Q1 23 Results
28/07/2022 07:00
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RNS Number : 0036U Airtel Africa PLC 28 July 2022
Airtel Africa plc
Results for the quarter ended 30 June 2022
28 July 2022
Double-digit revenue growth, margin and earnings progression and further
strengthening of our balance sheet
Highlights
· Revenue grew by 13.0% in reported currency to $1,257m. In
constant currency terms revenue grew by 15.3%.
· Total revenues, for mobile services and mobile money services
combined, grew in Nigeria by 18.3%, in East Africa by 14.1% and in Francophone
Africa by 11.7%.
· Revenue growth in constant currency was
posted across all four reporting segments. Mobile Services revenue in
Nigeria grew by 18.3%, in East Africa by 11.1% and in Francophone
Africa by 10.6% (and across the Group by 14.2%, with voice revenue up
by 11.3% and data revenue up by 19.8%). Mobile Money revenue grew by
26.5%, driven by growth of 26.9% in East Africa and 25.4% in Francophone
Africa.
· EBITDA grew by 14.9% to $614m in reported currency.
· EBITDA margin was 48.8%, an increase of 78 basis points in
reported currency and 52 basis points in constant currency.
· Operating profit grew by 20.6% to $425m in reported currency.
· Profit after tax grew by 25.3% to $178m.
· Basic EPS increased to 4.4 cents (up by 31.0%). EPS before
exceptional items was 3.8 cents, up from 3.2 cents in the prior period.
· Operating free cash flow grew by 10.3% to $473m, while net cash
generated from operating activities reduced by 13.2% to $388m, mainly due to
increased cash tax payments from both higher taxes on declared dividends and
increased taxable profits.
· Leverage ratio has improved to 1.3x from 1.8x in the prior
period. Post period end, in July 2022, the Group prepaid $450m of outstanding
external debt at HoldCo. The remaining debt at HoldCo is now $550m, falling
due in May 2024.
· Our total customer base increased to 131.6 million, up 8.9%, with
increased penetration across mobile data (customer base up 9.7%) and mobile
money services (customer base up 19.7%).
Alternative performance measures (1) GAAP measures
(Quarter ended)
(Quarter ended)
Description Jun-22 Jun-21 Reported Constant Description Jun-22 Jun-21 Reported
currency
currency
currency
$m $m change change $m $m change
Revenue 1,257 1,112 13.0% 15.3% Revenue 1,257 1,112 13.0%
EBITDA 614 534 14.9% 16.5% Operating profit 425 352 20.6%
EBITDA margin 48.8% 48.0% 78 bps 52 bps Profit after tax 178 142 25.3%
EPS before exceptional items ($ cents) 3.8 3.2 18.3% Basic EPS ($ cents) 4.4 3.3 31.0%
Operating free cash flow 473 428 10.3% Net cash generated from operating activities 388 447 (13.2%)
(()(1)) Alternative performance measures (APM) are described on page 15.
Segun Ogunsanya, chief executive officer, on the trading update:
'I am pleased to report that the Group has continued to post double-digit
revenue growth, margin improvement and strong earnings growth. I am also
particularly pleased with our ongoing strengthening of the balance sheet which
continued after the period ended, with early repayment of $450m of debt at
Group level.
As we flagged in our full year announcement, this quarter we have faced
headwinds from outbound voice call barring for customers who had not yet
registered their National Identification Numbers in Nigeria and the loss of
site sharing revenue in those OpCos where we recently sold towers. Inflation
is also having an impact on our cost base, particularly on energy costs, but
our continued efficiency drives have ensured that we have still been able to
increase our margins, albeit at a slightly slower rate.
After receiving the Payment Service Bank licence in Nigeria just a few months
ago, it is a testament to our prior preparation that we have already managed
to launch our mobile money operations in a few select locations without any
operational issues. We are excited by the commercial developments and
opportunities here. We also continued to invest for growth and have made a
couple of major additional spectrum acquisitions recently in the DRC and Kenya
in anticipation of continued strong data demand growth in these markets.
We continue to target growth ahead of the market this year and, despite
inflationary pressures, our continued focus on cost efficiencies should also
support margin resilience. Longer term, the opportunities for sustainable
profitable growth stemming from our underpenetrated markets for each of mobile
voice, data and mobile money services remain hugely attractive, and we are
confident of continuing to deliver on our growth strategy.'
