West Africa Rating Agency (WARA) affirms ONATEL's long-term rating at "BBB l", in investment grade, while its short-term rating is "w-4".

The outlook attached to these ratings is stable. Simultaneously, on its international scale, WARA assigns ONATEL the following ratings and outlook: iB/Stable/iw-6.

These ratings essentially reflect the company's expertise in its domestic market, its historical leadership position in Burkina Faso, its resilience in the face of external threats and its sound financial situation. The outlook attached to these ratings is stable.

ONATEL's ratings remain dependent on Burkina Faso's macroeconomic and political issues, as well as the maintenance of its high profitability and its competitive position in the domestic telecom market. WARA justifies ONATEL's rating and the stable outlook attached to it by the fact that ONATEL, despite a drop in its turnover in 2018, managed to generate a satisfactory result thanks in particular to a control of its operating expenses. .

WARA notes, however, that ONTAEL lost market share in 2018 in the flagship mobile telephony segment and in the mobile Internet segment, the corollary of which was the loss of the leading position it had held until then in the mobile phone segment. Its dominant position in its domestic market is therefore weakened and raises fears that this will have a negative impact on its financial performance, which overall has remained robust and growing over the past five years. Finally, the operational support of Maroc Telecom, majority shareholder of ONATEL (61% since April 2018), allows the company to put in place effective procedures that have been in place for almost a decade which could constitute an asset for the reconquest of its lost market share.

Despite the presence of Maroc Telecom in the capital, ONATEL's counterparty rating does not benefit from any external support factor. However, WARA's opinion on the intrinsic solvency of ONATEL takes into account the operational support of the Maroc Telecom Group; the scores underlying ONATEL's rating implicitly include the contribution of the Moroccan telecom leader to the stability of its Burkinabè subsidiary.

An improvement in ONATEL's rating would depend on: (i) an improvement in Burkina Faso's rating, which seems unlikely in the short term; (ii) the significant and lasting gain in market share in mobile telephony and fixed Internet; iii) the continuous modernization of its infrastructure to significantly improve the quality of the network; iv) the reduction of the fixed activity deficit, in particular by the combined action of developing this part of the turnover and by reducing personnel costs; and (v) improved timeframes for recovering trade receivables.

A deterioration in ONATEL's rating would be the consequence of: i) a significant and lasting deterioration in ONATEL's results through a drop in its market share and turnover if a 4th operator were to enter the Marlet ; ii) the materialization of social or political risk in Burkina Faso, which could permanently weaken the national economy and ONATEL's activity; or iii) the increase in regulatory and fiscal pressure, to a degree capable of cutting ONATEL's results excessively.

As a reference, WARA estimates that the probability of occurrence of favorable scenarios is equivalent to that of unfavorable scenarios in the medium term, which means in other words that ONATEL's current rating contains as many possibilities for upgrading as downside risks.

The rating methodology that WARA uses for the rating of ONATEL is the rating methodology for industrial and commercial companies, published in July 2012, then revised in January 2019; it is available on the WARA website: www.wara-ratings.com

The sources of information used by WARA for conducting ONATEL's rating are mainly proprietary information obtained during discussions with ONATEL management during the month of April 2018. This information, coupled with publicly available sources available, are considered by WARA as relevant and sufficient for the conduct of ONATEL's rating.

Finally, WARA specifies that ONATEL's rating is requested and participatory, that is to say that it follows a rating request from ONATEL, and that the company's management team took active part in exchanges with WARA's analytical teams.

ONATEL's rating of "BBB" is one notch above the rating accepted by the CREPMF to issue bonds without guarantee.