% internet 25% 5% 20% mobile liaison louées 66% 15% et autres 10% 5% data & leased line internet 1% -0% international fixe line 5% interconnexion -5% 19% domestic other wholesale -10% interconnexion 3% 2% -15% -20%

group margins remained at high levels

53% 52% 51% 52%

37% 38% 37% 39%

24% 26% 26% 27%

2011 2012 2013 2014

net margin operating margin Ebitda margin

58 annual report of activities Sonatel 2014

sustained investment to 17% of turnover

capex 135 expansion and densification in 2G and 3G network in Guinea (128 sites) and Guinea Bissau 120 118 (57 websites) 116

development of mobile internet

improving the quality of technical service and innovation 2011 2012 2013 2014

good cash generation and low leverage

(in Xof billion) 2011 2012 2013 2014

equity 592 596 613 655

debt 40 26 15 3 debt ratio 6.8% 4.4% 2.4% 0.5%

655 592 596 613

40 26 15 3

2011 2012 2013 2014

equity debt good cash generation and low leverage (next)

2011 2012 2013 2014

free cash flow 215 229 263 292

debt 40 26 15 3 debt ratio 14.4% 9.5% 5.1% 0.9%

292 263 229 215

40 26 15 3

2011 2012 2013 2014

free cash flow debt

creation of wealth : driving force of economical development

a key contributor to the economies of the countries of presence

more than 374 more than 218 more than 100 nearly 173 bil- billion XoF billion XoF in 000 indirect lion XoF were paid for taxes, turnover generated jobs thanks to a generated in fees, royalties, for the benefit of wide commercial contribution to the payroll taxes, local companies, distribution states balance of customs fees network and payments trough and dividends of more than 132 dynamic our international which billion XoF from partners, activities with Senegal, 35 billion foreign operators more than 215 XoF from Mali, 46 more than 3,000 of telecommunica- billion XoF from billion Xof from direct jobs tions Senegal, 107 Guinea and 5 billion XoF from billion XoF from net exports of more Mali, about 46 Bissau than 98 billion XoF billion XoF from from Senegal, 72 Guinea and near billion XoF from

States budget revenues 6 billion XoF from Private sector contribution Job creation exports Mali,19 billion XoF Bissau from Guinea and 10 billion XoF from Bissau

60 annual report of activities Sonatel 2014 staff

2011 2012 2013 2014 r 2013/2012 r 2014/2013

Senegal 1 910 1 933 1 787 1 751 -8% -2%

Mali 431 450 487 530 8% 9%

Guinea 170 217 275 324 27% 18%

Bissau 54 63 39 85 10% 23%

total 2 565 2 663 2 618 2 690 -1.7% 3%

record value of Sonatel share : continuing performance 25 000 Fcfa during the 1st trimester

monthly average stock price peak of the month 25 000 interim results 24 000 dividend 2013 23 000 22 000 21 000

20 000 -2 300 Fcfa + 2 700 Fcfa 19 000

jun-14 jul.-14 jan.-14 feb.-14 mar-14 apr.-14 sep.-13 oct.-14 may-14 aug.-14 nov.-14 dec.-14 25 000 stock split 22 500 20 000 17 500

15 000 +9 000 Fcfa 12 500 10 000

Jul.-12 jul.-14 aug-12 jan.-13 apr.-13 jun.-13jul..-13 nov.-13 jan.-14 apr.-14 jun.-14 nov.-14 sep.-12oct.-12nov.-12dec.-12 feb.-13mar.-13 may-13 aug.-13sep.-13oct.-13 dec.-13 feb.-14mar.-14 may-14 aug.-14sep.-13oct.-14 dec.-14

Share price record in closing at 24,600 CfaF generous and reliable dividend policy

exercices 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

share price 3 603 6 701,5 9 100 17 500 13 000 12 000 15 400 12 000 14 500 20 050 22 800

dividends 56.5 69 88.3 110 130 135 140 145 150 155 160 (in billion cfaF)

net dividend per 508.5 621 794.7 990 1 170 1 125 1 260 1 305 1 350 1 395 1 440 share

dividend yield 14% 9% 9% 6% 9% 10% 8% 11% 9% 7% 7%

distribution 69% 59% 60% 68% 83% 73% 76% 94% 88% 82% 93% rate (%)

62 chiffres clés annual report of activities Sonatel 2014 > financial report 2014 note to the readers The scope of consolidation of Sonatel group includes Sonatel SA and its subsidiaries:

• Sonatel SA, the parent company, • Sonatel Mobiles, a 100 percent subsidiary, under Senegalese law, • Orange Mali, a subsidiary of 70.0467 percent of Malian law, • Sonatel Multimedia, a 100 percent subsidiary, under Senegalese law, • Sonatel Business Solutions, a 100 percent subsidiary, under Senegalese law, • Orange Conakry, 89.3704 percent subsidiary of Guinean law, • Orange Bissau, a 90 percent subsidiary of Guinea-Bissau law.

The 2014 consolidated financial data of Sonatel group are discussed in the text. introduction The Sonatel group recorded in 2014, a double-digit growth and was able to confirm his leadership and good operational and financial results in all countries of presence through innovation, operational excellence, business momentum and maintaining a sustained level of investment.

This performance was helped by the improvement in the economic environment and the gradual normalization of the political situation in Mali and the Republic of Guinea. However, regulatory, tax and competitive pressures were higher than in 2013 and had bumps effects on growth, particularly in Senegal and Mali. The fiscal year 2014 Sonatel was marked by:

operational excellence and contribution of the international subsidiaries in the growth

• group operating income grows up by 78 billion XOF thanks to the recovery in Mali (+ 41.40 billion XOF), • remarkable performance in Guinea (+ 41.39 billion XOF) due to the consolidation of leadership on the volume market share to 50.6 percent, • Maintaining of the turnover contribution of Guinea Bissau (+ 1.25 billion XOF) due to the strong business momentum, • Senegal’s contribution slightly decreased (- 6.33 billion XOF) impacted by the residual effects of fraud on incoming international calls, lower interconnection rates by 36 percent and the beginning of implementation of the reduction of the Government’ bills.

the continued growth of mobile subscribers’ base reached more than 26 million

• Substantial recruitment in Guinea and Mali are sustaining the growth of the mobile subscribers’ base in 2014, • In Mali, the bonus program and the promotions’ activation served as main drivers to the increase of the subscribers’ base, • Growth of the subscribers’ base is 3 times higher than 2013 in Senegal limited by the extension of subscribers’ identification, • A dynamic commercial service in regions and in new localities covered in Senegal, Guinea and Guinea Bissau,

63 Sonatel 2014 annual report of activities

• The further penetration in rural areas combined with the decline in the volume of cancellations in the residential segment attenuate the decrease of fixed-lines subscribers’ base despite a slight slowdown to + 18 percent or - 4.8 point compared to the evolution of 2013 (+ 22.8 percent between 2013 and 2012), • A slowdown in growth of the subscribers’ base in Guinea Bissau due to the regulatory measures for identifying operators’ subscribers, • An ADSL subscribers’ base is declining (- 7 percent) due to the cannibalization of mobile internet deals around the use of 3G and still timid adherence to the new fixed-lines rates

Sustained financial performance

The turnover growth remained at a level above 10 percent despite the emergence of unexpected and adverse external factors: decision to reduce the Government of Senegal’s phone bills and fraud incoming calls.

The group was able at the same time to improve its EBITDA margin by + 1.2 point of 52.4 percent, thanks to the control of operating costs contained at 47 percent of the variation in turnover. EBITDA increases at 50 billion XOF and reached 427.8 billion XOF, or + 13.1 percent of XOF compared to 2013.

Turnover 816 738 663

4.4% 11.4% 10.5%

2012 2013 2014 r 14/13 r 13/12 turnover 663 738 816 10.5% 11,4% Ebitda 347 378 428 13.1% 8.9% Ebitda margin 52% 51% 52% +1pt -1pt operating result 251 273 316 15.5% 9% operating margin 38% 37% 39% +2pts -1pt net income 171 190 218 15.1% 10.7% net margin 26% 26% 27% +1pt - capex 118 116 135 17.2% -2.2% capex rate 18% 16% 17% +1pt -2pts free cash flow 229 263 292 11.3% 14.5%

in xof billion

64 annual report of activities Sonatel 2014

1. Economic and regulatory environment conomically, a slight improvement in environment • concerns raised following the aid suspension from the accompanied by a stabilization of the political si- World Bank, freeze up in December with the resump- Etuation in Mali and Guinea tion of cooperation with Mali, • threat of the epidemic «Ebola» but with little effect on the economy.

1.1 environmental stabilization The telecommunications sector was marked in the mobile market by: Senegal • pursuing the struggle for leadership of the subscribers’ base: promotions and activations On the macroeconomic side, we note: • a high rate of multi equipment and churn, • apace bonus promotions based on events, • an internal environment more suitable for business • continued expansion and intensification of the 3G network thanks to in Bamako to strengthen the leadership in mobile data, - the start of the implementation of Senegal Emergent Plan • on the corporate market, the resumption of growth in - the consolidation of sub-regional trade (economic re- the subscribers’ base following the reopening of bank covery in Mali) beneficial to the Senegalese economy, branches with VPN offers • uncertainties in the agricultural sub-sector: observed • and a decline in fixed-lines subscribers following the delay in the installation of the rainy season in 2014 in market withdrawal of Duba offer. most areas of the country, • economic forecast showing a marked increase com- Guinea pared to 2013 as a result of the renewed dynamism in industry and services, The year 2014 was quite politically stable unlike 2013 mar- • a real GDP growth rate is expected to be more than 4% ked by many manifestations and socio-political events. in 2014 against 3.5% for 2013. The events that have marked the Guinea’s environment The telecommunications sector is characterized by: were as follows: • Intensification of the competition, mainly on mobile of- • parliament session made earlier this year followed by fers (voice and data), resulting in the development of large investments plans, and multisim which strongly impacted the ARPU (- 9% on • appearance of Ebola fever in late March with serious mobile voice), consequences on the economic and social level. • A decrease in wholesale components under the effect of a decrease of 36 percent of call termination rates Orange Guinea has maintained its leadership acquired on mobile (from 23.4 to 15 XOF) and the inclination of since May 2013 thanks to a strong performance on re- international activity with an increase in scale of the cruitment supported by a network deployment program cannibalization of our revenues by Over The Top (OTT) (187 sites open in 2014 with 128 new locations) and ani- actors facilitated by the development of broadband mations organized at the opening of new locations. networks and the democratization of smartphones, • Lower rental capacities on the international following Guinea Bissau the demand reduction induced by the availability of capacity via the new submarine cable ACE, The country recorded the positive impacts following the • The willingness of the Government to intervene in the lifting of economic sanctions resulting notably in the pro- sector while demanding more contribution of opera- gressive resolution of the social crisis of the first semes- tors in turnovers (Contan project - establishment of the ter of 2014 and the settlement of salary arrears of civil special tax PST), combined with its cap decision of its servants (4 months). telephone expenses to 11 billion XOF. Other notable developments include: Mali • the entry into force of a tax reform with the main point of the VAT rate down from 15 to 17 percent, The gradual normalization of the political situation with: • the deficit on the production factors (water, electricity,..) • the resumption of negotiations with the armed groups posing a handicap for a good control of service quality, in northern Mali, • a large campaign to identify subscribers initiated by • the start of the country’s economic recovery with GDP the Government under the supervision of the Regulator growth expected, Authority with a major impact on the evolution of the number of active subscribers of both operators.

65 Sonatel 2014 annual report of activities

1.2 Sonatel group, a shared wealth creator 2. Operational elements The group continues to remain a key player in the creation of wealth in all countries of presence. 2.1 Subscribers’ base: 26.3 million customers, representing 17.5 percent growth It contributes to the development of the countries through: n late 2014, the Sonatel Group subscribers’ base • budget turnovers: more than 374 billion XOF paid by way (fixed-lines, mobile and internet) surpassed 26,300,000 of taxes, fees, social security contributions, customs duties subscribers, an increase of 17.5 percent over 2013. and dividends including more than 215 billion in Senegal, I more than 107 billion in Mali, 46 billion in Guinea, and 6 The mobile subscribers’ base are driving growth of the billion for Bissau, subscribers’ base with a significant increase of almost 4 • development of the private sector: more than 218 billion million subscribers (+ 18 percent compared to 2013) driven XOF of turnover generated for the benefit of local bu- by the significant recruitments mainly in Guinea (+ 1.27 mil- sinesses, including more than 132 billion turnover for en- lion subscribers) and in Mali (+ 2 million subscribers). terprises in Senegal and 35 billion in Mali, 46 billion XOF in Guinea and 5 billion in Guinea Bissau, Senegal has managed to triple the growth of the mobile • job creation: 100 000 indirect jobs through a wide and dy- subscribers’ base (+ 655,000 subscribers), the hiring namic commercial distribution partners and 3,000 direct pace achieved during the second semester of 2013 had jobs, been slowed by the implementation of regulatory mea- • exports: nearly 173 billion XOF generated contribution to sures to identify subscribers. These same measures re- the balance of payments by foreign telecommunications lating to the identification of subscribers in Bissau have operators; net exports of services by nearly 98 billion by slowed the pace of recruitment in 2014. Senegal, 72 billion XOF by Mali, 19 billion by Guinea and 10 billion by Bissau, Thus, the leadership was consolidated in Guinea, the • Sponsorship actions in the fields of Culture, Education and subscribers’ base gap from the leader was reduced in Health Foundation of Orange Mali and Sonatel in Senegal, Bissau, the competitor offensive contained in Senegal which celebrated its 10 years of existence since 2012. and Mali.

The ADSL subscribers’ base has decreased by 6.5 percent compared to 2013, explained by a slowdown in recruitment due to 3G mobile competition and volume of terminations more than the recruitment on new fixed- lines deals (home and home plus).

2012 2013 2014 r 2013/2012 r 2014/2013

fixed line 281 762 293 063 284 306 4% -3%

mobile 17 911 057 22 000 003 25 942 396 23% 18%

internet 108 351 126 310 120 247 17% -5%

total 18 301 170 22 419 376 26 346 949 23% 18%

66 annual report of activities Sonatel 2014

12 828

(thousands of subscribers) 10 822 subscribers per country 8 582 Senegal 8 098 31.2% 7 462 7 118

Bissau 2% 4 506 17.4% Guinea 3 239 1 850 Mali 293 477 284 513 49.4% 282 361

2012 2013 2014

fixed line mobile Senegal mobile Mali mobile Guinea mobile Guinea Bissau

The subscribers’ base by country is analyzed as follows: This strong growth, achieved in a very competitive environment is due to the many promotions on sim activa- Senegal tions and the market animation for recharging with an acceleration of the frequency and levels of bonuses of- mobile fered. Compared to 2013, the mobile subscribers’ base grew by 635,235 subscribers, a significant jump in base fixed-lines / Internet growth (+ 8.5 percent against + 4.8 percent in 2013). The growth of fixed-lines subscribers’ base in Mali has been affected by the withdrawal from the market of the The acquisition campaigns (Nio far, Ganalé region, offer Duba, object of dispute with the Regulator. On the Noflay), the strengthening of recruitment «Kirène with other side, 25 percent growth was recorded in the Inter- Orange» and the mastery of outputs deployed through net compared to 2013 thanks to new offerings «Flybox», retention campaigns have tripled in volume growth re- «Sénékela», «mobile internet package for others» and corded in the subscribers’ base in 2013. reopening of bank branches for VPN offers.

The subscribers’ base knows in stride an increase of 10 Guinea percent compared to 2013 and stabilized at around 74 percent of prepaid active customers (+ 8 million subscri- mobile bers). Orange Guinea Subscribers’ base in late 2014 stood at 4.5 million against 3.2 million subscribers in 2013. We fixed-lines / Internet note a remarkable increase of + 39.1 percent compared The fixed-lines subscribers’ base felt by 3 percent and to 2013 thanks to continued investment efforts for network that of the ADSL down by - 6.5 percent compared to densification and coverage of new localities (187 sites 2013 impacted by the development of mobile data of- deployed with 128 new localities covered in 2014, 164 fers on the 3 G amplified by the popularization of smart- 3G sites opened), the recovery of the quality of technical phones and resale of retail mobile internet (internet pass service accompanied by strong sales of conquest. from 100 XOF). Commercial offers headlights (illiminet, Kheweul,) and dual play packages (voice + adsl), as the Orange Guinea holds 50.6 percent market share volume continued penetration of Cdma (Yakhanal) in rural areas at end-2014 and 53 percent market share value, consoli- still can welcome new subscribers on the fixed-lines. dating its leading position in the Guinean market in both volume and value. Mali mobile The mobile Subscribers’ base Orange Mali amounted to 12.8 million subscribers, up + 18.5 percent, an increase of recruitment (+ 2 million subscribers).

67 Sonatel 2014 annual report of activities

Guinea Bissau

mobile Orange Bissau base reached 513,000 subscribers at the end of 2014 against 477,000 subscribers at the end of 2013, an increase of 7.6 percent. This growth resulted on the maintenance of commercial dynamics and development of the usage favored by commercial animation and abundance deals

There is a strengthening of the Orange market position with 0.9 points won market share.

2.2 traffic: evolution of in-coming and out-going national mobile traffic, international traffic by country.

outgoing national mobile traffic outgoing national mobile traffic outgoing national mobile traffic outgoing national mobile traffic 396 2144 266 9128 1998 1723 3110 170 4248 4901 1659 961 305 222 214 253 377 19 243 207 372 369 16 15

2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014

Orange other operators

international traffic international traffic international traffic international traffic

837 859 791 535 499 533 174 172 31 47 144 22 20 27 33 332 361 344 206 241 233 85 116 136

2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014

outgoing from Senegal incoming international traffic

incoming national mobile traffic incoming national mobile traffic incoming national mobile traffic incoming national mobile traffic

610 589 590 364 399 24 365 299 301 319 13 16

2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014

incoming national mobile traffic

68 annual report of activities Sonatel 2014

mobile Senegal

The mobile out-going traffic totaled 9,335 million minutes due to the residual effects of SIM box fraud and the de- and was up sharply by 81.5 percent compared to 2013. velopment of alternative channels (VoIP). Traffic growth, driven mainly by the use of voice on prepaid refills, is the result of the resurgence of promotional actions, Mali almost daily on prepaid (flash promotion, unlimited days and nights, unlimited bonus numbers). Most of the mobile At the end of 2014, outgoing traffic from Orange Mali is outgoing traffic (94 percent) is made to Orange mobiles 2,619 million minutes, representing an absolute increase (club effect). of 175.4 million minutes compared to 2013.