Airtel Africa plc ('Airtel Africa' or 'Group') results for the quarter ended
30 June 2022 are unaudited and in the opinion of management, include all
adjustments necessary for the fair presentation of the results of the same
period. The financial information has been prepared based on International
Accounting Standard 34 (IAS 34) issued by the International Accounting
Standards Board (IASB) approved for use in the UK by the UK Accounting
Standards Endorsement Board (UKEB) and apply the same accounting policies,
presentation and methods of calculation as those followed in the preparation
of the Group's annual consolidated financial statements for the year ended 31
March 2022 except to the extent required/ prescribed by IAS 34. This report
should be read in conjunction with the audited consolidated financial
statements and related notes for the year ended 31 March 2022. The comparative
information has been drawn based on Airtel Africa plc's audited consolidated
financial statements for the year ended 31 March 2022. Comparative quarterly
information is drawn from the unaudited IAS 34 financials of the respective
quarters. All comparatives and references to the 'prior period' or 'previous
period' in this report are for the reported metrics for the quarter ended 30
June 2021.
About Airtel Africa
Airtel Africa is a leading provider of telecommunications and mobile money
services, with a presence in 14 countries in Africa, primarily in East Africa
and Central and West Africa.
Airtel Africa offers an integrated suite of telecoms solutions to its
subscribers, including mobile voice and data services as well as mobile money
services, both nationally and internationally. We aim to continue providing a
simple and intuitive customer experience through streamlined customer
journeys.
Enquiries
Airtel Africa - Investor Relations
Pier Falcione +44 7446 858 280
Morten Singleton +44 7464 830 011
Investor.relations@africa.airtel.com +44 207 493 9315
(mailto:Investor.relations@africa.airtel.com)
Hudson Sandler
Nick Lyon
Emily Dillon
airtelafrica@hudsonsandler.com (mailto:airtelafrica@hudsonsandler.com) +44 207 796 4133
Conference call
Management will host an analyst and investor conference call at 12:00pm UK
time (BST), on Thursday 28 July 2022, including a Question-and-Answer session.
To receive an invitation with the dial in numbers to participate in the event,
please register beforehand using the following link:
Conference call registration link
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=6471091&linkSecurityString=dac4ab069)
Key consolidated financial information
Description Unit of measure Quarter ended
Jun-22 Jun-21 Reported currency Constant currency
change
change
Profit and loss summary
Revenue (1) $m 1,257 1,112 13.0% 15.3%
Voice revenue $m 610 562 8.6% 11.3%
Data revenue $m 418 356 17.3% 19.8%
Mobile money revenue (2) $m 159 124 28.6% 26.5%
Other revenue $m 106 98 8.0% 10.4%
Expenses $m (645) (581) 11.0% 13.7%
EBITDA (3) $m 614 534 14.9% 16.5%
EBITDA margin % 48.8% 48.0% 78 bps 52 bps
Depreciation and amortisation $m (189) (182) 3.9% 6.8%
Operating exceptional items $m - - 0.0% 0.0%
Operating profit $m 425 352 20.6% 21.5%
Net finance costs $m (151) (97) 55.2%
Non-operating exceptional items(4) $m - 4 (100.0%)
Profit before tax (5) $m 276 259 6.5%
Tax $m (119) (117) 1.5%
Tax - exceptional items (6) $m 21 - 0.0%
Total tax charge $m (98) (117) (16.3%)
Profit after tax $m 178 142 25.3%
Non-controlling interest $m (15) (17) (16.1%)
Profit attributable to owners of the company - before exceptional items $m 143 121 18.2%
Profit attributable to owners of the company $m 163 125 30.9%
EPS - before exceptional items cents 3.8 3.2 18.3%
Basic EPS cents 4.4 3.3 31.0%
Weighted average no of shares million 3,754 3,755 (0.0%)
Capex $m 141 106 33.5%
Operating free cash flow $m 473 428 10.3%
Net cash generated from operating activities $m 388 447 (13.2%)
Net debt $m 3,056 3,536
Leverage (net debt to EBITDA) times 1.3x 1.8x
Return on capital employed % 24.6% 18.3% 634 bps
Operating KPIs
ARPU $ 3.2 3.1 3.4% 5.4%
Total customer base million 131.6 120.8 8.9%
Data customer base million 46.5 42.4 9.7%
Mobile money customer base million 27.6 23.1 19.7%
((1)) Revenue includes inter-segment eliminations of $36m for the quarter
ended 30 June 2022 and $28m for the prior period.
