Airtel Africa announced results for nine month period ended Dec 2023

02Feb 2024
Correspondent
DAR ES SALAAM
The Guardian
Airtel Africa announced results for nine month period ended Dec 2023

Total customer base grew by 9.1% to 151.2 million. The penetration of mobile data and mobile money services continued to rise, driving a 22.4% increase in data customers to 62.7 million and a 19.5% increase in mobile money customers to 37.5 million.

Operating (KPIs)

Constant currency ARPU growth of 10.0% was primarily driven by increased usage across all segments.Mobile money transaction value increased by 41.3% in constant currency, with Q3’24 annualised transaction value of $116bn in reported currency.

Financial performance

Revenue in constant currency grew by 20.2%, with Q3’24 growth accelerating to 21.0%. Reported currency revenues declined by 1.4% to $3,861m. In Q3’24, reported currency revenues declined by 8.3% as currency devaluation (primarily the Nigerian naira devaluation) continued to impact reported revenue trends.

All segments continued to deliver double-digit constant currency growth. Across the Group mobile services revenue grew by 18.6% in constant currency, driven by voice revenue growth of 11.2% and data revenue growth of 28.5%. Mobile money revenue grew by 31.8% in constant currency.

Constant currency EBITDA increased 21.9%, with Q3’24 EBITDA growing 23.3%. The EBITDA margin of 49.4% increased 72bps over the prior period despite foreign exchange headwinds and inflationary pressure. Reported currency EBITDA declined by 0.4% to $1,908m, with Q3’24 EBITDA 8.3% lower as currency headwinds continued to impact reported trends.

Profit after tax was $2m in the period, primarily impacted by significant foreign exchange headwinds, particularly the $330m exceptional loss after tax following the devaluation of the Nigerian naira in June 2023 and the Malawian kwacha in November 2023 after the structural changes in their respective FX markets. The Nigerian naira devalued further in Q3’24, resulting in a $140m derivative and foreign exchange losses net of tax, which is not treated as an exceptional item.

EPS before exceptional items was 7.1 cents, a decline of 34.6%. Basic EPS at negative (1.6 cents) compares to 12..5 cents in the prior period, impacted by the significant derivative and foreign exchange losses as explained above.

Capital allocation

Capex of $494m was 8.2% higher compared to the prior period. Capex guidance for the full year remains between $800m and $825m as we continue to invest for future growth.

Leverage of 1.3x in December 2023, improved from 1.4x in the prior period. The remaining debt at HoldCo is $550m, falling due in May 2024. Cash at the HoldCo was $560m at the end of the period and the Group is expecting to fully repay the HoldCo debt when due.

In light of the Holdco cash accretion and where leverage is today, and in view of the consistent strong operating cash generation of the Company, the Board intends to launch a share buy-back programme of up to $100m, starting early March 2024 over a 12-month period.

Sustainability strategy

Our landmark five-year $57m partnership with UNICEF has been launched across 10 of our markets providing access to educational resources, free of charge, on our way to transforming the lives of over one million children through our educational programmes by 2027.

In November 2023 we launched our Scope 3 strategy which focuses on an ongoing engagement programme with our top tier partners and suppliers, ensures a regular flow of information and enables us to monitor their impact on the environment.

East Africa Highlights (Kenya, Uganda, Rwanda, Tanzania,Malawi and Zambia)

East Africa revenue grew by 8.7% in reported currency to $1,227m, and grew by 21.2% in constant currency. The constant currency growth was made up of voice revenue growth of 14.7%, data revenue growth of 30.9% and other revenue growth of 23.9%. 

The differential in growth rates is primarily contributed by the average devaluation in Zambian Kwacha (22.7%), Malawi kwacha (21.5%) and Kenya shilling (21.1%).

Voice revenue grew by 14.7% in constant currency, driven by both customer base growth of 10.7% and voice ARPU growth of 3.5%. 

The customer base growth was largely driven by expansion of both increased network coverage and the increasing scale of the distribution network. 

Voice ARPU growth of 3.5% was supported by increase in voice usage per customer by 6.4% to 410 minutes per customer per month partially offset by the interconnect rate reduction in Tanzania and Rwanda.

Data revenue grew by 30.9% in constant currency, largely driven by data customer base growth of 25.7% and data ARPU growth of 3.3%. 

Our continued investment in the network and expansion of 4G network infrastructure helped us grow both the data customer base and usage levels. 95.1% of our East Africa network sites are now on 4G, compared with 89.8% in the prior period. 

Furthermore, we have 679 5G sites in Kenya, Tanzania, Uganda and Zambia. In Q3’24, 4G customers accounted for 54.3% of our total data customer base and contributed to 77.2% of total data usage. 

Q3’24 total data usage per customer increased to 4.9 GB per customer per month, up by 16.0%, and 4G data usage per customer reached 6.8 GB per customer per month.

EBITDA increased to $603m, up by 18.8% in constant currency. EBITDA margin at 49.2%, declined by 98 basis points in constant currency. 

Decline in Q3’24 EBITDA margin was largely driven by rising energy costs over the period in key markets which has negatively impacted margins by approximately 200bps.

Operating free cash flow was $426m, up by 21.9% in constant currency, due largely to EBITDA growth, partially offset by increased capex which increased due to phasing of deployment.