The exponential growth of outgoing traffic (+ 4,191 mil- This evolution of outgoing traffic (+ 7.2 percent) is in lion minutes) confirms the de-correlation increasingly pro- phase with the recorded increase in the subscribers’ nounced with mobile turnovers (+ 2.5 percent), or 32 times base (2 million) and the increase in the level of free calls. less than the increase in usage. The national incoming traffic (third party mobile opera- The increase in monthly prepaid average usage per user tors) is experiencing a significant increase of 24.3 percent (aupu) from 59.1 to 100.2 minutes per month, or + 69 due to the strong growth of the competitor subscribers’ percent, takes place at the same time as a decrease of 6 base (+ 2.2 million) and volumes exchanged between percent of the out-going mobile prepaid ARPU (average subscribers of both operators due to the development of revenue per user), from 3,069 à 2,734 XOF per month, re- off-net promotions. flecting the decline in value caused by the development of abundance. International incoming traffic from Orange Mali experienced a slight increase of 0.9 percent, or 4.6 million fixe-line Senegal minutes compared to 2013.

The fixed-lines outgoing traffic totaled 267.7 million mi- Guinea nutes at the end of 2014, down by 10.8 percent in 2013 (- 32 million minutes). Overall traffic of Orange Guinea strongly grew with an increase of 63.4 percent (+1,402.8 million minutes) for The decline in the fixed-lines outgoing traffic is mainly outgoing traffic compared to 2013 and by 5 percent due to the overall decline of the outgoing traffic to almost (16.5 million minutes) on the incoming traffic compared all destinations (except for servers) with more than 2/3 of to late 2013. the national fixed-lines under the effect of the continued gradual transfer of use of voice to mobile. The evolution of outgoing traffic was mainly driven by outgoing traffic to Orange network(club effect) whose The traffic evolutions by destination were as follows: variation is +98 percent (1,386.5 minutes) of the variation in the total outgoing traffic. • National outgoing traffic (local + long distance), down - 12.9 percent or - 3.1 million minutes, The strong increase in traffic is the result of the combined • Mobile outgoing traffic decreased by - 7.7 percent or - effects of the strong growth of the subscribers’ base (+ 14.6 million minutes, 1.2 million subscribers), improved service quality and • Outgoing international traffic (origin Senegal) declined further expansion of network coverage to new areas. slightly by - 4.8 percent or - 17.4 million minutes.

The change of the mix subscribers’ base for packaged solutions mainly ADSL usage, reinforces the refocusing Guinea Bissau phenomenon of the fixed-lines usage, especially for new The outgoing traffic experienced a sharp increase subscribers, mainly on broadband. Further, the conver- between 2013 and 2014 with growth of + 42 percent, or gence of rates of fixed-lines and mobile services in the 131.8 million minutes. Orange network promotes the indiscriminate usage of fixed-lines or mobile for calls within the Orange network It is mainly driven by the development of the subscribers’ representing over 80 percent of traffic. base, the development of abundant causing an increase in traffic to Orange mobiles by + 48 percent, or 129.5 mil- International incoming traffic with 791 million minutes lion minutes, regularly linked with unlimited offers made experienced a decline of 5.5 percent, or 46 million mi- to customers during weekends. nutes. This decrease in international incoming traffic is

69 Sonatel 2014 annual report of activities

Furthermore, the positive development of refills (+ 10 The change noted on the ARPU is due to: percent growth in turnover for the mobile business) re- • The over-abundance proposed on the markets leading sults in an increase of usage with a direct impact on the to lower average prices of usages, development of traffic. • The still low contribution of income growth drivers (mobile data, Orange Money, content, TV) The incoming traffic rose 42.7 percent of the 49.2 mil- • The decline in revenue from voice lion minutes in 2013 to 70.2 million minutes in 2014. This • The impact of lower termination rates on mobile calls growth was driven both by the international incoming in Senegal. traffic, which rose from 33.1 million to 46.5 million minutes of national traffic minutes which rose from 16.1 mil- Also, abundance, main lever on recruitment and pre- lion to 23.6 million minutes. servation of value market share, explains the decline in ARPU in Senegal from 9.3 percent to 2,784 XOF / month, in Mali from 3.6 percent to 1,778 XOF a month, in Guinea 2.3 Average revenue per user (ARPU) from 13 percent to 2,583 XOF per month and in Bissau from 4.4 percent to 3,024 XOF per month. A decline in prepaid ARPU was noted in all countries resulting induced effects of increased largest subscribers’ base that changes in income recorded over the period.

croissance average monthly arpu 2012 2013 2014 r 13/12 r 14/13 du parc

fixe 93 890 100 549 102 245 7% 2% -3% Senegal (cfaF) mobile prepaid 3 326 3 069 2 784 -8% -9% 9%

Mali (cfaF) mobile prepaid 2 118 1 844 1 778 -13% -4% 19%

Guinea (Gnf) mobile prepaid 43 923 39 962 34 652 -9% 13.3% 39%

Guinea Bissau (cfaF) mobile prepaid 3 056 3 162 3 024 3% -4.4% 8%

2.4 staffing

In late 2014, the staff of Sonatel group stood at 2,690 officers, an increase of 3 percent compared to end 2013.

By entity, the workforce is distributed as follows: • Senegal: 1,751 employees, down 36 because of early retirement and pensions. • Orange Mali: 530 employees, or + 43 employees because of the recruitments to fill particular needs in technical structures due to the increased activity. • Orange Guinea: 324 employees, an increase in the number of 58 employees integrated for better management of business development, • Orange Bissau: 85 employees, an increase in the number of 16 employees to support the development of the activity.

2011 2012 2013 2014 r 13/12 r 14/13

Senegal 1 910 1 933 1 787 1 751 -8% -2%

Orange Mali 431 450 487 530 8% 9%

Orange Guinea 170 217 275 324 27% 18%

Orange Bissau 54 63 69 85 10% 23%

Sonatel 2 565 2 663 2 618 2690 -1.7% 3%

70 annual report of activities Sonatel 2014

3. Financial Results

3.1 Turnover: growth of 10.5 percent However, there is a decrease in The year 2014 recorded a significant level of turnover • Wholesale turnover (- 6.7 billion XOF) carried by growth of +10.5 percent compared to 2013. Senegal, following the drop in interconnection rates from 23 to 15 XOF, This maintaining of a double digit growth remains an • Reselling capacity on leased lines following the setting important performance in the context of increased ACE service, competition and widespread abundance on the market. • International incoming volumes (- 3.6 percent) due It represents an additional 78 billion in turnover driven to the residual effects of the SIM box fraud and the by: development of alternative routes, • Mobile + 77.3 billion due to the growth of the • The Government which begins his bill reduction subscribers’ base and the increase of usages to which process. (70 billion in Mali and Guinea Conakry) • Internet and leased data links +7.5 billion mainly in The mobile business in Mali, Guinea and Senegal had Guinea (+ 5.7 billion) and Mali (+ 1.9 billion) through driving the growth in the group. the revitalization of public offers (key dominoes, flybox) and redesign of business deals,

In 2014, Turnover by country divided as follows:

Guinea Bissau 15

Guinea 116 • Senegal 52%

• Mali 32% Mali Senegal • Guinea 14% 261 425 • Guinea Bissau 2%

in xof billion

71 Sonatel 2014 annual report of activities

Senegal

The social turnover in Senegal stands at 458.8 billion decline in volumes of 48 million minutes following XOF. It is stable compared to 2013. In contribution, the the effects of SIM box fraud and the development of turnover is 425 billion in 2014, a decrease of 1.4 percent alternative channels (Voip). The decrease in incoming and 6.1 billion in absolute value compared to 2013. international turnover was slightly offset by the increase of 0.5 billion of hubbing revenues related to increased The decrease in revenues recorded covers the three main volumes received. components of wholesale: domestic interconnection (-3.6 billion), the international incoming traffic (-6.5 fixed-lines billion), leased lines and roaming for (-1.9 billion). Fixed-lines activities contribute for 8.7 percent to the The mobile generates 59.6 percent of Senegal’s turnover turnover in Senegal, nearly 40 billion XOF, decreasing 0.5 to grow by 2.5 percent, or 6.2 billion compared to 2013. billion or -1.3 percent compared to 2013, due to a hand moving of usage toward the mobile and also following mobile the implementation of the beginning of the government’s bill reduction convention. The mobile business represents 59.6 percent of Senegal’s turnover and amounted to 253.2 billion XOF, internet and data a slight growth of 2.5 percent compared to 2013 (6.2 billion XOF). Turnover in Senegal amounted to 26.3 billion XOF and contributes 6.2 percent of revenues. It is stable This growth was driven by refills (+ 5.2 billion), turnover compared to 2013. of equipment (+ 0.8 billion Makossa policy around low cost smartphones), Orange Money income due to The slight increase in revenues of the Internet (+ 0.2 increased transaction volumes around the bill payment billion) explained by migration on new formulas home and merchant payment (+ 1.1 billion). and home plus, is offset by a decrease of 0.2 billion recorded on data and integration. Postpaid revenues are down by 0.8 billion (effect of Government’s bill reduction, the flat-rate data, and domestic interconnection corporate market offers). Revenues from domestic interconnection in Senegal are The growth of prepaid refills (+ 5.2 billion) is explained by 8.83 billion in 2014, down 3.8 billion or - 30.4 percent the increase in subscribers’ base recharger of 490,000 compared to 2013 following the downward revision of subscribers compared to 2013, stabilized at 74 percent call termination rates on mobile by the Regulator of - 36 of the active subscribers’ base through actions on the percent ( from 23.4 XOF to 15 XOF). inactive base, animations supported around promotions and campaigns targeted, and to a lesser extent on the Other wholesale revenues (leased lines, roaming tariff revision carried out in the second semester on tariffs operators) for outgoing national calls. Other income in the wholesale recorded a decrease of international wholesale 1.7 billion compared to 2013. This decrease results from the decrease in revenues from leased lines of 1.9 billion Turnover from international activities amounted to explained by the reduction in demand (subscriptions 87.9 billion XOF down 6.9 percent, or 6.5 billion XOF terminations) and prices (abundant offer) of resale compared to 2013. capacity with the commissioning of the ACE cable service. This decrease in revenue was due to the decline in incoming net traffics falling to 7 billion resulting in the

72 annual report of activities Sonatel 2014

Senegal 300 000

200 000

100 000

fixed line mobile

internet domestic interconnection

international interconnection other wholesale (internet & data)

Mali international interconnection

The social turnover of Orange Mali amounted to 271.8 billion International interconnection activity represents 22.5 XOF. It grew by + 18.9 percent over 2013. percent of contributory earnings Orange Mali (59 billion). She recorded an increase of 2.1 percent, or 1.2 billion XOF For contribution, Mali’s turnover amounted to 261 billion in compared to 2013, related to an increase in rates. 2014, representing growth of 19 percent (+ 41.4 billion). The Mali increases its contribution of 2.7 points compared to domestic interconnection 2013, mainly due to mobile business (+ 37.3 billion), internet and data (+ 2.3 billion) and wholesale (+ 1.7 billion). Revenues from domestic interconnection totaled 6.8 billion in December 2014, thus an increase of 0.6 billion mobile compared to 2013, driven by higher volumes received from competitors + 27 million minutes. Revenues for the Mobile division contribute to 70 percent to turnover (182 billion), up by 26 percent compared to fixed-lines, internet and data 2013. Turnover rose by 2.4 billion, including 0.1 billion XOF This growth was driven by the significant evolution of thanks to the success of business deals and VPN the mobile subscribers’ base (+2 million registered services following the reopening of the banking agencies subscribers), combined with the rapid pace of bonus after the crisis. promotions and activation, to the continued expansion and densification of the 3G network, particularly the development of Orange Money activity (increase in turnover of 5 billion compared to 2013)

200 000 Mali 150 000 100 000 50 000 0 fixed line mobile

internet domestic interconnection

international interconnection other wholesale (internet & data)

73 Sonatel 2014 annual report of activities

Guinea

The social turnover of Orange Guinea amounted to 122.3 internet and data billion, up 56.5 percent over 2013. This turnover amounted to 8 billion and represents 7 In contribution, Guinea turnover totaled 115.6 billion percent of Orange Guinea contributed turnover. XOF, an increase of 55.8 percent (+ 41.4 billion), or + 17 points compared to 2013. Internet leased lines and VPN offers are experiencing a strong growth compared to 2013 (+ 5.2 billion) thanks Growth was driven by the mobile business (+ 33 billion), to the launch of key dominoes and the redesign of bu- internet and data (+ 5 billion) and international inter- siness deals. connection (+ 2 billion), the national interconnection (+ 0.6 billion XOF) and the roaming including leased lines international wholesale (+ 0.5 billion). With a turnover of 12 billion in 2014, international inter- mobile connection recorded a growth of 24 percent or + 2.4 billion compared to 2013 due to higher termination rates for With a turnover of 89 billion, the mobile business is calls from $ 0.28 to $ 0.325. However, traffic was down contributing by 77 percent of Orange Guinea revenue. by -1.2 percent or -2 million minutes impacted by the SIM box fraud. Activity revenue is up by 58 percent, or + 33 billion compared to 2013 due to the significant increase in the Other wholesale revenues (leased lines, operator subscribers’ base (+ 39 percent or 1.3 million subscri- roaming) bers compared to 2013) in pursuit of the refill incentives actions with the expansion of network coverage (187 Other wholesale revenue amounted to 1 billion and re- sites with 128 new locations) and the improvement of the corded a growth of 0.5 billion primarily on operator roaming. quality of service. domestic interconnection

Turnover from domestic interconnection totaled 5.1 billion in December 2014, an increase of 0.6 billion compared to 2013, in correlation with the increase in volumes received from competitors + 6 percent (+18.5 million minutes).

Guinea 100 000 80 000 60 000 40 000 0

fixed line mobile

internet domestic interconnection

international interconnection other wholesale (internet & data)

74 annual report of activities Sonatel 2014

Guinea Bissau

The social turnover of Orange Bissau amounted to 19.7 The activity grows by 10 percent (+ 1.2 billion) compared to billion XOF, up + 13 percent compared to 2013. 2013, thanks to increased refills supported by the increase in usage (network coverage expansion and improvement For contribution, Bissau’s turnover amounted to 15 of quality of service), further animation efforts and refills billion, an increase of 9.4 percent (+ 1.3 billion), driven incitements (promotion «Tico Tico») primarily by the mobile and domestic interconnection. domestic interconnection mobile Revenues from domestic interconnection amounted to The turnover of the mobile business amounted to 12 billion, 935 million and were up by 0.2 billion compared to 2013 contributing to 86 percent of Orange Bissau’s turnover. due to the significant increase in volumes received from competitors + 47 percent (+ 7 million minutes) in 2014.

15 000 Guinea Bissau 10 000 50 000

0 fixed line mobile

internet domestic interconnection

international interconnection other wholesale (internet & data)

3.2 Operating expenses

2014 operating expenses of the Sonatel Group amounted Evolution by type of expense is as follows: Network to 530.9 billion, up by 45.1 billion (+ 9.3 percent) access charges and payments to operators fell by 4.1 compared to 2013. billion driven by Senegal for 5.5 billion, by Mali for 0.3 billion and Bissau for 0.2 billion while they increase to 1.9 Most of this increase was driven by Mali to 47.3 percent billion in Guinea. (+ 21.3 billion), Guinea for 30 percent (+ 13.6 billion), Senegal for 21 percent (+ 9.4 billion) and Bissau for 1.8 In Senegal, this decrease is justified by: percent (+ 0.8 billion). • A declining of 4.3 billion on the national interconnection due to a decrease of interconnection rates (from 23 XOF The cost structure remains dominated by network to 15 XOF with Tigo and from 32 XOF to 15 XOF with charges and depreciation amount with respective Expresso) for 2 billion on repayments of value-added contributions of 36 percent and 21 percent. service with the limited success of SMS games, for 1.2 billion on rentals of circuits following the renegotiation Network expenses amounted to 193 billion and were of VSAT contracts (Very Small Aperture Terminal) and up by 12.3 billion. This growth is explained by higher for 0.5 billion on roaming, mitigated by the increase expenses from Guinea to 5.4 billion, from Senegal for 4.1 • 2.5 billion in international payouts explained by the billion and from Mali for 2.8 billion. growth of volumes of incoming hubbing of 26 million minutes and diversion until May of the Orange Zone offer

75 Sonatel 2014 annual report of activities

In Mali, the decrease was explained by lower international In Senegal, the increase is from mainly distributors’ payouts of 0.9 billion related to the decline in outgoing commissions for 2 billion (of which + 1 billion of the traffic volumes by 7.8 percent (impact of the initiation of Orange Money commissions, + 0.8 billion on media the Mobile Termination Charge billing - Orange Zone), voice and game servers payoffs, 0.2 billion on sales offset by increases respective of 0.4 and 0.2 billion of the force proxy, and costs of terminal and other equipment roaming and the national payouts. sold for 1.7 billion and advertising expenses to 0.9 billion.

