BKGR: Maroc Telecom, between operational resilience and rebound prospects with 5G

In the first half of 2025, Maroc Telecom reported a consolidated revenue decline of 1.2% to 18.04 billion dirhams, primarily due to a 3.4% drop in domestic activities. This decline was partially offset by a 1.2% growth in its Moov Africa subsidiaries and an increase in fixed data services in Morocco. The group's EBITDA fell by 4.2% to 9.08 billion dirhams, with a margin decrease of 1.6 points to 50.3%. After accounting for 2 billion dirhams received from agreements ending the unbundling dispute with Wana Corporate, and the absence of a 5.9 billion dirham exceptional provision related to the same dispute, the published EBITA returned to profitability at 7.83 billion dirhams, compared to a loss of 72 million dirhams in the first half of 2024. The published net profit attributable to the group (RNPG) reached 4.12 billion dirhams, up from a loss of 1.15 billion dirhams a year earlier, resulting in a net margin of 22.8%. Adjusted figures show a slight increase of 0.5% to 2.96 billion dirhams. Maroc Telecom's net debt decreased by 21% to 17.6 billion dirhams, aided by the repayment of bank loans. Notably, a private bond issuance of 3 billion dirhams was completed to refinance part of the debt and fund strategic projects, including the rollout of 5G and fiber optic development. The group's capital expenditures (CAPEX) slightly decreased by 1.5% to 3.2 billion dirhams, lowering the CAPEX/revenue ratio (excluding frequencies and licenses) from 17.6% to 15.7%. BKGR views the launch of 5G and the acceleration of fiber optic deployment as key catalysts for a new growth cycle in the sector. In June 2025, following approval from the ANRT, Maroc Telecom entered a significant strategic partnership with INWI by establishing two joint ventures: UNI FIBER (capital: 750 million dirhams) and UNI TOWER (capital: 350 million dirhams). These ventures aim to significantly accelerate the deployment of fiber optic and 5G services in Morocco to meet the requirements for the 2030 World Cup. UNI FIBER will focus on passive FTTH infrastructure, aiming for 1 million connectable outlets within two years and 3 million within five years. UNI TOWER will target the construction and modernization of telecom towers, with plans for 2,000 towers in three years and 6,000 in ten years. The total announced investment for the first phase is 4.4 billion dirhams, with no official details on its distribution among the entities and partners. This model, combining investment rationalization and operational synergies, could generate medium-term value, provided execution is well-managed and competitive conditions remain balanced. Otherwise, it may dilute IAM's historical competitive advantages. In July 2025, the ANRT launched a call for competition for 5G licenses, paving the way for commercial deployment by November 2025 in eight cities and their airports. Coverage is expected to reach 25% of the population by the end of 2026 and 70% by 2030. The total cost of the licenses amounts to 2.1 billion dirhams, distributed as follows: Maroc Telecom: 900 million dirhams for a bandwidth of 120 MHz; INWI and Orange: 600 million dirhams each for 70 MHz. The initial technical advantage granted to IAM due to its wider bandwidth is expected to diminish as frequencies are gradually released, leading to an equalization of 120 MHz per operator. While 5G promises to invigorate high-value segments (B2B, smart cities, cloud services) and enhance service quality, its widespread deployment will require substantial investments: approximately 80 billion dirhams for the three operators over the next five years, with at least 30 billion dirhams for IAM. This level of commitment is likely to exert significant financial pressure on operators, with uncertain returns on investment. Looking ahead, BKGR forecasts a consolidated revenue of 36.5 billion dirhams for 2025, a decrease of 0.4%, as mobile activities in Morocco continue to decline under competitive pressures and a still restrictive regulatory framework. Analysts believe that the growth of the MOOV AFRICA subsidiaries should partially offset this decline. The group's EBITDA is expected to decrease by 3.2% to 18.58 billion dirhams, in line with group guidance, resulting in a slight margin decline to 50.9% from 52.3% a year earlier. The RNPG is projected to surge 3.5 times to 6.304 billion dirhams, considering the retrocessions received in the first half of 2025 from agreements with WANA CORPORATE and the non-recurrence of the 5.9 billion dirham provision for additional risks related to the same dispute, which was accounted for in 2024. In 2026, revenues are expected to return to a more normative level of 5.174 billion dirhams. Regarding dividends, based on a payout ratio of 70%, the operator is expected to distribute a dividend per share (DPS) of 5.2 dirhams in 2025. Analysts from BKGR highlight that this return to a normative DPS level of 5.2 dirhams in 2025 signifies IAM's return as a yield stock, resulting in a dividend yield of 4.2%. The published price-to-earnings ratio (PER) rose to 40 times in 2024, compared to 16.6 times in 2023, impacted by the significant contraction in group profits and a share price decline to 82.01 dirhams by December 31, 2024. In contrast, the adjusted PER, reflecting IAM's recurring performance, decreased to 11.8 times in 2024 (from 14.2 times in 2023). For 2025 and 2026, the valuation remains attractive, with an anticipated PER of 17.2 times, despite the significant increase in share price. Given these factors, BKGR recommends accumulating the stock with a target price of 139 dirhams, indicating an upside of 13.7% compared to the price of 123 dirhams on August 8, 2025.