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Monday, March 29, 2021
Gulf News - Abu Dhabi listed Sudatel offers an option for risk-on investors
Vijay Valecha , Special to Gulf News 29, 2021
The DFM closed higher by 2.10 per cent and ADX gained 1.17 per cent on Monday (March 29).
Sudatel Telecommunications Group Ltd. has a Dh506 million market capitalization on Abu Dhabi Exchange. It is an appealing way for investors to get exposure to West Africa. The firm, majority-owned by a Sudanese government entity, is certainly not for the risk-averse due to the conflict-ridden history and political risks in this region.
Nevertheless, some developments offer a lot of hope for the discerning investor. Sudan, the biggest market of Sudatel, was removed from the State Sponsors of Terrorism list after nearly three decades by the US in December. This decision will help Sudanese businesses access Western markets and connect the country's banks with the global financial system.
Clear all debts
Sudan's transition government also removed large fuel subsidies and implemented a unified market-clearing exchange as a part of broader market reforms. Thanks to a $1.15 billion bridge loan from the US government, Sudan has cleared its debts with the World Bank after nearly three decades, making it eligible for an international debt-relief package.
The settlement of debt paves the way for the country to access almost $2 billion in IDA (International Development Association) grants for poverty reduction and sustainable economic recovery. IDA is the World Bank's programme for the poorest countries. It will also get external debt relief under the Heavily Indebted Poor Country (HIPC) Initiative.
The favourable macroeconomic trends portend good times for Sudatel, and it seems the worst is over. The company runs a telecom business in five African countries - Sudan, Mauritania, Senegal, Guinea Conakry and Ghana, offering mobile, fixed, internet and broadband services.
Chinguitel is its brand in Mauritiana, and Expresso Senegal is its Senegal Group company. Sudatel owns 13 per cent of the submarine cable to east Africa, extending from Port Sudan to Cape Town, and has a 50 per cent stake in SAS1 and SAS2, which are massive projects for transmission linkage between Port Sudan and Jeddah. Recently Sudatel Group secured a 4G license in Senegal which should boost its business significantly.
Despite the pandemic, company revenues rose to $277 million in 2020 from $256 million. Net operating profit increased by almost 40 per cent to $43.76 million, while net profit jumped 93 per cent to $15.40 million. Sudatel seems to be on the right track and is suited for the investor who understands risks.