In Bissau, the decrease of 0.2 billion was mainly driven In Mali, the growth is mainly due to distributors’ by international payouts. commissions for 3.1 billion in correlation with the increase in refills and Orange Money turnover for 29.4 billion, In Guinea, the increase is due to the growth of national including 4.7 billion on Orange Money, advertising termination charges of 1 billion resulting from the 59 expenses for 1.7 billion offset by the decrease of 0.5 percent increase in domestic traffic, rental of circuits for billion on the costs of handsets and other equipment 0.6 billion with the establishment of two additional links sold. and international terminals 0.3 billion due to the growth of international traffic to 17 percent. The growth of expenses in Bissau covers on the advertising expenses and the purchase of subscribers’ Rental expenses and network fees: increased by 10.5 terminals for sale. billion of which 7.6 in Senegal, 1.4 in Mali, 1.3 in Guinea and 0.2 in Bissau. The decrease in Guinea is mainly due to the economy recorded on mobile card purchases in connection with In Senegal, the Special Levy on the Telecommunications the development of virtual refills. sector (PST), the recall on the accounting of the 3G license fee and the SU fee explain this growth. External expenses (54.5 billion) increased by 9.6 billion, driven by Mali (+ 8.1 billion), Guinea (+ 1.1 billion) and The developments in Mali, Guinea Conakry and Guinea Senegal (+ 0.3 billion). Bissau are on the frequency fees and universal service in correlation with the growth of the business. This evolution is mainly due to the increase: • 8.4 billion in taxes The network energy expenses rise by 2.4 billion in • 1.8 billion in fees including 1 billion in Mali and 0.8 Guinea and in Mali respectively by 1.3 and 1.1 billion billion in Guinea Conakry in correlation with the growth due to the opening of new sites (+195 in Guinea and of turnover, +126 in Mali). • 0.3 billion on grants and donations including 0.2 billion in Senegal. The increase in other network expenses and IT expenses of 3.6 billion is supported by: This increase was offset by a decrease of 0.8 billion • Senegal for 2.1 billion primarily related to the XOF in postage fees in Senegal through the invoice outsourcing for 904 million, maintenance of service dematerialization project. platforms for 0.7 billion, purchases of integration materials for 578 million and IT infrastructure and Operating expenses 28 billion: increased by 3.6 billion applications maintenance for 555 million; These mainly in Guinea Conakry (1.6 billion), Senegal (1.2 increases were partially offset by the decrease of 346 billion) and Mali (+0.7 billion). million on submarine cables maintenance and 306 million on other networks maintenance Related to the cost structure, evolution is as follows: • Guinea for 0.9 billion with the increase of switching and transmission equipment maintenance and that of Real estate and logistics costs have increased by 1.4 submarine cables to support the growing business, billion, for 1.1 billion for Guinea and for Mali 0.3 billion • Mali for 0.6 billion on the lines and networks related to security costs and office rentals related to the equipment maintenance (0.8 billion) and the IT system opening of new commercial and technical sites. maintenance for 0.2 billion offset by the decrease of 0.4 billion on transmission supplies purchases.

Commercial expenses : amounted to 45.6 billion, an increase of 9 billion compared to 2013. Senegal’s contribution to this increase was 4.7 billion, Mali 4.3 billion and 0.3 billion in Bissau; there was a decline of 0.3 billion for Guinea.

76 annual report of activities Sonatel 2014

The fees are up by 0.8 billion, driven mainly by Senegal In social, the rate of EBITDA from Senegal was down 0.7 for 0.9 billion because of expert missions, studies and points, or 46.5 percent in 2014 against 47.2 percent in audits carried out this year and by Guinea for 0.1 billion 2013. on call centers royalties related on the subscribers’ base growth offset by the decrease in Mali of 0.2 billion on The EBITDA margin of Orange Mali is also experiencing fees paid to other experts. a decrease of 1.4 points, 53.2 percent against 54.6 percent in 2013. The costs of missions and receptions evolve of 0.5 billion primarily in Mali and Senegal. The margin of Orange Guinea rose 11.6 points, or 50.7 percent against 39.2 percent and that of Orange Guinea Training costs increased by 0.4 billion (0.3 billion in Bissau by 1.2 points, or 38 percent in 2014 against 36.8 Senegal and 0.1 billion in Mali). percent in 2013.

Operating water and energy also increase to 0.4 billion The group EBITDA grew by 13.1 percent compared to driven by the 0.3 billion in Mali and 0.1 billion in Guinea. last year (+ 49.7 billion).

Personnel expenses totaled 76.9 billion, up 8.8 billion The growth seen in EBITDA is mainly explained by: of which 4.1 billion in Senegal, 2.7 billion in Mali and 2 • increased 78 billion in turnover driven mainly by Mali billion in Guinea.. (+ 41.4 billion of 90 percent of the mobile business), by Guinea (+ 41.4 billion of 79 percent of the mobile In Senegal, higher expenses are mainly from the business) and by Bissau (+ 1.3 billion, of which more exceptional bonus of 4.3 billion, the special premium than 93 percent on the mobile); these performances for retirement of 2.1 billion with sliding retirements of noted in the international subsidiaries helped offset December 2013 for 2014, the yield premium for 0.8 billion the decline recorded in Senegal: - 6.1 billion focusing and the remuneration of agency staff and catering for 0.6 on international and domestic interconnection, leased billion. These increases were offset by the decrease of lines. 3.7 billion over the function ending allowances. • Growth 9.6 billion of other products including: • 10.6 billion on Senegal mainly due to reversals of In Mali, the increase was due to 1.2 billion for the provisions for retirement of 2.9 billion, the compensation exceptional bonus provision, the wages for 0.8 billion from Miga of the destruction in northern Mali for 2.6 due to the growth of the workforce (+ 43 agents) and 0.3 billion, the rebilling expenses and reversals of expenses billion in payroll taxes. for 2.5 billion, the reversal of provisions for 2.3 billion, and on receivables and inventory for 0.3 billion. In Guinea Conakry, the increase was due to 1.2 billion on • 0.6 billion in Guinea mainly from the reversal of the teams building expenses for better activity management, provision for customs fines of 500 million made in annual salary increases and 0.8 billion for the exceptional February 2014, bonus provision. • to offset the increase in operating expenses of 37.9 billion of which 19 billion in Mali, 10 billion in Guinea, The increase in depreciation (+ 7.208 million) was mainly 8.4 billion in Senegal and 0.5 billion in Guinea Bissau. due to accelerated depreciation of equipment replaced in Guinea and in Senegal with the renewal project of the Senegal, with an EBITDA of 200.3 billion sees its mobile access network and for the further expansion of contribution to the group EBITDA declining by 7.2 points 2G and 3G densification in Mali. from 54 percent to 46.8 percent.

The decrease in depreciation and provisions of - This decline in the Senegal contribution benefits Mali 4.487 million is explained by the revision of the pension and Guinea whom reinforce their contributions with provision in 2013 and the constitution of provisions for respective EBITDA of 151.9 billion and 68.7 billion litigation. corresponding to the respective contributions of 35.5 percent and 16.1 percent against 34.7 percent and 9.7 percent in 2013. 3.3 EBITDA maintained above 50 percent Guinea Bissau with an EBITDA of 6.9 billion maintains its Consolidated EBITDA amounted to 427. 8 billion XOF in contribution at 1.6 percent. 2014, representing an EBITDA rate of 52.4 percent, up 1.2 points compared to 2013.

77 Sonatel 2014 annual report of activities

3.4 operating income 3.5 financial income

Consolidated operating income amounted to 315. 95 Consolidated financial result of the Group is 3.6 billion, billion, up by 42.5 billion (+ 15.5 percent) compared up by 3.8 billion from 2013. to 2013 due to the increase of 49.7 billion in EBITDA partially offset by higher expenses on depreciation of The decrease in financial expenses of 2.5 billion at 7.2 billion. the end of the medium-term loan contracted in 2009 combined with the growth of financial products (+ 0.6 For contribution, the results are as follows: billion mainly on the reversals of provisions, foreign exchange difference and other payables + 0.3 billion • The Senegal has an operating profit of 144 billion, down on investment income) allows the achievement of this by 5 billion (- 3.3 percent) mainly from the decrease of outcome. 3.9 billion of the combined EBITDA, to the increase of 1.1 billion in depreciation; the operating margin was down 1 point compared to 2013 (34 percent against 3.6 income excluding ordinary activities 35 percent), • The Orange Mali Operating income amounted to 118 It stood at 226 million XOF. billion, an increase of 18.7 percent (+ 18.6 billion) compared to 2013, following a growth of 16 percent (+ 20.9 billion) of EBITDA offset by increased depreciation 3.7 net income of 2.3 billion. • Orange Conakry recorded an operating profit of 50.3 Consolidated net profit amounted to 218.2 billion, up by billion, up by 28.5 billion (+ 130.1 percent) due to the 15.1 percent, or + 28.6 billion compared to 2013, thanks increase in EBITDA (+ 32 billion), while depreciation to the results of Orange Guinea (+ 20 billion), Orange increased by 3.5 billion; Orange Guinea multiplies its Mali (+ 10.1 billion) and Orange Guinea Bissau (+ 0.2 operating income by 2.3 times compared to 2013. billion). The rate of net profit margin increased from 25.7 • Orange Bissau operating income is 3.5 billion, it percent to 26.7 percent. increased by 0.4 billion compared to 2013.

78 annual report of activities Sonatel 2014

4. Investments

Investments made in 2014 by the Sonatel Group Senegal’s investment level remained stable compared to amounted to 135.3 billion, or 17 percent of realized 2013. turnover. They increased by 19.8 billion, up 17.1 percent over 2013. However, the subsidiaries recorded a strong growth (+ 54 percent in Guinea, + 46.8 percent in Bissau and Investments made by Senegal represent 37.1 percent + 15.9 percent in Mali). of the total, or 50.2 billion, Mali 32.2 percent, or 43.5 billion, Guinea 26.5 percent, or 35.9 billion and Bissau 4.2 percent, or 5.7 billion.

(in xof billion) 2012 2013 2014 2014-2013 r 14/13 r 13/12

Senegal 48 51 50 -1 -1% 6% network 35 36 41 +5 14% 2% others 13 15 9 -6 -38% 15% Mali 44 38 44 +6 16% -16% network 39 33 40 +7 22% -16% others 6 5 4 -1 -24% -15% Guinea 21 23 36 +13 54% 8% network 20 22 34 +12 58% 7% others 1 2 2 - 5% 30% Bissau 4 4 6 +2 47% -2% network 3 3 5 +2 56% 11% others 1 1 1 - -12% -43% total 118 116 135 17% -2% +19 capex rate 18% 16% 17% +1pt -2pts

Senegal • The broadband projects and the data center with the aim of stabilizing the quality of data and voice network Senegal network investments representing 82 percent of services, total budget, increased by 5 billion (+ 13.9 percent) com- • Improving the Backhauling capacity (transmission pared to 2013. network and links between the core of the network) and the collection rate of the Node B (base station). The mobile network polarizes almost half (49 percent) of the amounts invested in 2014, with the remainder fixed-lines network split between the fixed-lines network (29.3 percent), network data and internet (13.7 percent) and energy The various fixed-lines network projects have been allo- (8.1 percent). cated in the following areas:

The various projects have helped to further our primary Access Network: the accomplishments of an amount of objectives: 1.8 billion largely concerning the expansion, the rehabilitation of wired access network and the serving of new • Ran the Renewal projects, LTE and Service Quality Plan subdivisions. The achievements have focused on: Energy and Environment helped accelerate the deploy- • Moving wire works to address the risk of network down- ment of 3G radio sites, improving the quality of service, time caused by cable cuts due to the execution of road including the densification of the 2G network with the works, modernization with equipment of latest generation and • Wired rehabilitation focused on the resumption of the deployment of 4G pilot sites. transmission and distribution cables, replacement of • Rural extension and regulatory compliance (covering broken heads, renewal of dilapidated booths and un- main roads axes following the regulator campaign in derground development of long overhead cables, 2013).

79 Sonatel 2014 annual report of activities

• The satisfaction of demand for broadband and IPTV customers by serving new subdivisions in Dakar and Achievements of 3 billion in the following areas: the regional capitals. • IP network: 421 million for the extension and securing of the IP network. transmission: these projects implemented at the level of • Service platforms, OSS, TTM: 2.5 billion on fixed-lines 2.4 billion were mainly concerning the interconnection with concerning the new IPTV platform and the expansion Orange Mali, transmission securing, obsolescence mana- of IPTV network head. gement and FH extension (microwave link, transmission extension). The achievements have permitted, inter alia, Energy and environment the implementation of the new transmission network, thus The achievements in this area amounted to 2 billion and avoiding saturation loops SDH (synchronous digital hierar- were down by 465 million compared to 2013. They have chy north, center and south). permitted to ensure continuous and permanent supply of primary energy on strategic sites, to reduce by half the collection: these projects executed in the amount of 6 bil- risk of service disruption and contribute to the NUR im- lion concern the project FH Ran Renewal (2.6 billion XOF), provement by reducing the proportion related to energy the fiber collection (2.2 billion XOF), obsolescence ma- and the environment. They focused on the upgrade of nagement and secure broadband (818 million XOF) and batteries life, the renewal of generators’ park, AES, inver- VSAT hub extension (139 million XOF). ters, obsolete and out-of-service inverters, the extension and securing of the energetic environment, to optimize other projects: the achievements amounting to 1.5 bil- the multiservice collection and support migration toward lion are related to the data center and the acquisition of the transmission over IP (desaturation of SDH loops). land for the site sharing. investments outside networks in Senegal have switching: the projects implemented at a level of 168 reached 9 billion XOF, of which 4.1 billion XOF for land million relate to the following of the program in 2014 CSN acquisition and construction of buildings (following up with the refloating of spares CSN MA lots. of the new headquarters project), 3.1 billion XOF for IT projects and nearly 2 billion XOF on other investments mobile networks outside networks.

The investments devoted to mobile amounted to 24.2 bil- Compared to 2013, the projects carried out in the field lion, down slightly from 589 million (- 2.4 percent). They outside networks are down by 5.6 billion XOF. concern: Mali the access network (58 percent) or 14 billion including: • 11.7 billion for the ran renewal, Mali has spent 39.7 billion XOF to its investments in the • 333 million for the 3G program network domain, or 91 percent of the amount of its invest- • 2.1 billion for the improvement of quality of service and ments. They focused again mainly on the 3G program rural extension in 2014. with the densification of 3G in Bamako to strengthen leadership in mobile data, core network, transmission and core network (25.9 percent) or 6.3 billion including: energy. • 3.195 billion realized on the security of transmission (national backbone and submarine cables), through They were used to finance network expansion in all its densification of 2G in 2014 components: • 397 million XOF to the mobile switching, • Core network: 9 billion XOF for the extension of swit- • 652 million on services platforms, 1.5 billion on tools ching equipment, intelligent network and Gprs ser- and 461 million for TTM projects; vices and value added • Network access: 5.4 billion XOF for the acquisition of other network projects (10.5 percent) or 2.5 billion inclu- BSC, BTS and sites construction; ding: • Transmission: 8.4 billion XOF for the acquisition of FH • 1.1 billion for LTE project for rural program, Vsat stations and optical fiber, • 1.4 billion for the core network in 2014. • Energy: 7 billion XOF for solar sites, batteries and ge- • Energy: 6 percent or 1.141 billion nerators. • Information system: 1.4 billion XOF invested in the purchase of servers and office equipment, • Other investments include the purchase of vehicles, office furniture and layout of commercial spaces. data and Internet

80 annual report of activities Sonatel 2014

Guinea Guinea Bissau

In its dynamic development of new locations, Orange Bissau network investments amounted to 5.3 billion XOF Guinea has invested 34 billion XOF in 2014 in the network and focused on: domain, which is 12.5 billion more than in 2013. These investments are mainly devoted to energy for 6 billion XOF transmission and site construction pour 3.8 milliards (12.4 percent of increase compared to 2013), the buil- Fcfa : for 3.8 billion XOF: ding of sites for 6.2 billion XOF (13.9 percent increase • Acquisition of 45 3G + sites, deployed in Bissau and in compared to 2013) and core network for 4.7 billion XOF. the regional capitals, • BTS acquisitions, pylons, FH-PDH bonds for the densi- The mobile access network also occupies an important fication program and networks extension in 12 new 2G part with 11 billion of achievements or 8 billion XOF more sites in Bissau and the regions, compared to 2013. • 15 upgrades and 11 swaps bonds in Bissau and regions, The following achievements were made in the following • FH installations in 10 clients in 12 BTS. areas: • mobile access network: BTS acquisition (launch of 195 Energy for 1.3 billion XOF invested in: new sites for full coverage of the 303 sub-prefectures • Supplies, battery installations and generators for the in 2G), a new BSC, an MGW, 2014 program (12 sites) • 3G devices: whom have covered 33 prefectures and • Solar system in 33 sites in Bissau and regions, make the necessary densification to meet the strong • The acquisition of two mobile generators, growth in data traffic, • Swap of two electricity generators in Bissau and in • Core network: IN extension and PCRF project being Gabu. finalized, the acquisition of MSC) as well as various services on the core network, the upgrade of the core Outside network investments of 473 million XOF were packet and integration to MSC3, the MVAS and exten- used to: sion of HLR subscribers’ licenses • purchase of four plots in the regions and completion • Transmission: securing the loop and the purchase of of the building for the call center and restaurant staff, 10 routers, • the acquisition of furniture, office equipment and com- • site construction: acquisition of 98 pylons and dismant- puter, ling of some pylons in urban areas for their redeploy- • the purchase of three vehicles primarily for technical ment in the regions, and business needs. • Energy: acquisition of 98 generators, solar energy workshops and tanks for deployment, purchase of 20 generators to replace old and compliance and strategic sites and QoWiso project.

Off-network projects were: • the development of new agencies, including that of Ka- loum, new receptions and works in new buildings, • Projects Information Systems (Project backup and vir- tualization).