((2)) Mobile money revenue post inter-segment eliminations with mobile
services was $123m for the quarter ended 30 June 2022, and $96m for the prior
period.
((3)) EBITDA includes other income of $2m for the quarter ended 30 June 2022,
and $3m for the prior period.
((4)) Non-operating exceptional items in the previous period include a profit
of $4m from the sale of towers in Rwanda.
((5)) Profit before tax in the quarter ended 30 June 2022 include $2m share of
profit from associates.
((6)) Tax exceptional items in the quarter ended 30 June 2022 reflect the
initial recognition of a deferred tax credit of $21m in Kenya.
( )
( )
Financial review for the quarter ended 30 June 2022
Revenue in reported currency grew by 13.0%. This overall growth is slightly slower than recent trends due to some specific challenges this quarter largely as a result of the effect of voice customers barred in Nigeria and the loss of tower sharing revenues following the recent sales of towers in Tanzania, Madagascar and Malawi. Revenue in constant currency grew by 15.3% for the Group. Excluding these specific challenges growth for the quarter would have been around 19% in constant currency terms.
Owing to significant growth in mobile money business and corresponding changes in the organization structure, combined with changes in the information provided to the Group CEO (Chief Operating Decision Maker) for the allocation of resources and the assessment of performance; with effect from April 2022, the Group has identified mobile money as a new operating and reportable segment. Thus, the Group now reports segmental performance for mobile services in Nigeria, East Africa and Francophone Africa, and for mobile money. The consolidated regional performance, comprising both mobile services and mobile money, for each of Nigeria, East Africa and Francophone Africa is provided on page 13 to help with reconciliation to historical segmental reporting.
Double digit revenue growth was posted across all reporting segments: with mobile services revenue in Nigeria up 18.3%, East Africa up 11.1% and Francophone Africa up 10.6% (with overall mobile services growing by 14.2%, with voice revenue growth of 11.3% and data revenue growth of 19.8%; and with growth of other revenues of 10.4%, marginally impacted by the c.$7m tower sharing revenues lost through tower sales). Mobile money revenue grew by 26.5% in constant currency, driven by growth of 26.9% in East Africa and 25.4% in Francophone Africa.
Net finance costs increased by $54m, as a result of $51m higher foreign exchange and derivative losses and $6m higher interest on lease obligations, partially offset by lower interest costs due to debt reduction (including the repayment of $505m bonds in March 2022).
Total tax charges were $19m lower mainly due to the initial recognition of a deferred tax credit of $21m in Kenya. Basic EPS improved to 4.4 cents, while EPS before exceptional items improved to 3.8 cents. The increase in basic EPS was mainly due to higher operating profits and the initial recognition of a deferred tax credit of $21m in Kenya, which more than offset foreign exchange and derivative losses.
Leverage improved to 1.3x from 1.8x in the prior period, largely driven by increased cash generation, the expansion of EBITDA and proceeds from Airtel Money investments. Our balance sheet has also been further de-risked by continued localisation of our debt into the OpCos and material debt reduction in HoldCo. Following the post period end prepayment of $450m bonds in July 2022, the remaining debt at HoldCo is now $550m.
GAAP measures
Revenue
Reported revenue increased to $1,257m, growing by 13.0% in reported currency,
and by 15.3% in constant currency driven by both customer base growth of 8.9%
and ARPU growth of 5.4%. The constant currency growth was partially offset by
average currency devaluations between the periods, mainly in the Central
African franc (13.2%), the Nigerian naira (1.8%), the Kenyan shilling (8.0%)
and the Malawian kwacha (11.2%), in turn partially offset by appreciation in
the Zambian kwacha (23.4%).
Mobile services revenue grew by 14.2% in constant currency, supported by
growth of 18.3% in Nigeria, 11.1% in East Africa and 10.6% in Francophone
Africa. Mobile money revenue grew by 26.5% in constant currency, driven by
revenue growth in East Africa of 26.9% and Francophone Africa of 25.4%.
Revenue growth for the quarter was impacted by the effect of barring outgoing
calls in Nigeria for those customers who had not submitted their National
Identity Numbers ('NINs'). A total of 13.6 million customers were originally
barred, out of which 5.3 million customers (39%) have subsequently submitted
their NINs and 2.3 million customers (17%) have been fully verified and
unbarred. We estimate that this resulted in the loss of approximately $34m of
revenues in the quarter, providing a drag on revenue growth of almost 3% at
Group level (impact of 7.5% in Nigeria). The growth in other revenues was also
impacted by c.$7m of tower sharing revenues lost through associated tower
sales.
Operating profit
Operating profit increased by 20.6% to $425m as a result of revenue growth and
modest improvements in operating efficiency in East Africa and Francophone
Africa.
Net finance costs
Net finance costs increased by $54m, as a result of $51m higher foreign
exchange and derivative losses and $6m higher interest on lease obligations,
partially offset by lower interest costs due to a reduction in debt (including
$505m bonds repurchased in March 2022).
The Group's effective interest rate increased to 5.6% compared to 5.0% in the
prior period, largely driven by the repayment of $935m of HoldCo debt, which
carried a lower-than-average coupon, and due to higher local currency debt at
the OpCo level.
Taxation
Total tax charges were $98m, a reduction of $19m, due to the initial
recognition of a deferred tax credit of $21m in Kenya. Excluding exceptional
items, tax was higher by $2m due to higher operating profit and withholding
tax on dividends by subsidiaries.
Profit after tax
Profit after tax increased by 25.3% to $178m, mainly led by higher operating
profits which more than offset the foreign exchange and derivative losses.
Additionally, the current quarter benefited from the initial recognition of a
deferred tax credit of $21m in Kenya.
Basic EPS
Basic EPS improved to 4.4 cents, an improvement of 1.1 cents (+31.0%) from 3.3
cents in the prior period. This increase was mainly due to higher operating
profits and the recognition of a deferred tax credit of $21m in Kenya this
quarter, which more than offset foreign exchange and derivative losses.
Net cash generated from operating activities
Net cash generated from operating activities was $388m, 13.2% lower than the
$447m of the prior period. This was largely due to higher cash tax payments as
a result of higher dividend tax on declared dividend and increased taxable
profits, partially offset by higher profit before tax.
Alternative performance measures 1 (#_ftn1)
EBITDA
EBITDA increased to $614m, up by 14.9% in reported currency, and by 16.5% in constant currency. Growth in EBITDA was led by revenue growth and supported by continued improvement in operating efficiencies which more than offset inflationary cost pressures. The EBITDA margin improved by 78 basis points in reported currency to 48.8%.
Foreign exchange had an adverse impact of $23m on revenue, and $8m on EBITDA,
as a result of currency devaluations, mainly in the Central African franc
(13.2%), the Nigerian naira (1.8%), the Kenyan shilling (8.0%) and the
Malawian kwacha (11.2%), in turn partially offset by appreciation in the
Zambian kwacha (23.4%).
With respect to currency devaluation sensitivity, on a 12-month basis, a 1%
currency devaluation across all currencies in our OpCos would have a negative
impact of $45m on revenues, $27m on EBITDA and $19m on finance costs. Our
largest exposure is to the Nigerian naira, for which a 1% devaluation would
have a negative impact of $19m on revenues, $11m on EBITDA and $7m on finance
costs.
Tax
The effective tax rate was 39.9%, compared to 39.1% in the prior period,
largely due to profit mix changes amongst the OpCos and the impact of
withholding taxes on dividends. The effective tax rate is higher than the
weighted average statutory corporate tax rate of approximately 33%, largely
due to the profit mix between various OpCos and withholding taxes on dividends
by subsidiaries.
Exceptional items
Non-operating exceptional items in the previous period relate to a gain of $4m
from the profit on the sale of towers in Rwanda. Tax exceptional items this
quarter benefited from the initial recognition of a deferred tax credit of
$21m in Kenya.