81 Sonatel 2014 annual report of activities annual report of activities Sonatel 2014

LES ANNEXES > financial statements

83 Sonatel 2014 annual report of activities

audit of financial statements: asset (in millions Xof)

asset gross amort/prov 31/12/14 31/12/13 fixed assets fixed charges 17 17 7 intangible assets 159 924 131 406 28 519 33 979 goodwill 0 0 0 0 other intangible assets 159 924 131 406 28 519 33 979 tangible assets 1 378 369 848 009 530 360 495 764 advances and installments paid on fixed assets 0 0 0 0 financial assets 131 864 899 130 966 123 928 differed taxes 13 529 0 13 529 13 206 equity affiliates 0 0 0 0 participations and linked debts 7 436 583 6 853 6 468 loans and other financials assets 110 900 316 110 584 104 254 total (I) 1 670 176 980 314 689 862 653 678 current assets inventory 16 847 520 16 327 18 460 receivables and assimilated functions 214 227 26 594 187 634 188 966 receivables 131 931 26 342 105 589 103 036 other receivables 82 296 252 82 044 85 930 total (II) 231 074 27 114 203 960 207 426 assets-cashflow 224 073 0 224 073 180 521 total fixed assets 2 125 323 1 007 428 1 117 894 1 041 625

84 annual report of activities Sonatel 2014

audit of financial statements: liability (in millions Xof) liability 31/12/14 31/12/13 equity equity 50 000 50 000 additionnal paid-in capital and consolidated reserves 347 742 337 010 conversion variance 2 249 -832 net result (part of consolidated company ) 191 991 168 329 other equity 0 0 part of consolidated company 591 982 554 506 minorities share 63 038 58 902 equity of total consolidated (A) 655 020 613 408 financial debts and assimilated resources differed taxes 239 239 loans and financials debts 2 922 15 426 financial provisions for contingencies and charges 42 346 40 661 total (B) 45 508 56 326 total stable equity flows 700 528 669 734 current liabilities accounts payables and related accounts 182 606 151 355 other debts 207 489 166 534 total (II) 390 095 317 889 liabilities-cash flow total (III) 27 271 54 002 total liabilities 1 117 894 1 041 625

85 Sonatel 2014 annual report of activities

audit of financial statements: consolidated income statement (in millions Xof)

consolidated income statement 31-dec-14 31-dec-13 turnover 816 019 738 314 stocked production 0 0 immobilized production 2 288 2 361 other operating income 17 400 9 578 I - production of the year 835 707 750 253 consumed purchases 52 444 50 242 external services and other consumptions 280 122 248 753 II - consumption of the year 332 566 298 995 value added of the activities 503 142 451 258 staff costs 76 908 68 084 gross operating profit (gop) 426 234 383 174 depreciation and provisions 121 466 118 742 reversals of provisions 11 182 9 036 operating profit 315 949 273 468 financial revenues 8 900 7 290 financial expenses 5 308 7 514 ordinary activities result 319 541 273 244 o.o.a. result 226 -3 913 result before tax 319 768 269 331 tax due on result 103 408 89 331 differed tax 1 855 9 635 net result of integrated company 218 215 189 635 share in net income of equity affiliates 0 0 iequity-accounted investments companies net result of the consolidated companies 218 215 189 635 minorities share 26 224 21 306 part of consolidated company 191 991 168 329

86 annual report of activities Sonatel 2014

financial table of resources and funds : tafire 1 (in millions Xof)

1st part: determination of financial balances for fiscal year 2014

global cash-flow (GCF)

amount amount (Xof million) (Xof million) EBE 426 234 (TT) operating expenses (SA) financial fees 2 309 3 342 transfer (SC) exchange rate loss 2 207 (SL) expenses outside ordinary activities 1 (UA) Financial income 5 534 (UE) Financial expenses 1 transfer (SQ) participation 0 (UC) Exchange rate profit 2 096 (UL) Outside regular (SR) income tax 103 408 0 activities products (UN) Outside regular 0 activities expense transfer total (I) 107 925 total (II) 437 207

GCF: Total(II) - Total(I) 329 282

financing from cash flow (a.f.)

dividends distributed during the fiscal year 177 681 AF= GCF – dividends distribution during the fiscal year 151 601 working capital need changes (n.w.c.)

change N.W.C.= inventory change + debt changes + notes payable changes uses resources stock change n -(n-1) (increase +) (decrease -) (BC) goods 0 0 (BD) raw materiel and other stocks 0 2 250 (BE) in-progress 0 0

(BF) manufactured products 0 0

(A) global net change in stock 0 2 250

87 Sonatel 2014 annual report of activities

financial table of resources and funds : tafire 1 (next) (in millions Xof)

1st part: determination of financial balances for fiscal year 2013 (next)

uses resources changes in receivables (increase +) (decrease -) suppliers, paid advances 0 362 customers 17 171 0 other receivables 0 11 723 conversion variance - Asset 0 2 084 total 17 171 14 169 (B) global net change in receivables 3 003 0

uses resources changes in debt (increase +) (decrease -) customers, received advances 0 1 218 operating suppliers 0 35 020 tax liabilities 0 28 055 social liabilities 0 1 680 other liabilities 910 0 conversion variance - liabilities 0 1 533 contingency provisioned 137 0 total 1 047 67 506 (C) global net change in debt 0 66 459

change in NWC=A+B- C 0 65 706

operating cash surplus (OCS) OCS = GOP – NWC CHANGES – Self constructed assets 2014 2013 E.B.E. 426 234 383 174 - changes in NWC 65 706 38 586 - self constructed assets -2 288 -2 361 O.C.S 489 652 419 399

88 annual report of activities Sonatel 2014

financial table of resources and funds : tafire 2 (in millions Xof)

2nd part: determination of financial balances for fiscal year 2013

fiscal year 2014 fiscal year 2013 use resources U - ; R + I- investments and disinvestments fixed charges (increase during the period) 0 0 internal growth purchases/transfers of intangible assets 3 991 0 -5 263 purchases/Transfers of tangible assets 131 506 187 -105 934 external growth purchases/transfers of financial assets 25 280 19 413 -47 558 investissement total 141 178 0 -158 756 II- changes in operation working capital need 0 65 706 38 586 A- economic uses to be financed FF+FG 75 472 0 -120 170 III- uses/resources (B.F.; H.A.O.) 0 9 535 6 769 IV - restrained financial uses 22 670 -14 919 reimbursement (based on payment schedule) of loans and nancial debt and financial debt B- total uses to be financed 88 608 0 -128 319 V- internal financing dividends (uses) / CAFG (resources) 177 681 329 282 125 277 VI- equity financing increase in equity by new contribution 0 0 investments from grants 0 0 equity withdrawals 0 0

89 Sonatel 2014 annual report of activities

financial table of resources and funds : tafire 2 (next) (in millions Xof)

2nd part: determination of financial balances for fiscal year 2013 (next)

fiscal year 2014 fiscal year 2013

use resources U - ; R + VII- financing by new loans loans 0 297 1 523 other financial liabilities 0 6 992 4 237 C - net financing ressources 0 158 890 131 038 D - excess or shortage of resourcesfunding (C-B) 0 70 282 2 719 VIII - cash variation net cash at the end of the period + or - 196 802 0 -126 519 at the beginning of the period + or - 126 519 0 -123 800 cash changes 70 282 0 -2 719 ( + use ; - resources )

use resources control (based on N and N-1 balance sheet volumes) 12/31/2014 12/31/2013 working capital change (WC): WC(N) - WC(N-1) 4 958 0 NWC change: NWC(N) -NWC(N-1) 0 75 241 cash change (T) T(N)-T(N-1) 70 282 0

total 75 241 75 241

90 annual report of activities Sonatel 2014

audit of financial statements: table of changes in equity (in millions Xof)

capital social other initial account final ba- emission d’actions balance to lance after before distri- cash incor- conver- account distribu- de- distribution bution contribu- porated increase decrease sion Transfer tion crease in kind tion reserves variance equity 50 000 50 000 issuance, merger, 3 577 244 3 822 contribution premium re-evaluation -832 3 082 2 249 variance legal reserve 18 162 18 162 statutory and contractual 0 0 reserves other 354 540 903 0 6 247 361 689 reserves carried over -1 673 0 -70 2 626 884 balance previous year result not yet 0 0 allocated result of the 189 635 218 215 -177 681 -11 955 218 215 year investment 0 0 grants regulated 0 0 provisions

0 0 total 613 408 0 0 0 0 219 118 -177 681 175 0 655 020

91 Sonatel 2014 annual report of activities

audit of financial statements: table of changes and consolidated debts details (in million Xof)

balance net other balance collateral incurred payments incorporated beginning conversion movments end of of secured debt (2) (3) to equity (4) of year (1) variance (5) (6) year (7) debts convertible bonds debts other bonds debts loans and debts credit 10 018 123 9 005 10 1 145 institutions

various financial 5 408 7 166 13 609 2 812 0 1 777 loans and debts

total 15 426 7 289 22 614 0 2 822 0 2 922

off-balance sheet financial commitments

commitments given received (1) (1) secured commitment with real collaterals 1 211

other security commitments 4 055 3 864

mutual commitments

in terms of Leasing definite orders

92 annual report of activities Sonatel 2014

consolidated financial statements: turnover breakdown table (in million Xof)

2014 fiscal year 2013 fiscal year % of % of total sales total sales turnover turnover A) sales allocation by activity

fixed lines 36 048 4,42% 35 754 4,84% mobile lines 535 349 65,60% 460 631 62,39% publi-phony 639 0,08% 774 0,10% interntaional interconnexion 161 636 19,81% 166 501 22,55% ADSL 13 493 1,65% 13 254 1,80% specialized links 15 280 1,87% 14 838 2,01% fixed terminal sales / Peri-telephony 806 0,10% 535 0,07% internet 17 925 2,20% 10 464 1,42% national Interconnexion 32 533 3,99% 31 985 4,33% various products 0 0,00% 0 0,00% other accessories 2 310 0,28% 3 578 0,48% total 816 019 100% 738 314 100%

B) sales allocations by geographic areas

Africa ( ECOWAS) 543 417 66,59% 496 659 67,27% Africa ( outside ECOWAS) 115 742 14,18% 83 109 11,26% Asia 1 486 0,18% 1 345 0,18% America 14 119 1,73% 14 529 1,97% Europe 141 254 17,31% 142 671 19,32% total 816 019 100% 738 314 100%

93 Sonatel 2014 annual report of activities

audit of financial statements: Workforce Analysis by key categories as of 31 december (in XOF millions)

fiscal year 2014 fiscal year 2013 workforce payroll workforce payroll

staff under payroll 2 690 69 950 2 676 61 934

managers and seniors executives 1 083 32 227 1 014 26 861 middle managers 1 042 26 379 1 072 24 293 foremen 506 9 915 515 9 116 employees and workers 59 1 429 75 1 664

staff available for the company 41 2 344 46 2 455

temporary staff 1 073 4 614 1 033 3 696

total 3 804 76 908 3 755 68 084

94 annual report of activities Sonatel 2014

Sonatel SA balance sheet : summarized assets (in XOF millions)

fiscal year 2014 fiscal year 2013 asset depreciation/ gross net net provisions fixed assets (1) fixed charges 0 0 0 set-up costs and deferred charges 0 0 0 bond redemption premium 0 0 0 intangible assets 33 837 30 205 3 632 4 151 research and development charges 13 13 1 1 patents, licences and software 33 823 30 192 3 632 4 151 goodwill 0 0 0 0 other intangible assets 0 0 0 0 tangible assets 496 277 390 068 106 209 101 614 land 3 636 0 3 636 3 611 buildings 36 564 16 504 20 060 17 124 installations and fittings 14 940 11 055 3 884 3 859 equipment 430 320 355 382 74 938 73 701 transportation equipment 10 817 7 128 3 689 3 318

advances and installements paid on fixed assets 0 0 0 0 financial assets 182 388 878 181 510 190 561 equity securities 68 175 583 67 593 67 593 other financial assets 114 212 295 113 917 122 969 total fixed assets (I) 712 501 421 151 291 351 296 326 current asset

o.o.a. current assets 0 0 0 0

inventories 3 329 96 3 233 5 416 goods 0 0 0 0 raw materials and other supplies 3 329 96 3 233 5 416 in progress 0 0 0 0 made products 0 0 0 0

receivables and assimilated receivables 235 926 10 522 225 404 230 821 suppliers, advances paid 5 391 0 5 391 5 570 accounts recievables 135 586 10 296 125 289 114 540 other receivables 94 949 225 94 723 110 711 total current assets (II) 239 254 10 618 228 637 236 237 assets - cash flow marketable securities 9 361 0 9 361 3 711 checks, bills awaiting collection 98 0 98 94 bank, postal checks, cash on hand 123 453 0 123 453 94 334 total assets- cash flow (III) 132 912 0 132 912 98 139 conversion variance - assets (IV) 242 242 93 (probable exchange loss) general total (I + II + III + IV) 1 084 910 431 769 653 141 630 795

95 Sonatel 2014 annual report of activities

Sonatel SA balance sheet : summarized liabilities (in XOF millions)

LIABILITIES (Before allocation) fiscal year 2014 fiscal year 2013 capital and assimilated resources

capital 50 000 50 000 shareholders, uncalledd capital 0 0

premium and reserves 163 558 171 045 share, issuance, merger premium 0 0 re-evaluation variance 0 0 unavailable reserves 10 000 10 000 free reserves 153 558 161 045 carried forward balance 0 0 net income for the period (gain +, loss -_) 173 666 147 513

other equity 2 038 2 188 investment grants 1 241 1 390 regulated provisions and assimilated funds 798 798 total equity (I) 389 262 370 746 financial debts and assimilated resources

loans 1 146 9 909 lease liabilities and assimilated contracts 0 0 various financial debts 60 39 risk and expenses provisions 38 832 37 345 total financial debts (II) 40 038 47 292 total secured resources (I + II) 429 300 418 038 cuurent liabilities

o.o.a. debts and assimilated resources 6 217 7 848 clients, received advances 877 1 368 trade suppliers 59 200 48 661 tax debts 72 216 54 712 social debts 9 423 9 742 other debts 61 048 60 291 provisioned risks 242 93 total current liabilities (III) 209 224 182 715 liabilities - cash flow

bank, discount credit 0 0 bank, cash credit 0 25 134 bank, overdraft 14 440 4 907 total liabilities - cash flow (IV) 14 440 30 041 conversion variance - liabilities (V) 177 1 (probable exchange gain) general total (I + II + III +IV+ V) 653 141 630 795

96 annual report of activities Sonatel 2014

Sonatel SA income statement summary (in XOF millions)

fiscal year2014 fiscal year2013 works, sold services 325 532 316 086 self-constructed assets 1 450 1 500 accessory products 30 110 30 306 turnover 355 643 346 392 operating grants 0 0 other revenues 7 896 4 120 other purchases 9 160 9 684 inventory change 1 651 253 transportation 857 1 528 external services 121 804 119 788 tax and duties 11 290 10 482 other expenses 4 697 6 225 value added 215 530 204 053 staff costs 56 501 52 434 ebitda 159 029 151 619 provision recovery 7 286 3 759 expenses transfers 3 648 2 809

total operating revenues 375 924 358 580 provision and depreciation 29 301 33 188 operating result 140 662 124 999 financial expenses 1 377 1 714 exchange rate loss 443 308 provision and depreciation 275 713 total financial expenses 2 095 2 736 financial revenues 78 676 65 882 exchange rate gain 967 94 provision recovery 692 212 expenses transfers 0 0

total financial revenues 80 336 66 188 financial result 78 241 63 453 total ordinary activities revenues 456 260 424 768

97 Sonatel 2014 annual report of activities

Sonatel SA income statement summary (next) (in XOF millions)

fiscal year 2014 fiscal year 2013 result from ordinary activities 218 903 188 452 accounting values of fixed assets transfer 81 238 o.o.a. expenses 1 114 o.o.a. provisions 0 0 total o.o.a. expenses 83 352 revenues from fixed assets 165 230 o.o.a. revenues 0 0 o.o.a. transfers 149 166 expenses transfer 0 0 total o.o.a. revenues 315 396 o.o.a. result 232 44 workers’ participation 0 0 income tax 45 470 40 982

general total of revenues 456 575 425 164

net result 173 666 147 513

98 annual report of activities Sonatel 2014

Sonatel SA supply and use table (tafire) (in XOF millions) part 1: determination of financial balances for fiscal year 2014

GLOBAL CASH FLOW (G.C.F.) G.C.F. =

GOP - Remaining disbursable expenses + Remaining collectable revenues

GOP 159 029 (SA) financial fees 1 377 TT) operating expenses transfer 3 648

(SC) exchange rate loss 443 (UA) financial income 78 676 (SL) expenses outside ordinary activities 1 (UE) financial expenses transfer 0 (SQ) participation 0 (UC) exchange rate profit 967 (SR) income tax 45 470 (UL) outside regular activities products 0 (UN) outside regular activities expense transfer 0 total ( I ) 47 291 Total ( II ) 242 320

G.C.F. = Total (II) - Total (I) = 195 029 financing from cash flow (A.F.)

dividends distributed during the fiscal year 155 000 AF= CAFG – dividends distribution during the fiscal year (1) 40 029 working capital need changes (W.C.N) Change in WCN = Inventory change + debt changes + notes payable changes

Uses Ressources inventory changes : N-(N-1) Increases (+) Decreases ( - )

(BC) goods 0 0

(BD) raw materials 0 2 183

(BE) in-process 0 0

(BF) made products 0 0 (A) global net changes in inventory 0 2 183

(1) dividends paid during the fiscal year including dividends’ advances. (2) excluding O.O.A. elements.