EPS before exceptional items
EPS before exceptional items increased to 3.8 cents, up by 18.3% from 3.2
cents in the prior period. This increase was mainly due to higher operating
profits which more than offset foreign exchange and derivative losses.
Operating free cash flow
Operating free cash flow was $473m, up by 10.3%, as higher EBITDA more than
offset increased capital expenditure. Capital expenditure during the period
was $35m higher relating mainly to planned network expansion.
Leverage
Leverage (net debt to EBITDA) improved to 1.3x at 30 June 2022, from 1.8x at
30 June 2021, largely driven by increased cash generation, EBITDA expansion
and the receipt of $550m from mobile money minority investments. Our balance
sheet has continued to be de-risked through a reduction of HoldCo debt to
$1bn, from $1.9bn in the prior period; and the increased localisation of our
debt into the OpCos, such that our HoldCo debt is significantly lower than
gross OpCo debt of $3bn (including lease obligations). In July 2022, our
HoldCo debt was reduced even further to $550m, following the early repayment
of $450m of senior notes due in May 2024.
Other significant updates
NIN - SIM linkage implementation in Nigeria
Following a directive issued by the Nigerian Communications Commission (NCC)
on 7 December 2020 to all Nigerian telecom operators, Airtel Nigeria has been
working with the government to ensure that all our subscribers provide their
valid National Identification Numbers (NINs) to update SIM registration
records. To complete the registration process, we must link the NIN
information received with the SIM of the respective subscribers and share the
same with the National Identity Management Commission (NIMC).
The original regulatory directive set an initial deadline for customers to
register (link) their NIN with their SIM of 30 December 2020. This was
subsequently moved several times, with the last deadline being 31 March 2022.
Airtel Nigeria was subsequently notified that with effect from 4 April 2022,
all SIMs that have not been linked to a NIN were to be placed on 'receive
only' status, meaning all their outgoing calls have been barred with immediate
effect. Subscribers of such lines can still link their SIMs to their NINs in
order that these restrictions can be lifted. Customers have therefore been
given a final opportunity to fully comply with the latest registration
requirements. A total of 13.6 million customers were initially barred out of
which 5.3 million (39%) have subsequently submitted their NIN and 2.3 million
(17%) have subsequently been verified and unbarred.
As at the end of June 2022, we had collated NIN information for 40.7 million
active customers. Revenues for those subscribers who have not yet linked their
NIN with their SIM amount to around 7% of total revenues from Nigeria, and
around 3% of total revenues for the Group. As we reported might happen, SIM
registration has accelerated, and some SIM consolidation is occurring in
response to implementation, potentially reducing the future financial impact.
We continue to work closely with the regulator and impacted customers to help
them to comply with the registration requirements, making every effort to
minimise disruption and ensure affected customers can continue to benefit from
full-service connectivity as soon as possible; in line with our aim to drive
increased connectivity and digital inclusion across Nigeria.
Nigeria mobile money operationalisation
On 29 April 2022, we announced that the Central Bank of Nigeria ('CBN') had
confirmed that Smartcash Payment Service Bank limited ('Smartcash'), had
received final approval for a full Payment Service Bank ('PSB') licence,
affording the Group the opportunity to deliver a full suite of mobile money
services into Nigeria. This news followed our announcement of 26 April that
the CBN had also awarded our subsidiary, Airtel Mobile Commerce Nigeria Ltd,
with a full super-agent licence, allowing the business to create an agency
network that can service the customers of licenced Nigerian banks, payment
service banks and licenced mobile money operators in Nigeria.
On 19 May 2022, we announced that Smartcash had commenced operations in
Nigeria. Services were initially made available at selected retail
touchpoints, and operations are now being expanded gradually across the
country.
This marks the beginning of our journey to revolutionise the financial
services landscape in Nigeria, to help further digitise the Nigerian economy,
and to help bank the unbanked by reaching the millions of Nigerians who do not
currently have access to financial services by delivering current and savings
accounts, payment and remittance services, debit and prepayment cards and more
sophisticated services.
DRC spectrum acquisition
On 6 June 2022, we announced the purchase of 58 MHz of additional spectrum in
the DRC, spread across 900, 1800, 2100 and 2600 MHz bands, for a gross
consideration of $42m. The licence for paired spectrum in the 2100 band comes
up for renewal in September 2032. All the other licences continue until July
2036. This additional spectrum will support our 4G expansion in the DRC for
both mobile data and fixed wireless home broadband capability, providing
significant capacity to accommodate our continued strong data growth in the
country. DRC is the largest country by area in our portfolio and our second
largest market by population. This investment reflects our continued
confidence in the tremendous opportunity inherent in the DRC, supporting the
local communities and economies through furthering digital inclusion and
connectivity.
Kenya spectrum acquisition
Post period end, on 15 July 2022, we announced that Airtel Kenya Networks
Limited ('Airtel Kenya'), had purchased 60 MHz of additional spectrum in the
2600 MHz band from the Communications Authority of Kenya, for a gross
consideration of $40m. The licence is valid from July 2022 for a period of 15
years. This additional spectrum will support our 4G expansion in the market
for both mobile data and fixed wireless home broadband capability and will
allow for future 5G rollout, providing significant capacity to accommodate our
continued strong data growth in the country. Airtel Kenya is one of our
largest markets by revenue. This investment reflects our continued confidence
in the tremendous opportunity inherent in the Kenya market, supporting the
local communities and economies through furthering digital inclusion and
connectivity.
$450m early bond redemption
Post the period end, on 8 July 2022 the Group announced the settlement of a
cash tender offer, redeeming $450m of the $1 billion of 5.35% guaranteed
senior notes due 2024 ('Notes'). An aggregate principal amount of $450m of
Notes was accepted for purchase for a total of $462.6m. All Notes accepted for
purchase were cancelled ahead of their maturity in May 2024. This early
redemption was made out of the Group's cash reserves and is in line with our
strategy of reduction of external foreign currency debt at Group level.
Information on additional KPIs
An investor relations pack with information on the additional KPIs and balance
sheet is available to download on our website at airtel.africa/investors
(https://airtel.africa/investors) .
Financial review for the quarter ended 30 June 2022
Nigeria - Mobile services
Description Unit of Quarter ended
measure
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Summarised statement of operations
Revenue $m 517 445 16.2% 18.3%
Voice revenue $m 259 238 8.8% 10.8%
Data revenue $m 210 171 22.6% 24.8%
Other revenue (1) $m 48 36 34.5% 37.0%
EBITDA $m 264 246 7.3% 9.2%
EBITDA margin % 51.0% 55.3% (424) bps (424) bps
Depreciation and amortisation $m (75) (63) 19.0% 21.2%
Operating exceptional items $m - - 0.0% 0.0%
Operating profit $m 189 183 3.3% 5.1%
Capex $m 56 49 14.6% 14.6%
Operating free cash flow $m 208 197 5.4% 7.9%
Operating KPIs
ARPU $ 3.8 3.6 4.9% 6.8%
Total customer base Mn 46.0 40.9 12.7%
Data customer base Mn 20.5 17.8 15.6%
((1)) Other revenue includes inter-segment revenue of $0.5m in the quarter
ended 30 June 2022. Excluding inter-segment revenue, other revenue was $47.5m
in the quarter ended 30 June 2022.
Revenue grew by 16.2% in reported currency to $517m, and by 18.3% in constant
currency. The differential in growth rates was due to devaluation of the
Nigerian naira by 1.8%. The constant currency revenue growth was driven by
both customer base growth of 12.7% and ARPU growth of 6.8%, largely driven by
higher data and other revenue.
Voice revenue grew by 10.8% in constant currency, driven by customer base
growth of 12.7% while voice ARPU growth was flat. Voice revenue growth was
impacted by the barring of outgoing calls for customers who had not submitted
their NINs. A total of 13.6 million customers were initially barred out of
which 5.3 million (39%) have subsequently submitted their NIN and 2.3 million
(17%) have subsequently been verified and unbarred. This has resulted in a
loss of approximately. $34m revenue in the quarter and a corresponding impact
of 7.5 percentage points on the growth rate.