99 Sonatel 2014 annual report of activities

Sonatel SA supply and use table (tafire) (in XOF millions)

part 1: determination of financial balances for fiscal year 2014 (next)

Uses Ressources Changes in receivables: N - (N - 1) Increases (+) Decreases (-)

(BH) suppliers, paid advances 0 178 (BI) clients 10 749 0 (BJ) other receivables 0 15 987 (BU) conversion variance – assets 149 0

(B) net global changes in receivables -5 268

Uses Ressources changes in current liabilities: N - (N-1) Decrease (-) Increase (+)

(DI) clients, received advances 491 0 (DJ) operating suppliers 0 10 539 (DK) tax liabilities 0 17 504 (DL) social liabilities 319 0 (DM) other Liabilities 0 758 (DN) provisioned risks 0 149 (DV) conversion variance - Liabilities 0 175

change in W.C.N.= (A)+(B)+(C) 0 35 766

operating cash surplus (O.C.S.) fiscal year 2014 fiscal year 2013

operating margin surplus 159 029 151 619 - change in W.C.N.(- if uses ; + if resources) (- or +) 35 766 30 678 - self constructed assets -1 450 -1 500 operating cash surplus 193 344 180 798

100 annual report of activities Sonatel 2014

Sonatel SA supply and use table (tafire 2) (in XOF millions) part 2: supply and use table (tafire)

fiscal year fiscal year 2014 2013 uses ressources (U - ; R +) I. investments and disinvestments fixed costs (increase during the year) 0 0 internal growth purchases/transfers of intangible asset 967 0 -2 249 purchases/ transfers of tangible assets 23 717 165 -20 112 external growth purchases / transfers of financial assets 19 427 28 897 -28 205 total investments 15 050 0 -50 565

II. change in operating financial need 0 35 766 30 678 (cf. supra: Var. B.F.E.)

A - economic uses to be financed (FF + FG) 0 20 717 -19 887 III. used/resources (B.F. , H.A.O.) 1 631 0 384 IV. restrained (1) financial uses 8 933 -14 718 loans and financial liabailities repayment (according to timetable) (1) except for anticipated repayments done in VII B - total uses to be financed 0 10 153 -34 222

101 Sonatel 2014 annual report of activities

part 2: Sonatel SA supply and use table (tafire) (in XOF millions)

fiscal year fiscal year 2014 2013 uses ressources (U -; R +) V. internal financing dividends (uses)/ C.A.F.G.(resources) 155 000 195 029 27 286 VI. equity capital financing capital increase with new contributions 0 0 investment grants 0 39 deduction on capital 0 0 (Including operator’s withdraws) VII. new loans financing loans (2) 0 191 340 other financial debts (2) 0 0 0 other financial debts (2) C - net financing resources 0 40 220 27 665 D - surplus or insufficiency of financial resources (c-b) 0 50 373 -6 557 VIII. changes in cash position net cash position at the end of year + ou - 118 472 at the beginning of year + ou - 68 098 changes in cash position: + if uses; -if resources 50 373 0 -6 557

control: D = VIII with opposite sign I, IV, V, VI, VII: n terms of flow; II,III,VIII: balance sheet differences

control (based on N and N-1 balance sheets volumes) uses ressources change in working capital (W.C.) : WC(N) – WC(N-1) 0 16 238 change in global W.C.N. (G.W.C.N) : GWCN(N) - GWCN(N-1) 0 34 135 change in cash position (T): T(N) - T(N-1) 50 373 0 total 50 373 50 373

102 annual report of activities Sonatel 2014

Sonatel SA financial statements (in XOF millions) table n° 1 : fixed assets change as of 31/ 12/2014

balance as balance as labels purchases reclassification retirement of 31/12/13 of 31/12/14 stock exchange entry expenses 0 0 0 0 0 fixed expenses 0 0 0 0 0 fixed assets purchases expenses 0 0 0 0 0 fixed costs 0 0 0 0 0 studies and research 13 0 0 0 13 patents and licences 1 551 0 162 0 1 713 computer software 18 115 0 1 298 0 19 413 switching software 3 154 0 0 0 3 154 transmission software 4 070 0 443 0 4 513 network and data software 2 890 0 933 0 3 823 research and development expenses 1 0 0 0 1 patents & licenses in process 456 12 -68 0 399 software in process 1 315 955 -1 461 0 809 other rights and intangible values in process 0 0 0 0 0 intangible assets 31 562 967 1 307 0 33 836 vacant lands 2 728 0 30 0 2 758 lands 763 0 0 0 763 buildings allocated to technical sites 108 0 0 0 108 land development 0 0 0 0 0 land planning in process 11 21 -26 0 6 lands 3 611 21 4 0 3 636 industrial buildings 6 377 0 0 0 6 377 administrative and commercial buildings 5 679 0 37 0 5 716 buildings, administrative fixed assets 6 883 0 0 0 6 883 buildings assigned to technical sites 1 844 0 0 0 1 844 buildings allocated to housing 1 111 0 0 0 1 111 trails & routes 133 0 0 0 133 other infrastructure works 439 0 0 0 439 general office facilities 3 556 0 0 0 3 556 office equipment 42 0 0 0 42 other adjustments, arrangements and installations 10 428 0 723 31 11 119 buildings in process 10 398 4 240 -580 0 14 059 arrangements, office installation in process 0 0 0 0 0 infrastructure works in process 0 0 0 0 0 adjustments, installations in process 177 46 0 0 222 technical facilities, buildings and arrangements 47 068 4 286 181 32 51 502

103 Sonatel 2014 annual report of activities

table n° 1: Sonatel SA fixed assets change (next) (in XOF millions)

fixed assets change as of 31/ 12/2014

balance as of balance as labels purchases reclassification retirement 31/12/13 of 31/12/14 sonatel switching equipment 36 474 0 114 0 36 589 public switching equipment 0 0 0 0 0 transmission equipment 133 184 0 1 206 9 134 382 network access equipment 34 275 0 1 969 15 36 229 lines & public network equipment 127 893 0 405 0 128 298 sonatel lines and network equipment 394 0 0 0 394 energy equipment 40 785 0 825 29 41 581 devises 3 166 0 37 0 3 204 access network equipment 0 0 0 0 0 other operating equipment 36 0 0 0 36 operating equipment 376 207 0 4 557 52 380 713 office equipment 2 246 0 18 19 2 245 technical computer equipment 10 195 0 326 0 10 521 office computer equipment 4 450 0 391 109 4 732 office equipment 2 361 0 35 5 2 390 housing equipment 6 0 0 0 6 housing furniture 5 0 0 0 5 equipment and furniture 19 263 0 769 133 19 899 light vehicles 9 966 0 1 482 1 561 9 887 heavy vehicles 159 0 27 0 186 motocyles 164 0 6 3 167 transportation materiel 10 288 0 1 515 1 563 10 240 other fixed assets 2 955 0 99 1 3 053 other fixed assets 2 956 0 99 1 3 053

104 annual report of activities Sonatel 2014

table n° 1: Sonatel SA fixed assets change (end) (in XOF millions) fixed assets change as of 31/ 12/2014

balance as balance as labels purchases reclassification retirement of 31/12/13 of 31/12/14 operating equipment in process 82 -4 0 0 79 public switching equipment in process 313 172 -115 0 371 Sonatel equipment in process 1 0 0 0 1 transmission equipment in process 2 846 5 057 -1 604 0 6 298 mobile 2g / 3g network access equipment 4 -4 0 0 0 in process lines & public network equipment in process 577 0 -404 0 173 lines & public network equipment in proces 0 0 0 0 0 giga switch and ip routers in process 0 0 0 0 0 energy equipment in process 2 870 2 685 -883 0 4 673 service plateform materials in process 1 108 1 191 -215 0 2 084 measurement equipment in process 118 644 -35 0 727 network equipment in process 1 577 1 651 -30 0 3 198 network material in process 4 222 4 200 -2 674 0 5 748 other fixed assets in process 0 0 0 0 0 technical computer equipment in process 489 1 664 -292 0 1 861 office computer equipment in process 365 227 -391 0 200 office and housing furniture in process 58 70 -72 0 57 office and housing equipment in process 0 0 0 0 0 transportation materiel in process 561 1 484 -1 467 0 578 arrangements and installation in process 24 0 0 0 24 other fixed assets in proces 615 351 -249 0 717 customs on fixed assets in process 0 0 0 0 0 other exploitation materiel in process 0 0 0 0 0 fixed assets lettering 425 20 0 0 445 material in process 16 255 19 410 -8 432 0 27 234 advances, deposits on software 0 0 0 0 0 advances on buildings 0 0 0 0 0 advances on transportation equipment 0 0 0 0 0 advances & deposits on other fixed assets 0 0 0 0 0 advances and deposits on fixed asset 0 0 0 0 0 general total 507 210 24 684 0 1 781 530 115

105 Sonatel 2014 annual report of activities

Sonatel SA financial statements (in millions Xof)

table n° 2 : depreciation changes 31/12/2014

Balance as of Retirement Balance on labels Increases Reclassification 31/12/13 Disposal 31/12/14 depreciation research development 13 0 0 0 13 depreciation patents, licences 1 535 177 0 0 1 712 depreciation software 25 862 2 617 0 0 28 479 total 281 27 410 2 794 0 0 30 205 depreciation development works 0 0 0 0 0 total 282 0 0 0 0 0 depreciation admin. and commercial 14 368 713 0 0 15 081 buildings depreciation staff housing 965 27 0 0 992 depreciation office installation and 34 2 0 0 36 organization depreciation tracks and roads 130 0 0 0 131 depreciation other infrastructures works 279 22 0 0 301 depreciation other installations and 10 307 742 0 32 11 018 organizations total 283 26 085 1 506 0 32 27 559 depreciation sonatel switching equipment 33 432 836 0 0 34 268 depreciation public switching equipment 0 0 0 0 0 depreciation transmission equipment 106 368 4 778 0 9 111 137 depreciation public lines and networks 116 181 2 470 0 0 118 651 depreciation sonatel lines and network 228 39 0 0 267 depreciation energy equipment 31 371 3 395 0 28 34 737 depreciation access network and 0 0 0 0 0 equipment depreciation network and data equipment 29 739 2 459 0 15 32 184 depreciation other operating equipment 32 3 0 0 35 total 2841 317 352 13 981 0 52 331 279

106 annual report of activities Sonatel 2014

Sonatel SA financial statements (in millions Xof) table n° 2 : depreciation changes 31/12/2014

Balance as of Retirement Balance on labels Increases Reclassification 31/12/13 Disposal 31/12/14 depreciation office furniture 1 939 121 0 5 2 054 depreciation housing furniture 2 0 0 0 2 depreciation office equipment 2 051 78 0 19 2 110 depreciation housing equipment 4 1 0 0 5 depreciation technical computer 10 068 328 0 0 10 396 equipment depreciation computer office equipment 3 972 364 0 105 4 231 total 2844 18 035 892 0 129 18 798 depreciation light vehicles 7 242 1 071 0 1 484 6 829 depreciation heavy vehicles 139 7 0 0 146 depreciation motorcycles 152 6 0 3 154 total 2845 7 530 1 084 0 1 487 7 130 depreciation design, fixtures and instal- 0 0 0 0 0 lations total 2847 0 0 0 0 0 depreciation devices 3 045 97 0 0 3 142 depreciation other fixed assets 1 989 173 0 1 2 161 total 2848 5 033 270 0 1 5 303 general total 401 446 20 527 0 1 700 420 273

Sonatel SA financial statements (in XOF millions) table n° 3 : gains and losses disposal Gross Deprecia- Disposal + Gain Valeur Amount tion price - loss Net book value done C = A - B A B D E = D - C intangible assets 0 0 0 0 0 tangible assets 1 781 1 700 81 165 84 financial assets 0 0 0 0 0 total 1 781 1 700 81 165 84

107 Sonatel 2014 annual report of activities

Sonatel SA financial statements (in millions Xof)

tableau n°4 : provisions written in the balance sheet

a b c d = a+b+c

provision increases: expenses decreases : reprises nature provision at the outside outside at the end beginning opera- finan- opera- finan- ordinary ordinary of the year of the year ting cials ting cials activities activities 1. regulated Provisions 798 0 0 0 0 798 2. financial Provisions for 37 344 9 124 0 7 636 0 38 832 liabilities and expenses 3. provisions for fixed assets 1 295 275 0 692 0 877 depreciation total i 39 437 9 398 0 0 8 328 0 0 40 507 4. inventory depreciation 254 96 0 254 0 95 5. depreciation and 0 0 provisioned risks (third party) 11 418 1 357 0 2 011 0 10 763 6. depreciation and 0 0 provisionned risks (cash) 1 0 0 0 0 1 total ii 11 673 1 452 0 0 2 266 0 0 10 860

total ( i ) + ( ii ) 51 110 10 851 0 0 10 594 0 0 51 366

Sonatel SA financial statements (in millions Xof)

tableau n°5 : assets acquired through capital lease and related contracts

none

108 annual report of activities Sonatel 2014

Sonatel SA financial statements (in millions Xof) tableau n°6 : debts maturities at the end of the fiscal year

analysis by maturities other analysis

gross at least one year of amounts amounts amount between at more amounts to affi- repre- which 1 and 2 than 2 in foreign liated sented by are years years currency compa- promissory due nies notes receivables of fixed assets (I) 114 212 30 404 0 13 972 69 836 0 0 0

loans (1) 80 328 11 972 0 11 972 56 384 0 0 0 receivables from participations 0 0 0 0 0 0 0 0 other financial assets 33 884 18 432 0 2 000 13 452 0 0 0 assets receivables (II) 236 168 236 168 0 0 0 0 0 0 account receivables 5 391 5 391 0 0 0 0 0 0 clients and associated 135 586 135 586 0 0 0 0 0 0 accounts staff 994 994 0 0 0 0 0 0 social Security and other socal 0 0 0 0 0 0 0 0 agencies state 18 676 18 676 0 0 0 0 0 0 international organizations 0 0 0 0 0 0 0 0 shareholders and group 10 031 10 031 0 0 0 0 0 0 various Debtors 65 489 65 489 0 0 0 0 0 0

O.O.A. RECEIVABLES 0 0 0 0 0 0 0 0

prepaid expenses 1 1 0 0 0 0 0 0

total (I) + (II) 350 380 266 572 0 13 972 69 836 0 0 0

(1) loans granted during the fiscal year : : 14 156 Reimbursements obtained during the fiscal year : 11 590

109 Sonatel 2014 annual report of activities

Sonatel SA financial statements (in millions Xof)

tableau n°7 : debts maturities at the end of the fiscal year analysis by maturty other analysis at least 1 year amounts amount repre- gross between at more amount to affiated sented amount which 1 and 2 than in foreign compa- by promis- are years 2 years currency due nies sory notes financial liabilities and assimilated resources convertible bond debts (1) 0 0 0 0 0 0 0 0 other bond debts (1) 0 0 0 0 0 0 0 0 loans and debts from credit 1 146 436 0 237 473 0 0 0 institutions (1) other financial debts (1) (2) 60 0 0 0 60 0 0 0 total (I) 1 206 436 0 237 533 0 0 0 property leasing debts 0 0 0 0 0 0 0 0 equipment Leasing debts 0 0 0 0 0 0 0 0 assimilated contracts debts 0 0 0 0 0 0 0 0 total (II) 0 0 0 0 0 0 0 0 current assets - liabilities suppliers and related 59 200 59 200 0 0 0 0 0 0 accounts clients 877 877 0 0 0 0 0 0 staff 9 010 9 010 0 0 0 0 0 0 social security and social 413 413 0 0 0 0 0 0 agencies state 72 216 72 216 0 0 0 0 0 0 international organizations 0 0 0 0 0 0 0 0 associated and group 52 854 52 854 0 0 0 0 0 0 various debtors 8 371 8 371 0 0 0 0 0 0 O.O.A. DEBTS 6 217 6 217 0 0 0 0 0 0 unearned income 0 0 0 0 0 0 0 0 total (III) 209 158 209 158 0 0 0 0 0 0 total (I + II + III) 210 364 209 594 0 237 533 0 0 0

(1) loans subscribed during the fiscal year : 191 / loans reimbursed during the fiscal year : 8 933 (2) total debts owned to shareholders (indivudual persons)

110 annual report of activities Sonatel 2014

Sonatel SA financial statements (in millions Xof) tableau n°8 : intermediary consumptions of the fiscal year

nature account number amount Water 6051 97 Electricity 6052 3 796 Other Energies 6053 0 None stockable maintenance supplies 6054 2 None Stockable office supplies 6055 0 Small Equipment 6056 168 Transportation on behalf of third party 613 0 Staff transportation 614 396 Real estate maintenance and repair 6241 663 Equipment maintenance and repair 6242 138 Publicity, publication, public relations 627 1 563 Telecommunication expenses 628 73 460 Payments of intermediaries and consultants 632 9 604

111 Sonatel 2014 annual report of activities

Sonatel SA financial statements (in millions Xof)

tableau n°9 : income allocation and other particular elements of the last five years

concerned exercices (1) 2014 2013 2012 2011 2010 nature of indication capital structure at the end of the year (2) authorized capital 50 000 50 000 50 000 50 000 50 000 common shares 100 10 10 10 10 preferred dividend shares (a.d.p.) with no 0 0 0 0 0 voting right new shares to be issued 0 0 0 0 0 through bond conversions 0 0 0 0 0 through exercice of subscription rights 0 0 0 0 0 operationel income of the year (3) sales turnover net of taxes 355 643 346 392 318 238 282 711 286 930 income from ordinary activities (i.a.o.) out of provision and reversals (operating and 240 500 218 382 240 484 190 918 231 085 financial) workers’ contribution to profits 0 0 0 0 0 income tax 45 470 40 982 39 434 18 404 26 153 net income (4) 173 666 147 513 172 132 127 236 170 987 income per share distributed income 5) 160 000 155 000 150 000 145 000 140 000 dividend allocated to each share (in xof) 1 600 15 500 14 500 14 500 14 000 staff and wages policy average number of workers in the period (6) 1 752 1 821 1 850 1 815 1 824 average number of external staff 3 5 3 3 3 distributed payroll during the period (7) 50 051 46 501 42 318 42 453 40 858 benefits packages paid during the period (8) 4 429 3 980 3 940 3 906 3 671 {social security, charity works} external staff billed to the company (9) 2 021 1 953 1 724 1 726 1 364

(1) included the period of which the financial statements are submitted to the assembly (2) indication in case of partial release of the capital of the none called capital (3) the elements of this item are in the income statement (4) when the result is negative, it should be put into brackets (5) the n period corresponds to the suggested dividend of the last period (6) the company’s own staff (7) all the 661, 662, 663 accounts (8) all the 664, 668 accounts. (9) 667 account.

112 annual report of activities Sonatel 2014

Sonatel SA financial statements (in millions Xof) tableau n° 10 : 2012 fiscal year income allocation project

allocations amount (1) origins amount (1) previous balance bought forward legal reserve 0 0 (loss) stratutory or contractual reserves 0 balance carried forward ( recipient) 0 other (available) reserves 13 666 net income of the period 173 666 dividends (2) 160 000 deduction on reserves (3) 0 other allocations 0 balance carried forward 0 total (A) 173 666 control :total A = total B 173 666

1) the negative amounts must be put into brackets or preceded by a (-) sign. 2) in case of several beneficiaries to dividends, indicate the amount of each of them. 3) indicate reserve accounts from which deductions are made

113 Sonatel 2014 annual report of activities

Sonatel SA financial statements (in millions Xof)

tableau n°11 : workfoce, wages and external staff

1) local staff wages (in million XoF) other other outside coun- outside locals countries of total locals total ECOWAS tries of ECOWAS ECOWAS ECOWAS M F M F M F M F M F M F qualifications employed staff 1. Senior 609 316 0 0 4 0 929 18 450 9 574 0 0 1 987 0 30 011 Executives 2. Senior Technicians 335 262 0 0 0 0 597 10 149 7 938 0 0 0 0 18 087 and middle managers 3. Technicians, Supervisors 150 40 0 0 0 0 190 4 544 1 212 0 0 0 0 5 756 and skilled workers 4. Employees, laborers, 38 1 0 0 0 0 39 1 151 30 0 0 0 0 1 182 workers and apprentices total ( 1 ) 1 132 619 0 0 4 0 1 755 34 295 18 753 0 0 1 987 0 55 036 permanent seasonal

114 annual report of activities Sonatel 2014

Sonatel SA financial statements (in millions Xof)

invoiced to the 2) external staff other countries outside local staff total company of ECOWAS ECOWAS (in million XoF) M F M F M F M F 1. senior executives 0 0 0 0 0 0 0 0 0 2. senior technicians 0 0 0 0 0 0 0 0 0 and middle managers 0 0 0 0 0 0 0 0 0 3. technicians, supervisors 0 0 0 0 0 0 0 0 0 and skilled workers 632 0 0 0 0 0 632 1 466 0 4. employees, laborers, 0 0 0 0 0 0 0 0 0 workers and apprentices 0 0 0 0 0 0 0 0 0 total ( 2 ) 632 0 0 0 0 0 632 1 466 0 permanent seasonal total ( 1 + 2 ) 1 764 619 0 0 4 0 2 387 37 748 18 753

M = Male F = Female

115 Sonatel 2014 annual report of activities

auditors’ general and special > report financial statements – for the fiscal year ending 31 December 2014

Dear Shareholders,

In compliance with the terms of our appointment entrusted to us by your General Assembly, we hereby present our report for the year ended December 31st, 2014, on:

• the audit of consolidated financial statements of Sonatel (National Telecommunications Company of Senegal), Sonatel Mobiles, Orange Mali, Sonatel Multimedia, Sonatel Business Solutions, Orange Guinea and Orange Bissau; • the specific verifications and information required by law.