Data revenue grew by 24.8% in constant currency, driven by data customer base
growth of 15.6% and data ARPU growth of 7.1%. Data usage per customer
increased by 19.1% to 4.6 GB per month (from 3.8 GB in the prior period). As
we continued our 4G network rollout, nearly all our sites in Nigeria (99%) now
deliver 4G. For the Q1'23 period, 44.3% of our data customer base were 4G
users, contributing to 77.7% of total data usage. 4G data usage per customer
reached 7.4 GB per month, an increase of 45.6% (from 5.1 GB per customer per
month in Q1'22). Compared to recent quarters, data revenue growth was lower as
a result of a slowdown in the growth of data usage per customer, as well as
higher churn due to NIN-related call barring.
Other revenues grew by 37.0% in constant currency, with the main contribution
coming from the growth in value added services revenue, led by airtime credit
services.
EBITDA was $264m, growing by 9.2% in constant currency. The EBITDA margin
declined to 51.0% from 55.3% due largely to the increase in operating costs.
Operating free cash flow was $208m, up by 7.9%, due to the expansion of
EBITDA, partially offset by higher capex.
East Africa - Mobile services (1)
Description Unit of Quarter ended
measure
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Summarised statement of operations
Revenue $m 359 323 11.3% 11.1%
Voice revenue $m 203 178 14.2% 14.1%
Data revenue $m 123 105 16.6% 15.9%
Other revenue (2) $m 33 39 (15.4%) (14.4%)
EBITDA $m 159 140 13.4% 12.5%
EBITDA margin % 44.2% 43.4% 81 bps 56 bps
Depreciation and amortisation $m (60) (56) 8.3% 8.4%
Operating exceptional items $m - - 0.0% 0.0%
Operating profit $m 99 84 17.0% 15.3%
Capex $m 44 31 41.4% 41.4%
Operating free cash flow $m 115 109 5.4% 4.5%
Operating KPIs
ARPU $ 2.1 2.0 4.2% 4.0%
Total customer base Mn 58.5 55.4 5.6%
Data customer base Mn 18.5 17.3 6.8%
((1)) The East Africa business region includes Kenya, Malawi, Rwanda,
Tanzania, Uganda and Zambia.
((2)) Other revenue includes inter-segment revenue of $2.4m in the quarter
ended 30 June 2022. Excluding inter-segment revenue, other revenue was $31m in
the quarter ended 30 June 2022.
East Africa revenue grew by 11.3% in reported currency to $359m, and by 11.1%
in constant currency. The constant currency growth was made up of voice
revenue growth of 14.1% and data revenue growth of 15.9% partially offset by
decline in other revenues. The reduction in other revenues was due to the loss
of c.$6m of tower sharing revenues from tower sales in Malawi and Tanzania.
The revenue growth rates in reported currency and constant currency were quite
similar due to currency appreciation in Zambia almost offsetting currency
devaluations in Malawi, Kenya and Uganda.
Voice revenue grew by 14.1% in constant currency, driven by both customer base
growth of 5.6% and voice ARPU growth of 6.9%. The customer base growth was
largely driven by expansion of both network coverage and the distribution
network. Voice usage per customer increased by 10.8% to 371 minutes per
customer per month, driving voice ARPU up by 6.9%.
Data revenue grew by 15.9% in constant currency, largely driven by data
customer base growth of 6.8% and data ARPU growth of 4.4%. Our continued
investment in network and expansion of 4G network infrastructure helped us to
grow both the data customer base and usage levels. 87.0% of our East Africa
network sites are now on 4G, compared with 80% in the prior period. In Q1'23,
4G customers accounted for 41.5% of our total data customer base and
contributed to 65.4% of total data usage. Total data usage per customer
increased to 3.9 GB per customer per month, up by 30%, and 4G data usage per
customer increased to 6.2 GB per customer per month from 5.4 GB per customer
per month in the prior period. Compared to recent quarters, data revenue
growth is slower, as a result of a slowdown in customer additions in Kenya and
Malawi and lower ARPU growth in Tanzania and Malawi.
EBITDA increased to $159m, up by 12.5% in constant currency. The EBITDA margin
improved to 44.2%, an improvement of 56 basis points in constant currency, as
a result of revenue growth and improved operating efficiencies.
Operating free cash flow was $115m, up by 4.5%, due largely to the expansion
of EBITDA, partially offset by increased capex.