1. opinion on the financial statements

We have audited the consolidated financial statements comply with ethical requirements and plan and perform attached of the Sonatel Group comprising the balance the audit to obtain reasonable assurance whether the sheet, income statement, the financial table of resources financial statements are free of material misstatement. and uses, as well as the annex notes to the consolidated financial statements of Sonatel for the period from 1st An audit involves performing procedures to obtain January to 31st December 2014. audit evidence about the amounts and disclosures in the financial statements. The choice of procedures Management’s responsibility for financial performed, including the risk assessment that the reporting financial statements contain material misstatements, whether due to fraud, or error, depend on the judgment Management is responsible for the preparation and of the auditor. In making those risk assessments, the fair presentation of financial statements in accordance auditor considers internal control relevant to the entity with OHADA accounting system and internal control as in the preparation and fair presentation of the financial management deems necessary for the preparation of statements in order to design audit procedures that are financial statements that are free of material misstatement, appropriate in the circumstances, and not in the purpose whether due to fraud, or error. of expressing an opinion on the effectiveness of internal control of the entity. An audit also includes evaluating Auditor’s Responsibility the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management and the overall presentation of the financial Our responsibility is to express an opinion on these statements. financial statements based on our audit. Our audit was conducted in accordance with auditing standards We believe that the audit evidence obtained is sufficient applicable in Senegal. Those standards require that, we and appropriate to provide a basis for our opinion.

116 annual report of activities Sonatel 2014

opinion 2. specific verifications and information In our opinion, the consolidated financial statements attached to this report are true and fair and present fairly the financial position, wealth and the results of We have also performed the specific verifications required the assembly constituted by the entities included in the by the OHADA Uniform Act relating to Commercial consolidation, in accordance with rules and procedures Companies and Economic Interest Grouping. accountants issued by the accounting System of OHADA. We have no matters to report regarding the fair presentation and consistency with the financial statements of the information given in the report of the Board of Directors and in the documents addressed to the shareholders on the financial position and consolidated accounts of the Sonatel Group.

The Auditors

GARECGO RACINE JPA INTERNATIONAL NETWORK MEMBER ERNST & YOUNG MEMBER

16th February 2015

117 Sonatel 2014 annual report of activities > Auditors’ general report financial statements – for the year ending 31 December 2014

Dear Shareholders,

In compliance with the terms of our appointment entrusted to us by your General Assembly, we hereby present our report for the year ended December 31, 2014, on: • The audit of financial statements of the National Telecommunications Company of Senegal (Sonatel) • The specific procedures and disclosures required by law.

1. opinion on the financial statements

We have audited the financial statements, that is to say the financial statements. The choice of procedures the balance sheet, income statement, financial table of performed, including the risk assessment that the resources and uses, as well as the annex notes to the financial statements contain material misstatements, financial statements of your company for the period from whether due to fraud, or error, depend on the judgment 1 January to 31 December 2014. of the auditor. In making those risk assessments, the auditor considers internal control relevant to the entity management’s responsibility for financial in the preparation and fair presentation of the financial reporting statements in order to design audit procedures that are appropriate in the circumstances, and not in the purpose of expressing an opinion on the effectiveness of internal Management is responsible for the preparation and control of the entity. An audit also includes evaluating fair presentation of financial statements in accordance the appropriateness of accounting policies used and with OHADA accounting system and internal control as the reasonableness of accounting estimates made by management deems necessary for the preparation of management and the overall presentation of the financial financial statements that are free of material misstatement, statements. whether due to fraud, or error. We believe that the audit evidence obtained is sufficient auditor’s Responsibility and appropriate to provide a basis for our opinion.

Our responsibility is to express an opinion on these opinion financial statements based on our audit. Our audit was conducted in accordance with auditing standards applicable in Senegal. Those standards require that, we In our opinion, the financial statements attached to comply with ethical requirements, to plan and perform pages 4 to 47 to this report are true and fair and present the audit in order to obtain reasonable assurance a true image of the compalny’ financial position as of 31 whether the financial statements are free of material December 2014, its results, its wealth and the changes in misstatement. financial position for the year that ended in accordance with accounting policies issued by the Accounting System An audit involves performing procedures to obtain of OHADA.. audit evidence about the amounts and disclosures in

118 annual report of activities Sonatel 2014

2. specific verifications and information

We have also performed the specific verifications re- information given in the report of the Board of Directors quired by the OHADA Uniform Act relating to Commer- and in the documents addressed to the shareholders on cial Companies and Economic Interest Grouping. the financial position and the consolidated accounts of the Sonatel Group. We have no issue to report regarding the fair presentation and consistency with the financial statements of the

The Auditors

GARECGO RACINE JPA INTERNATIONAL NETWORK MEMBER ERNST & YOUNG MEMBER

16th February 2015

119 Sonatel 2014 annual report of activities

accounting methods and policies

basis of preparation of financial statements immobilized charges and intangible assets

The financial statements are prepared on the basis of Expenses relating to loans granted for the financing of generally accepted accounting principles admissible major investment projects and supported during the and retained in the OHADA accounting system: pru- completion of these works until the end are capitalized. dence, consistency of methods, specialized exercises, historical costs, business continuity, transparency and They are depreciated over a period of five (5) years. material significance. «Unbundled» software (which are subject to a separate The annual financial statements are presented in ac- invoicing of computer equipment) are capitalized and cordance with the requirements of OHADA accounting depreciated over the estimated life of three (3) years. system and the main accounting policies and methodo- logies used are as follows: Foreign exchange differences to share are assessed according to the principles of currency transactions.

tangible assets

They are valued at their acquisition cost, which includes the purchase price and the related costs and depreciated on a straight-line method based on the estimated useful lives as follows:

Buildings 20 years Land enhancement work 40 years Equipment, office and home furniture 5 years Fixtures, fittings and installations 8 years Transportation equipment 3 et 5 years

Operating equipment: • Switching 10 years • Transmission 10 years • Lines and Networks 10 years • Energy 7 years • Measuring Equipment 3 years • Other assets 5 et 10 years

Assets in progress are recorded at their acquisition cost acquire shares in the company (10 percent), security and are reclassified as tangible assets at their entry into deposits and guarantees paid on water and electricity service. subscriptions, but also prepaid rent, government PBE securities (levy for the budget of equipment) and equity investments. other current assets These assets are valued and recorded at historical cost. They concern advances and down payments for the purchase of tangible assets, the housing and vehicle On securities, provisions for depreciation are recognized loans to employees, the government loans to staff to when the closing value is less than the historic cost.

120 annual report of activities Sonatel 2014

The closing value is either the market price for quoted Foreign currencies traffic balances are re-calculated at securities or the value of net assets for unquoted the prevailing rate at the balance sheet date if they are securities. not settled and the exchange differences are dealt with as follows: inventories • potential loss of exchange are recognized as expensed Inventories are valued at the weighted average cost of for the year; purchases. • Unrealized exchange gains are not recognized as income. The values used for local purchases represent the real exact cost and final listed on the annex on the Foreign exchanges losses and gains are recognized in procurement contracts. the balance sheet in accounts 478 or 479 «conversion variance». The purchase cost of imported products is the market value plus custom tariffs and transit fees. Claims on foreign operations are depreciated on a case-by-case basis, depending on the operator’s Inventories that have not registered any movement for creditworthiness. more than a year are depreciated at 100 percent. foreign currencies transactions receivables Foreign currency accounts are converted at exchange rates prevailing at the date of exercise and the resulting accounting services to local customers amounts are thus reconciled with the values recorded on the basis of exchange rates on the date of the transaction. The services to local customers are invoiced in local The differences observed are treated as follows: XOF at the date of issuance of the invoice and recorded in the accounts 41. the balance sheet:

Services not yet invoiced at the balance sheet date are • Potential foreign exchange gains are not recognized recorded in accounts 418 «Accrued income». as revenue but recorded in account 479 «conversion variance liabilities» on the balance sheet. Doubtful loans to private clients who have more than six months old are depreciated at 100 percent. in the income statement: accounting of revenue from international traffic • The unrealized exchange rate losses on transactions Traffic balances are established monthly, bimonthly or of more than one year are recorded as liabilities in the quarterly on the basis of statements recorded and, after account «Provision for exchange rate losses» and the acceptance by the concerned foreign correspondent counterparty is recorded in the balance sheet in the in a debit or credit account depending on the month, account 478 «Exchange rate differences». bimonthly or quarterly balance. • The unrealized exchange rate losses on transactions within At the end of the year, a provision is calculated for one year are recorded in the account 679 «Expenses all traffic balances not yet accepted. It is recorded in accrued on financial risks», by the credit of account 499 account 418300 «Customers, international operators «Provisioned risks on operating transactions. invoices not received» when the balance is in favor of SONATEL and account 408400 account «Suppliers • Losses on cash accounts are recorded in the income international operators, invoices not received» in the statement through the cash account. opposite case.

Foreign currencies traffic balances are recorded at the prevailing rate at the accounting date. Exchange rate differences arising during the settlement of past due invoices are recorded as exchange gain or loss.

121 Sonatel 2014 annual report of activities

provisions for liabilities and charges investment grants

disputes The amortized share for the fiscal year is recognized in the income statement. All potential risks in litigation with third parties are provisioned according to information provided by the company’s legal services. Unjustified Provisions are reported in the income statement.

retirement Benefits

Allowances due to staff at the retirement or on a contractual basis are subject to a provision for losses and expenses.

122 annual report of activities Sonatel 2014

auditors’ special report on regulated agreements > for the fiscal year ending 31 December 2014

Dear Shareholders,

In our capacity of Auditors of your Company, we hereby present our report on regulated agreements.

It is our duty to inform you, on the basis of the information we were provided, the essential characteristics and conditions of those agreements brought to our attention, without expressing an opinion on their usefulness and appropriateness. It is your responsibility, pursuant to Articles 440 and followings of the OHADA Uniform Act relating to Commercial Companies and Economic Interest Group, to assess the interest involved in the conclusion of these conventions for their approval.

We were informed of the execution of the following agreements, concluded during the year and previously authorized by the Board of Directors.

We have conducted our audit in accordance with professional auditing standards; Those standards require that we perform due deligence to verify the consistency of the information we have been provided with the basis documents from which they are derived.

1. loan Agreement with Orange Mali

concerned Directors terms and effects • Mr. Alioune Ndiaye • Mr. Jerome Henique The loan given by Sonatel will bear an interest rate of 5 • Mr. Cheikh Tidiane Mbaye percent per annum. Interest begins to accrue from 21 • Sonatel Company, represented by Mr. Birago Diene April 2014 and is paid quarterly. The loan then granted is Moctar Beye not subject to disbursement in a bank account of Orange • Mr. Fabrice Andre Mali. It will be directly deducted from dividends payable by Orange Mali to Sonatel. nature and purpose On 31 December 2014, the loan was fully repaid and It is a loan agreement between the Company Orange interest recognized for the period totaled 271 million Mali and Sonatel signed on 21 April 2014. It provides to XOF. Orange Mali a loan of 15 billion XOF in the form of short- term credit for a period of six (6) months and shall begin to run from 21 April 2014. This loan is intended solely to fund the payment by Orange Mali of the dividends for the year 2013.

123 Sonatel 2014 annual report of activities

2. assistance agreement with Orange Services Group

concerned Directors nature and purpose • Sonatel company represented by Mr. Alioune Ndiaye • Mr. Cheikh Tidiane Mbaye This is an amendment to the assistance agreement with Sonatel Mobiles, signed on 21 December 2012 nature and purpose and mentionned on article 4 of the present report. This amendment was previously authorized at the 153th meeting of Sonatel Board of Directors on 19 April 2014 This is an assistance agreement for the management and at the 61st meeting of Sonatel Mobiles Board of through the provision of permanent experts to the group Directors on 10 April 2014. Sonatel with the Orange Services Group (GOS). This agreement was validated during the 155th meeting of The object of this amendment is to complete the billing the Board of Sonatel on 18 September 2014 and at the terms of an expected service under the assistance 14th meeting of the GOS SA Board of Directors. agreement. This agreement was concluded for an indefinite period. it is retroactive and begins to run from 1 January 2014. 4. assistance agreement with the terms and effects Sonatel mobiles

In the case of a seconded expert, the invoicing will be concerned Directors 7 million FCFA / month man (employee) and 9 million • Mr. Jerome Henique FCFA / month man if the employee is in a position of • Mr. Alioune Ndiaye Managing Director or Deputy Managing Director. • Mr. Fabrice Andre • Mr. Hugues Foulon In the case of a temporary expert, the invoicing will be 350,000 FCFA / day man. This bill does not include travel nature and purpose and subsistence expenses. It is an agreement signed on 21 December 2012 (with In the case of other assistance services, the billing must retroactive effect from 1 September 2012) between be agreed between the two parties before the actual Sonatel and Sonatel Mobiles. This agreement replaces startup of the execution of the requested service. the agreement signed on 23 September 2008 and its amendments 1 and 2 of 11 February 2010 and 20 July On 31 December 2014, the effects produced by 2010. This agreement provides in particular: the agreement are only applied to assistance services

for permanent experts and amounted of a total of 195 • transfer of know-how of Sonatel in the field strategic million FCFA. planning, technical, commercial and control • the transfer of staff from Sonatel Mobiles to Sonatel • technical assistance on the management provided by 3. assistance agreement with the Sonatel to Sonatel Mobiles by providing experts on Sonatel Mobiles permanent basis; • occasional technical assistance at the request of Sonatel Mobiles. These include assistance in the concerned Directors following areas: • Mr. Jerome Henique • legal, regulatory and bill recovery • Mr. Alioune Ndiaye • marketing, • Mr. Fabrice Andre • technical and information technology, • Mr. Hugues Foulon • use of Sonatel management tools and software, • Sonatel Mobiles Company represented by Mrs. • Sonatel expertise through the establishment of high- Aminata Ndiaye tech equipment,

124 annual report of activities Sonatel 2014

• Marketing management and communication, Mobiles will rebill communication costs (including • Management of “One Card” (prepaid cards), advertising taxes) paid on behalf of Sonatel. The • Management and cash management of Sonatel advertising tax will be invoiced in proportion to the Mobiles by Sonatel, turnover of the year N (excluding wholesale turnover). • Management of accounting activities and taxation, • Management of procurement and logistics activities, The parties agree that Sonatel Mobiles will pay the • Management of roaming and interconnection activities, activities of outsourced technical hotline. It will invoice to • Miscellaneous services (sites usage, materials, energy ...) Sonatel its share.

This agreement was the subject of an addendum Under the management of “One Card” (prepaid cards), mentioned in paragraph 3 of this report the expenses for the costs of purchasing these cards will be billed based on the following method: number terms and effects of cards used on services in the fixed-lines services X average unit cost of management (WAC) of the previous In return for the transfer of know-how and personnel, year. Sonatel Mobiles pays to Sonatel a flat annual fee calculated on the basis of 5 percent of annual turnover. Sonatel Mobiles will repay to Sonatel his part of the turnover due to this latter. The cost of staff seconded permanently involved in the governance and management of Sonatel Mobiles will be Under management and centralization by Sonatel of borne by Sonatel Mobiles. Sonatel Mobiles’ cash management:

Experts seconded on a permanent basis will be billed up • for cash receipts done at Sonatel’s counters and to 7 million XOF/month/man. their accounting, Sonatel Mobiles will be invoiced by Sonatel up to 2 percent of the total amount collected; Temporary experts are invoiced at 350.000 XOF/day/ man. • loans and borrowings granted to each other will be paid at a rate defined by the nature of the loan. Costs Legal, regulatory and bill collection technical assistance generated by the transactions on bank accounts on will be billed by Sonatel for a lump sum of 250 million behalf of Sonatel Mobiles by Sonatel will be billed at XOF. the prorate of transactions done;

The distributions of refill cards and SIM cards will be • remuneration of current accounts will be paid by billed respectively up to 4 percent and 10 percent of Sonatel Mobiles depending on the amount of surplus turnover with retailers. and overdraft of Sonatel Mobiles.

The network management and computer technology The management of accounting and taxation activities will be billed in proportion to the resources allocated by will be billed for an annual lump sum of 623 million XOF. Sonatel. The management of procurement and logistics activities The use of Sonatel’s software and management tools will be billed for an annual lump sum of 300 million XOF. (Oracle and Business Intelligence ...) be billed in proportion to the resources used. The management of roaming and interconnection activities will be billed for an annual lump sum of 50 Under the management of its marketing and million XOF. communication activities, Sonatel will invoice to Sonatel Mobiles an annual fee equal to 1 percent of annual turnover of Sonatel Mobiles outside group. Sonatel

125 Sonatel 2014 annual report of activities

Over the year, this agreement generated a total of 40,927 million XOF, which break down as follows:

in millions of XOF

management fees 14,352 experts on secondment 0 temporary experts 0 payments done at windows 574 marketing and Communication: • annual fee 2,680 • communication costs (75) • advertising tax - “one Card” Management: • cost of cards management (26) • part of SONATEL turnover 802 legal, regulatory, bill collection assistance 250 distribution of refill and SIM cards 12,863 technical management and Information Technology - network management 6,750 software usage 941 hotline management ACL 843 roaming and Interconnection 50 accounting and taxation 623 purchasing and Logistics 300 total 40,927

5. cooperation agreement with on 3 March 2009, 15 October 2009 and 11 February 2010. This agreement shall include Sonatel Multimedia • transfer of know-how of Sonatel in the fields strategic concerned directors planning, technical, commercial and management • Mr. Jerome Henique. control. • Sonatel Company, represented by Mr. Birago Diene Moctar Beye • occasional technical assistance (legal advice, dispute assistance, receivable collection, marketing services, nature and purpose use of management tools, vehicles and Sonatel expertise, building rentals, hosting in technical premises, This is a technical assistance agreement signed on services delivery, telephone hotline management, 21 December 2012 (with retroactive effect from 1 Sep- marketing and communication activity, technical and tember 2012) between Sonatel and Sonatel Multimedia. information technology, cash management and cash This agreement replaces the agreement signed on 17 pooling, purchasing management, accounting and December 2007 and its amendments 1, 2 and 3 dated taxation, single billing management.)

126 annual report of activities Sonatel 2014

terms and effects

In consideration for the transfer of know-how, Sonatel Multi- • in respect of marketing and communication activities, an media will pay to Sonatel an annual fee (management fees) annual lump sum equal to 1 percent of annual sales out- amounting to 1 percent of annual turnover excluding taxes. side the group, • 350,000 XOF per expert per day Under the assistance of legal advice, Sonatel charges a • under the unique invoicing system, an amount equal to fixed annual amount of 5 million XOF excluding taxes. the proportion of resources used, and 3 percent of the amount billed for the activities, Under assistance in the field of litigation, Sonatel charges a • in respect of the use of management tools (Oracle, ...), an flat annual amount of 5 million XOF excluding taxes. amount equal to the proportion of resources committed, • under the management of the telephone hotline, an Under the management of accounting, treasury, purcha- amount equal to the proportion of resources used, sing, inventory and taxation, Sonatel charges a flat annual • in respect of Internet communication costs, an amount amount of 200 million XOF excluding taxes. equal to the portion of the Sonatel Multimedia’s subscribers base on the total subscribers base, Sonatel Multimedia also pays: • 2 percent of invoices cashed by Sonatel, Depreciation of Sonatel vehicles used by Sonatel Multime- • a commission of 20 percent of the costs of ADSL access dia is invoiced in proportion to the use of each entity. and 15 percent for business solutions, • an annual lump sum of 260 million XOF in respect of tech- For the 2014 fiscal year, this agreement has generated nical activity and information technology royalties amounting to 1.431 million XOF broken down as follows:

in millions of XOF

management fees 83 legal counsel and studies 5 accounting, treasury, purchasing, inventory, taxation 200 marketing of products 89 management tools (oracle ...) 119 expert - hotline management 143 engineering and information technology 260 marketing and communication 67 communication costs on the internet 40 use of vehicles - single billing 179 litigation 5 collection of receivables 241 total 1,431

127 Sonatel 2014 annual report of activities

6. participation Agreement

concerned Directors and provides the following benefits to Sonatel and all its • Mr. Marc Rennard subsidiaries: • Mr. Thierry Breton • transfer of know-how in all areas of operation and • Mr. Hugues Foulon the development of a telecommunications company • Mr. Fabrice Andre (strategic planning, technical, regulatory, financial, in- • Mr. Jerome Henique formation systems, purchasing, ...); • Sonatel Company, represented • permanent technical assistance with the provision of by Mr. Birago Diene Moctar Beye permanent experts participating in the leadership and management of the company and its subsidiaries; nature and purpose • ad hoc technical assistance with the completion of ti- mely and specific studies, problem solving related to This is a contract signed on 31 March 2012, between the organization or operation. the JV (the company Buyin SA), the NATCO (Sonatel, Sonatel Multimedia, Sonatel Mobiles and Sonatel terms and effects Business Solutions) and France Telecom. In consideration for the transfer of know-how and ser- This contract is intended to lay the terms of the collabo- vices rendered, Sonatel will pay France Telecom a yearly ration between the JV and Natco regarding procurement fee equivalent to 0.31 percent of turnover of the Senegal activities included in the scope of the JV. perimeter (Sonatel SA, Sonatel Mobiles, Sonatel Mul- timedia, Sonatel Business Solutions) net of intra-group The scope of procurement activities of the JV concerns: activities. • network technology, • customer equipment, This fee has a ceiling of 1.43 percent of the Group So- • service platforms... natel consolidated turnover for year 2010 and shall not be less than 0.20 percent of the annual turnover of the terms and effects perimeter Senegal net of intra-group activities.

This collaboration is without financial consideration. For the 2014 fiscal year, recognized fees totaled 1.395 million XOF.

For the cost of disposition of staff, Sonatel rebilled at 7. cooperation Agreement France Telecom, expenses related to expatriates supported by Sonatel and are outside of the lump sum set by between Sonatel and France France Telecom. The amount of charges billed by Sona- Telecom tel amounted to 214 million XOF on 31 December 2014.

concerned Directors • Mr. Marc Rennard 8. memorandum of • Mr. Thierry Breton • Mr. Hugues Foulon Understanding between • Mr. Fabrice Andre France Telecom and Sonatel

nature and purpose concerned Directors • Mr. Marc Rennard It is a cooperation agreement signed on 1 November • Mr. Thierry Breton 2011 (with retroactive effect from 1 January 2011) • Mr. Hugues Foulon between France Telecom and Sonatel for a period of • Mr. Fabrice Andre three (3) years.

This agreement supersedes the previous agreement signed on 16 December 2004 and all its amendments.

Through this agreement, France Telecom provides the know-how to Sonatel and its Senegalese subsidiaries

128 annual report of activities Sonatel 2014

nature and purpose terms and effects

A memorandum of understanding was signed on 1 No- The loan given by Sonatel will bear an interest rate of 9.5 vember 2011 (with retroactive effect from 1 January 2011) percent per annum. between France Telecom and Sonatel. This protocol is valid until 31 October 2014. It supersedes the previous Interest shall begin to accrue from the date of disburse- agreement signed 9 April 2008 and all its amendments. ment of funds to the account of Orange Bissau.

France Telecom and Sonatel agreed that the fee payable On 31 December 2014, the outstanding loan amounts to each year to France Telecom by Sonatel and its Sene- 1,000 million XOF. galese subsidiaries under the cooperation agreement (the rate is set at 0.31 percent of the annual turnover of Interest recorded for 2014 fiscal year amounted to 95 the companies inside Senegal perimeter) is limited to the million XOF. amount to 1.43 percent of the 2010 consolidated turnover of the Sonatel Group.

The consolidated turnover is defined as the consolidated 10. loan Agreement with Orange turnover of the Sonatel Group net of intra-group Sonatel Bissau activities. Sonatel Group means Sonatel and its Sene- galese subsidiary companies as well as Orange Mali, concerned Directors Orange Guinea and Orange Guinea-Bissau, as well as • Mr. Alioune Ndiaye any other company by the SYSCOA standards will be • Mr. Jerome Henique consolidated in the accounts of Sonatel. nature and purpose terms and effects It is a loan agreement between the Company Orange In case the fee would exceed 1.43 percent of the conso- Bissau and Sonatel signed on 29 October 2010 and pro- lidated turnover of the Sonatel Group, it will be adjusted vides to Orange Bissau a 5 years medium-term loan of so as not to exceed the amount corresponding to 1.43 800 million XOF with a grace period of one year from the percent of the consolidated turnover of the Sonatel date of disbursement. Group.

This fee cannot be less than 0.20 percent of the annual terms and effects turnover of the companies inside the Senegal perimeter. The loan given by Sonatel will bear an interest rate of 9.5 As of 31 December 2014, the agreement has no effect in percent per annum. the accounts of Sonatel. Interest shall begin to accrue from the date of disbursement of funds to the account of Orange Bissau.

9. loan Agreement with Orange At 31 December 2014, the outstanding loan amounts to Bissau 800 million XOF. Interest recorded for 2014 fiscal year totaled 76 million concerned Directors XOF. • Mr. Alioune Ndiaye • Mr. Jerome Henique nature and purpose

It is a loan agreement between the Company Orange Bissau and Sonatel signed on 26 April 2010 and which provides to Orange Bissau a 5 years medium-term loan of 1,000 million XOF with a grace period of one year from the date of disbursement.

129 Sonatel 2014 annual report of activities

11. loan Agreement with Orange Bissau

concerned Directors Interest shall begin to accrue from the date of disburse- • Mr. Alioune Ndiaye ment of funds to the account of Orange Bissau. • Mr. Jerome Henique The loan must be repaid by Orange Bissau in three (3) nature and purpose years with a grace period of one year from the date of disbursement of funds in accordance with the amortization schedule. It is a loan agreement between the Company Orange Bissau and Sonatel signed on 3 March 2009 and which The disbursement of this loan was done on 2 January provides to Orange Bissau a 5 years medium-term loan 2009. of 3,000 million XOF with a grace period of one year from the date of disbursement. On 31 December 2014, the loan balance is null.

terms and effects Interest recorded under this loan for the 2014 fiscal year amounted to 32 million XOF. The loan given by Sonatel will bear an interest rate of 10 percent per annum.

Interest shall begin to accrue from the date of disburse- 13. loan agreement with Orange ment of funds to the account of Orange Bissau. Bissau On 31 December 2014, the outstanding loan amounts to concerned Directors 3,000 million XOF. • Mr. Alioune Ndiaye • Mr. Jerome Henique Interest recorded for 2014 fiscal year amounted to 300 million XOF. nature and purpose

It is a loan agreement between the Company Orange 12. long term loan agreement Bissau and Sonatel signed on 1 August 2007 and provi- with Orange Bissau des to Orange Bissau a five (5) years medium-term loan of 4,700 million XOF, which begins from the date of disbursement of funds. concerned Directors

• Mr. Alioune Ndiaye Following the share increase in 2011 by incorporation of • Mr. Jerome Henique debts, the outstanding loan has decreased 3.105 million XOF and totaled 1.595 million XOF. nature and purpose terms and effects It is a loan agreement between the Company Orange Bissau and Sonatel. The agreement provides to Orange The loan given by Sonatel will bear an interest rate of 10 Bissau loan a medium-term credit of three (3) years for 1 percent per annum. billion XOF, which begins from the date of disbursement of funds. Interest shall begin to accrue from the date of disbursement of funds to the account of Orange Bissau. terms and effects The loan must be repaid by Orange Bissau within five (5) The loan given by Sonatel will bear an interest rate of 10 years from the date of disbursement of funds in accor- percent per annum. dance with the amortization schedule.

As of 31 December 2014, the outstanding loan is null.

Interest recorded for the year 2014 amounted to 13 million XOF.

130 annual report of activities Sonatel 2014

14. loan Agreement with Orange Guinea concerned Directors • occasional assistance for solving problems related to • Mr. Alioune Ndiaye the organization (legal advice and studies, assistance • Mr. Jerome Henique in litigation, collection of receivables, finance and accounting, use of Sonatel’s management tools, use of nature and purpose vehicles, use of Sonatel’s expertise, rental of buildings, provision of services, accommodations in technical premises). It is a loan agreement between the Company Orange Guinea and Sonatel signed on 27 December 2010. This This agreement was concluded for a period of 10 years. agreement supersedes all loan agreements signed An amendment to this agreement was signed on 21 June between Sonatel and Orange Guinea from 2008 to 2010. 2007. This amendment takes into effect from the 2007 These grouped loans totaled to 26.573 million XOF and fiscal year the full benefits under the assistance agree- have a term of 5 years with a grace period of 5 years for ment signed between the parties in 2005. Indeed, in principal and interest. addition to the services already provided in the original contract, it provides the billing of permanent assistance, terms and effects as well as additional services.

The loan given by Sonatel will bear an interest rate of 9 Amendment No. 2 was signed on 11 February 2010 and percent per annum. provides: • management and cash pooling, At 31 December 2014, the outstanding loan amounts to • management of accounting and taxation. 17.432 million XOF. terms and effects

15. cooperation agreement with In return for the services received, Sonatel Business So- lutions agrees to pay to Sonatel an annual flat fee equal Sonatel Business Solutions to 2 percent of its turnover excluding tax from the second year of operation, a lump sum of 5 million XOF for concerned Directors counsel and legal advice, reimbursement of attorneys, • Sonatel company represented notaries and bailiffs fees on presentation of bills, 350,000 by Mr. Omar Gueye Ndiaye XOF per temporary expert per day. For experts, billing is • Mr. Jerome Henique done at actual cost plus a 15 percent margin. nature and purpose Rental equipment from Sonatel to Sonatel Business Solu- tions is billed according to following conditions: [(acqui- This is a technical assistance agreement between So- sition cost HT / depreciation period in days) x number of natel and Sonatel Business Solutions signed on 7 June days of the loan] x 1.15. 2005, and which includes: Management tools are billed on prorated licenses used. • transfer of know-how between Sonatel and Sonatel Bu- siness Solutions; Sonatel charges to Sonatel Business Solutions for the accounting and tax management activities an annual • the management of permanent assistance with the lump sum of 38 million XOF. availability of experts to participate in the management of the company; Assistance in litigation will be billed for an annual lump sum of XOF 5 million excluding tax.

131 Sonatel 2014 annual report of activities

The amounts accounted by Sonatel on 2014 fiscal year under this agreement amounted to 581 million XOF and are detailed as follows:

in million XOF

accounting assistance 38 management fees 75 seconded staff 440 vehicles rental 13 legal assistance 5 information technology management 10 total 581

16. assistance agreement with Orange Bissau

concerned Directors gross cost of staff available on a permanent basis, wi- • Mr. Alioune Ndiaye thout applying EBITDA margin as long as it is negative • Mr. Jerome Henique An amendment was signed on 23 December 2011 with nature and purpose retroactive effect from 1 January 2011 to amend Article 2.2 of the agreement signed on 6 August 2007 relating This is an assistance agreement between the company to the payment of «management fees». Orange Bissau and Sonatel signed on 6 August 2007 and which includes a convention: terms and effects

• transfer of Sonatel’s know-how for the benefit of In return of the services provided, Orange Bissau pays Orange Bissau in the areas of strategic planning in to Sonatel a fee of 3 percent of corporate turnover net the area of procurement, human resources, financial of the amount of «management fees» paid directly to management control, technical and commercial, France Telecom under the contract signed between • permanent assistance services by Sonatel with the France Telecom and Orange Bissau. availability of highly qualified personnel to perform executive functions, Under the permanent assistance services provided, • occasional assistance at the request of Orange Bis- Orange Bissau will bear the full costs of expatriate sau for specific studies staff made available by Sonatel. Sonatel will charge to • availability of Sonatel’s management tools to Orange Orange Bissau the actual gross costs of staff available Bissau. on a permanent basis, without applying an EBITDA margin as long as it is negative. This agreement was subject to amendment No. 1 signed Occasional assistance will be billed by Sonatel to on 9 July 2008 in order to amend and delete the terms Orange Bissau at 350.000 XOF/day/man of the Convention of 6 August 2007 relating to the costs of Sonatel permanent staff available to Orange Bissau. Software Sonatel usage will be billed at a prorated amount of licenses used by Orange Bissau based on Article 2 of the Addendum No. 1 to the agreement states a base (depreciation amount+ maintenance costs) x that Sonatel will invoice to Orange Bissau the actual 1.15.

132 annual report of activities Sonatel 2014

The amount accounted for the 2014 fiscal year under this agreement amounted to 645 million XOF and is as follows:

in million XOF

management fees 442 seconded staff 175 occasional assistance - network management 28 information technology - total 645

17. license Agreement for the use of the Orange brand concerned Directors The effect of this agreement on the 2014 fiscal year is 12 • Mr. Marc Rennard million XOF. • Mr. Thierry Breton • Mr. Hugues Foulon • Mr. Fabrice Andre 18. cooperation agreement with nature and purpose Orange Mali

These are license agreements for the Orange brand concerned Directors from Orange Brand Services Limited, France Telecom • Mr. Alioune Ndiaye and Sonatel. • Mr. Jerome Henique • Mr. Cheikh Tidiane Mbaye These agreements apply from the 2007 conventions were the subject of an addendum signed on 9 April nature and purpose 2008, and include: This is a technical cooperation agreement signed in Au- • the granting by Orange Brand Services Limited, a gust 2002 between Sonatel and Orange Mali in the fol- non-exclusive license to use the brand «Orange» lowing areas: • the authorization to manage and operate the Orange • Transfer of Sonatel’s know-how for the benefit of brand internationally, including the right to grant sub-li- Orange Mali, cense the use of the Orange brand in their territory, • Permanent assistance services by Sonatel in the areas • the support services for pre-launch and re-brand na- of operational management, technical assistance, en- ming of the Orange Brand Services Limited, gineering and training, • the support services in terms of marketing and commu- • Specific assistance to the request of Orange Mali for nication in the form of know-how, training, assistance, specific and occasional services expertise, brand and other information and / or advice • Assistance at the request of Orange Mali by Sonatel’ to help Sonatel and its subsidiaries. technical and business management tools • use by Orange Mali of Sonatel’s new software. This agreement was concluded for a period of 10 years. This agreement was subject to three amendments terms and effects signed on 18 November 2005, 23 December 2008 and 23 December 2011. The second amendment completes Sonatel agrees to pay to Orange Brand Services Limited, the services provided in the cooperation agreement and or any other entity designated by the latter, an annual fee amendment No. 1 signed between the parties in 2002 equal to 1.6 percent of turnover excluding taxes of activi- and 2005. ties under the brand name «Orange» activities.

133 Sonatel 2014 annual report of activities

The third amendment was signed on 23 December 2011 Temporary expert missions are billed at the rate of with retroactive effect from 1 January 2011 and to amend 350,000 XOF per man / day. Article 2.2 of the Agreement signed in August 2002 on the payment of «Management fees». The use of Sonatel software will be billed on a prorated use of license by Orange Mali on the basis of (deprecia- In addition to the services already provided in these two tion amount + maintenance costs) x 15 percent. initial contracts, the parties mutually agree to extend loans and borrowings. Under amendment No. 2, the amount of loans made by a party will not exceed the amount of loans more than 60 terms and effects percent of the average of 6 months monthly cash.

In return of the services provided, Orange Mali pays to The interest rate is the average rate over the last three Sonatel a fee of 3 percent of turnover net of «manage- DAT given to the lender plus 0.25 percentage points. ment fees» paid directly to France Telecom under the contract signed between France Telecom and Orange If, because of the loan agreement, the lender incurs a Mali. debt, the applicable rate used is the output rate of said debt increased by 0.25 points. The services provided by the seconded permanent staff are invoiced at 7.5 million XOF per month per agent for The amounts charges by Sonatel in the 2014 fiscal year the positions of Managing Director and Director and to a amounted to 5.947 million XOF globally and are as fol- maximum up to 5.9 million XOF per month per agent for lows: other positions.

in million XOF

annual fee 5.464

seconded staff 283

information technology 196

ad hoc assistance 4 total 5 947

19. assistance agreement with Orange Guinea • Permanent assistance services by Sonatel with the concerned Directors availability of highly qualified personnel to perform • Mr. Alioune Ndiaye such executive functions, • Mr. Jerome Henique • Specific assistance to the request of Orange Guinea for specialized and specific activities nature and purpose • Availability of Sonatel’s management tools to Orange Guinea. This is an assistance agreement between the company Orange Guinea and Sonatel signed on 21 June 2007 An amendment was signed on 23 December 2011 and which includes: with retroactive effect from 1 January 2011 and aims to • Transfer of Sonatel’s know-how for the benefit of amend Article 2.2 of the Agreement signed on 21 June Orange Guinea in the areas of strategic planning in 2007 on the payment of «management fees». procurement, human resources, financial management control, technical, marketing,

134 annual report of activities Sonatel 2014

terms and effects

In return of the services provided, Orange Guinea pays Benefit from specialized assistance will be billed by So- Sonatel a fee of 3 percent of net turnover in the amount natel Orange Guinea at a rate of 350.000 XOF /day/man. of «management fees» paid directly to France Telecom under the contract signed between France Telecom and Using software Sonatel will be billed on a prorated use of Orange Guinea. licenses by Orange Guinea on the basis of (depreciation amount + maintenance costs) x 1.15. Under permanent assistance services, Orange Guinea will bear the full costs of expatriate staff made available The amount recognized in 2014 fiscal year under this by Sonatel and pay an amount of 7 million XOF/ month agreement amounted to 3.213 million XOF and is as fol- man. lows:

in million XOF

seconded staff 638 management fees 2,478 occasional assistance 14 computer technology 83 total 3,213

20. memorandum of Understan- ding with Canal concerned director thout tax per subscriber. As such, a minimum amount • Sonatel company represented by Ms. Marie Sow Diop. guarantee (MG) determined by the following shall be settled by Canal to Sonatel: nature and purpose • Operation year 1: MG is 73,200 euros, • Operation year 2: MG for the second year of operation There is a Memorandum of Understanding between So- correspond to a carriage charge € 3.05 per subscriber, natel, Multi TV Africa and Canal Horizons Senegal. The multiplied by ‘x’ multiplied by 12 months. MoU was signed on 5 May 2006 for a period of two years renewable by tacit agreement for 12 months. «X» corresponds to twice the actual average number of subscription in Year 1 «x» is also equal to the minimum It provides for: of 2,000 subscribers and maximum to 4,000 subscribers. • a carriage contract by Sonatel of the CanalSat Hori- zons bouquet ADSL TV via the Multiplay offer through Under the services related to the management of Canal- its wired network ADSL, Sat Horizons bouquet TV ADSL subscribers. • a commercial distribution contract whose purpose for Sonatel and channel is to commercialize through their Canal will pay to Sonatel a monthly fee per subscriber sales force, network subscriptions for CanalSat Hori- established on the basis of a monthly average subscri- zons TV bouquet via ADSL, ber based on the following thresholds: • a contract for the subscribers’ management by Sona- • 4 euros per subscriber per month, if the average mon- tel. thly number of subscribers is between 1 and 3000, • 3.5 euros per subscriber per month, if the average monthly number of subscribers is between 3.001 and terms and effects 5.000, Financial terms of the protocol are: • 3 euros per subscriber per month, if the average monthly number of subscribers exceeds 5000. Under the transportation and signal management Canal will pay to Sonatel a monthly fee 3.05 euros wi-

135 Sonatel 2014 annual report of activities

Under distribution of services ting to the establishment and operation of networks and In exchange for the distribution of CanalSat Horizons TV the services of telecommunications throughout the entire bouquet via ADSL, Canal Horizons Senegal to Sonatel Senegalese territory for period of twenty (20) years. pay a commission of 5 percent on the price excluding VAT of the total amount of the annual subscription Canal- Sat Horizons TV bouquet via ADSL subscribed via Sona- tel by a new subscriber regardless of the rate structure 22. reimbursement of directors chosen by the customer. In accordance to the Article 432 of the Uniform Act of For the 2014 fiscal year, the effects of this Memorandum OHADA on the law of commercial corporations and eco- of Understanding in the books of Sonatel are: nomic interest group, the Sonatel Board of Directors, at • an amount of 34 million XOF for the services of trans- its meetings of 9 April 2008 and 13 October 2009 au- portation and signal management, thorized the reimbursement of hotel and travel expenses • an amount of 224 million XOF for the services of of the directors between their normal place of work and subscriber management, place of meetings of the Boards or the Board Com- • an amount of 12 million XOF under the distribution ser- mittees meetings. vices. In the 2014 fiscal year, there was no reimbursement of expenses. 21. franchise Agreement

concerned Directors 23. reimbursment of administra- • Mr. Mamadou Sarr tive fees • Mr. Birane Diouf • Mr. El Haji Abdou Aziz Mbaye Following the article 432 of the OHADA Uniform Act relating to Commercial Companies and Economic Interest nature and purpose Group, the Sonatel Board of Directors, at its meetings of 9 April 2008 and 13 October 2009, authorise the reim- A franchise agreement between the Government of Se- bursement for hotel expenses and transport costs of the negal and Sonatel was signed on 1 October 1985 and directors between their normal place of work and the Di- updated July 21, 1997. rectors Board meetings or Committees Board meetings places. terms Under the 2014 fiscal year, there is no reimbursement Under this agreement, the Government of Senegal of fees. grants to Sonatel the Government franchise rights rela-

The Auditors

GARECGO RACINE JPA INTERNATIONAL NETWORK MEMBER ERNST & YOUNG MEMBER

16 February 2015

136 annual report of activities Sonatel 2014

agenda of the general meeting of shareholders of Sonatel > thursday, april 9th, 2015. a. resolutions of the competence of the draft resolution 2 : allocation of 2014 year annual general assembly : income.

1. review and approval of the financial statements for the The General Shareholders’ Assembly approved the year ended on december 31st 2014. proposal of the Board of Directors decided to allocate 2. allocation of 2014 year income, dividends and reserves the profit for the year ended on 3. ratification of the appointment of Mr. Birane Diouf, 31st December 2014 up to the amount of 173.665.631.924 4. ratification of the appointment of Mr. Fabrice Andre F cfa. and renewal of his administrator’s mandate, 5. renewal of Mr. Marc Rennard administrator’s mandate, The General Shareholders’ Assembly decides to allocate 6. renewal of Mr. Hugues Foulon administrator’s mandate, the result as follows: 7. renewal of Mr. Thierry Breton administrator’s mandate, 8. approval of regulated agreements. First dividend 3.000.000.000 Fcfa Additional dividend 157.000.000.000 Fcfa b. resolutions of the competence of the Other reserves 13.665.631.924 Fcfa Extraordinary General Assembly : ______TOTAL 173.665.631.924 Fcfa 9. approval of an regulated agreement. transfer of head office, Accordingly, the Ordinary General Shareholders’ 10. harmonisation of the statutes with the new provisions Assembly fixed at the first 30 Xof gross dividend and of the act of ohada uniform on commercial companies 1.570 Xof the final gross complementary dividend and economic interest group (AUSCGIE), per share, bringing the total gross dividends to said 11. Consequential amendments to Articles 4, 6, 11, 13a, 1.600 Xof per share. 16, 17, 19, and 23 of the statutes, 12. Powers of completion of formalities. After deduction of withholding tax of 10 percent under IRVM, the net dividend of 1.440 Xof per share will be draft resolution 1 : review and approval of paid on or after 5th May 2014 in Dakar. the financial statements for the year ended draft resolution 3 : ratification of the st on december 31 2014. appointment of Mr. Birane Diouf. The General Assembly, having heard the reading: On the proposal of the Board of Directors and after 1. Of the Board of Directors’ Report on the activities of deliberation, the General Shareholders’ Assembly the company during the year ended on December decided to ratify the appointment of Mr. Birane DIOUF 31st 2014 and the statements of that year,, co-opted at the meeting of the Board of Directors on April 2. The General Report of the Statutory Auditors on the 10th 2014 replacing Mr. Thierno FALL, who resigned. financial statements of that year. Mr. Birane DIOUF nominated will retain his mandate for Approve Sonatel financial statements for the year ended the unexpired term of his predecessor until the Ordinary on 31st December 2014 as they were presented as well General Meeting called to approve the 2016 financial as the transactions reflected in these financial statements statements for the year ended on 31st December 2015. and summarized in these reports.

Accordingly, taking note of the Auditors’ special report, the Annual Shareholders’ Assembly gives full and unreserved discharge the Directors and the Auditors on the performance of their duties for the year ended on 31st December 2014.

137 Sonatel 2014 annual report of activities

draft resolution 4 : ratification of the General Meeting called to approve the 2018 financial appointment of Mr. Fabrice Andre and statements for the year ended on December 31st, 2017. renewal of his administrator’s mandate. Mr. Hugues FOULON whose mandate was renewed hereby accepts the renewal and states that it is subject On the proposal of the Board of Directors and after to any incompatibility or prohibition may prevent him deliberation, the General Shareholders’ Assembly from performing the duties of Administrator. decided to ratify the appointment of Mr. Fabrice ANDRE co-opted at the meeting of the Board of draft resolution 7 : renewal of Mr. Thierry th Directors on December 23 2014 replacing Mr. Bernard Breton administrator’s mandate. GHILLEBAERT, who resigned. The General Meeting notes that the mandate of Mr. Mr. Fabrice ANDRE nominated will retain his mandate for Thierry BRETON expires at the close of this Ordinary the unexpired term of his predecessor until the Ordinary General Meeting. General Meeting called to approve the 2015 financial statements for the year ended on 31st December 2014. It decides to reappoint Mr. Thierry BRETON for a period of three (3) years expiring at the close of the Ordinary Following this appointment, the General Meeting notes General Meeting called to approve the 2018 financial that the mandate of Mr. Fabrice ANDRE expires at the statements for the year ended on December 31st, 2017. close of this Ordinary General Meeting. Mr. Thierry BRETON whose mandate was renewed It decides to reappoint Mr. Fabrice ANDRE for a period hereby accepts the renewal and states that it is subject of three (3) years expiring at the close of the Ordinary to any incompatibility or prohibition may prevent him General Meeting called to approve the 2018 financial from performing the duties of Administrator. statements for the year ended on December 31st, 2017.

Mr. Fabrice ANDRE whose mandate was renewed draft resolution 8 : approval of an regulated hereby accepts the renewal and states that it is subject agreement. to any incompatibility or prohibition may prevent him from performing the duties of Administrator. After having heard the Auditors’ Special Report on the agreements referred to in Articles 438 and following of the draft resolution 5 : renewal of Mr. Marc OHADA Uniform Act relating to Commercial Companies Rennard administrator’s mandate. and Economic Interest Grouping, the Ordinary General Shareholders’ Assembly approves: The General Meeting notes that the mandate of Mr. Marc • The Amendment No. 1 to the initial cooperation agreement RENNARD expires at the close of this Ordinary General signed between Sonatel and Sonatel Mobiles, Meeting. • Cooperation agreement signed between Sonatel and Grouping ORANGE Services, It decides to reappoint Mr. Marc RENNARD for a period • the loan Agreement signed between Sonatel and of three (3) years expiring at the close of the Ordinary Orange Mali. General Meeting called to approve the 2018 financial statements for the year ended on December 31st, 2017. draft resolution 9 : transfer of head office. Mr. Marc RENNARD whose mandate was renewed hereby accepts the renewal and states that it is subject The Shareholders’ Meeting resolves to transfer the head to any incompatibility or prohibition may prevent him office of Sonatel to the following location: n°64 Voie de from performing the duties of Administrator. Dégagement Nord (VDN) in Dakar (Senegal).

draft resolution 6 : renewal of Mr. Hugues draft resolution 10 : harmonisation of the Foulon administrator’s mandate. statutes with the new provisions of the act of ohada uniform on commercial companies The General Meeting notes that the mandate of Mr. and economic interest group (auscgie). Hugues FOULON expires at the close of this Ordinary General Meeting. In accordance with Articles 907 and following of the AUSCGIE revised and entered into force on May 5th, It decides to reappoint Mr. Marc RENNARD for a period 2014, the General Assembly decided to harmonize its of three (3) years expiring at the close of the Ordinary Constitution with the new provisions.

138 annual report of activities Sonatel 2014

Are affected by this development in harmony the warranty actions, merely because of the approval by the following items: General Assembly of accounts for the last year on its • Article 6 of the Articles: Increase, management. » • Article 11 of the Statutes: Board of Directors • Article 13a of the Articles: Proceedings of the Board, 4. Article 13 of the Statutes is amended as follows : • Article 16 of the Statutes: The Audit Committee, « A director may, by letter or e-mail or telegram, mandate • Article 17 of the Statutes: Regulated agreements, another director to represent him at a meeting of the • Article 19 of the Statutes: the General Rules, Board of Directors (...) The Council shall be effective • Article 23 of the Statutes: Expert minority. only if at least half of its members are present. The board of directors may be held by videoconference or other draft resolution 11 : amendments to articles 4, means of telecommunication. In this case, the Board of 6, 11, 13 a, 16, 17, 19 and 23 of the statutes. Directors may validly deliberate unless at least one third of directors is physically present.

As a result of resolutions 9, 10 above, the General (...) In case of participation in the Board by videoconference Meeting of Shareholders changes as follow the Articles or other means of telecommunication, it is mentioned in 4, 6, 11, 13a, 16, 17, 19 and 23 of the Articles: the minutes of technical problems possibly arising during the session and that disrupted its progress. 1. Article 4 of the Statutes is amended as follows : The registered office is at 64, Voie de Dégagement (...) The minutes of the Board must be notified by any Nord (VDN) in Dakar (Senegal)…» (The rest remains means in writing to each director as soon as possible unchanged) and no later than at the convening of the next Board. »

2. Article 6 of the Statutes is amended as follows : 5. Article 16 of the Statutes is amended as follows : « The share capital can be increased, either by the « The Board of Directors is mandatory with an audit issuance of ordinary shares or preferred shares, or by committee .The committee is composed exclusively of increasing the par value of existing shares by a decision non-employee directors of the company or exercising of the Extraordinary General Meeting of shareholders. no mandate CEO, general manager or director deputy However, after the general meeting authorized the capital general society. increase, it may delegate to the Board of Directors the authority to decide on the capital increase. In this case, The Board of Directors ensures the competence of the General Meeting sets the period, not exceeding directors appointed members of the Audit Committee. twenty-four (24) months, during which this delegation may be used and the overall limit of the increase. The board The Audit Committee’s core missions: then has the necessary powers to set the terms of issue, • To examine the accounts and ensure the relevance record the completion of capital increases that result and and consistency of accounting methods adopted proceed to amend the statutes (...) » (rest unchanged) to prepare the consolidated and individual financial statements of the company, 3. Article 11 of the Statutes is amended as follows : • Monitoring the preparation of financial information, « (…). The entity that will be represented on the Board • Monitor the effectiveness of internal control systems of Directors shall be free to replace a representative with and risk management, another natural person during the course of his director. • Issue an opinion on the statutory auditors proposed for Administrators cannot be shareholders at the time of their appointment by the general meeting. appointment, but shall, before entering upon his duties, hold a number of shares at least equal to that required It reports regularly to the Board of Directors of the for access to Annual General Meetings. (...) A retiring performance of its duties and informs it promptly of director is eligible for reappointment. Each director must any difficulties encountered. (...) «(The rest remains own at least one hundred shares. These shares are unchanged). allocated entirely to the guarantee of all management actions, even those that would be exclusively personal 6. Article 17 of the Statutes is amended as follows : to one of the administrators. They are personal, « Article 17: Agreements between the Company and inalienable; they cannot be pledged. If the day of his any of its Directors or Chief Executive or Deputy Chief appointment, a director does not own the number of Executive Officer or shareholder with a participation shares determined above, or if while in office he ceases greater than or equal to 10% of the share capital of the to be the owner, he is deemed to have resigned if he company.» has not rectified the situation within three months. To be eligible, an administrator must be under the age of 65. The former director or his beneficiaries freely dispose of

139 Sonatel 2014 annual report of activities

Any agreement, except those relating to current operations It is held an attendance sheet (...) If the Company concluded under normal conditions, intervening between decides, Shareholders may attend the Meeting remotely the company and one of its directors managing director via videoconference or other telecommunication means or Deputy managing director or shareholder holding permitting their identification and guaranteeing their more than or equal to 10 % of share capital or company effective participation and are deemed present for in which such persons are concerned, should be subject the calculating quorum and majority. To ensure the to the prior approval of the Board. identification and effective participation in the meetings of shareholders who are participating remotely, these It is the same for the conventions: means transmit at least the voice of participants and • which a director or managing director or Deputy meet the technical characteristics that allow continuous managing director or shareholder holding more than or and simultaneous retransmission of deliberations. equal to 10% of the share capital or company in which Shareholders participating in the Assembly vote such persons are concerned, is indirectly interested remotely orally or by any other means established by the or in which he deals with the company through an company. Are also considered present for the quorum intermediary; and majority, the shareholders who voted by mail under • intervening between the company and a company in the conditions of Article 133-1 of the Uniform Act. which the director or the managing director or Deputy or shareholder with a participation managing director 8. Article 23 of the Statutes is amended as follows : greater than or equal to 10% of the share capital or « One or more shareholders representing (…)and the company in which such persons are concerned is amount of the provision that the applicant(s) the Company the owner, partner with unlimited , manager, director, will have to pay. » (the rest remains unchanged) managing director or managing Director, or CEO of the company. draft resolution 12 : Powers of completion (…) Any approval by the Ordinary General Meeting of formalities. of regulated agreements without presentation of the special report of the auditor is void.» (the rest remains The General Shareholders’ Assembly grants full powers unchanged) to the bearers of originals, copies or extracts of these resolutions to carry out all the formalities prescribed by 7. Article 19 of the Statutes is amended as follows: law. «The General Shareholders’ Meetings of any kind are held at the registered office or any other place.. (…) The shareholders will vote on resolutions wich will be proposed to them by any means established by the Company (show of hands, vote with secret ballots, electronic voting ... etc.).

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