Francophone Africa - Mobile services (1)
Description Unit of Quarter ended
measure
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Summarised statement of operations
Revenue $m 262 253 3.5% 10.6%
Voice revenue (2) $m 149 146 1.5% 8.8%
Data revenue $m 85 80 6.7% 14.2%
Other revenue $m 28 26 4.9% 9.5%
EBITDA $m 103 95 8.5% 14.8%
EBITDA margin % 39.2% 37.4% 180 bps 144 bps
Depreciation and amortisation $m (47) (52) (10.0%) (3.5%)
Operating exceptional items $m - - 0.0% 0.0%
Operating profit $m 56 43 30.7% 36.8%
Capex $m 27 20 35.9% 35.9%
Operating free cash flow $m 76 75 1.3% 9.2%
Operating KPIs
ARPU $ 3.2 3.5 (8.2%) (1.9%)
Total customer base Mn 27.0 24.5 10.1%
Data customer base Mn 7.5 7.4 2.0%
((1)) The Francophone Africa business region includes Chad, Democratic
Republic of the Congo, Gabon, Madagascar, Niger, Republic of the Congo, and
Seychelles.
((2)) Voice revenue includes inter-segment revenue of $1m in the quarter ended
30 June 2022. Excluding inter-segment revenue, voice revenue was $148m in the
quarter ended 30 June 2022.
Revenue grew by 3.5% in reported currency and by 10.6% in constant currency.
The difference in growth rates was due to devaluation of the Central African
franc (13.2%). The revenue growth in constant currency terms was largely
driven by DRC, Niger, Chad and Gabon.
Voice revenue grew by 8.8% in constant currency, driven by customer base
growth of 10.1% partially offset by voice ARPU decline of 3.5%. The customer
base growth was driven by expansion of both network coverage and distribution
infrastructure.
Data revenue grew by 14.2% in constant currency, supported by average customer
base growth of 15.3%. Our continued 4G network rollout resulted in an increase
in total data usage of 45.2% and a per customer data usage increase of 25.9%.
For Q1'23, 4G data users constituted 49.7% of total data users, compared with
40.0% in the prior period. 4G users contributed 67.9% of total data usage this
quarter. Data usage per customer increased to 2.9 GB per month (up from 2.3 GB
in the prior period), while 4G data usage per customer reached 5.0 GB per
month, from 4.5 GB in the prior period. Compared to recent quarters, data
revenue growth has slowed as a result of lower ARPU in Chad and Niger.
EBITDA, at $103m, increased by 14.8% in constant currency. The EBITDA margin
improved to 39.2%, an improvement of 144 basis points in constant currency.
This EBITDA growth was driven by continued revenue growth and increased
operating efficiencies.
Operating free cash flow was $76m, up by 9.2%, due to the expansion in EBITDA,
partially offset by higher capex.
Mobile services
Description Unit of measure Quarter ended
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Summarised statement of operations
Revenue ((1)) $m 1,135 1,018 11.6% 14.2%
Voice Revenue $m 610 562 8.6% 11.3%
Data Revenue $m 418 356 17.3% 19.8%
Other Revenue $m 107 99 8.2% 10.6%
EBITDA $m 526 481 9.4% 11.3%
EBITDA Margin % 46.3% 47.2% (93) bps (119) bps
Depreciation & Amortization $m (182) (171) 6.7% 9.6%
Operating Exceptional Items $m - - 0.0% 0.0%
Operating Profit $m 344 310 10.9% 12.3%
Capex $m 127 100 27.0% 27.0%
Operating Free Cash Flow $m 399 381 4.7% 7.2%
Operating KPIs
Mobile voice
Customer base Mn 131.6 120.8 8.9%
Voice ARPU $ 1.6 1.6 (0.7%) 1.8%
Mobile data
Data customer base Mn 46.5 42.4 9.7%
Data ARPU $ 2.9 2.9 2.8% 5.0%
( (1)) Mobile service revenue after inter-segment eliminations was $1,134m in
the quarter ended 30 June 2022 and $1,016m in the prior period.
Revenue from mobile services grew by 11.6% in reported currency, and in
constant currency grew by 14.2%. The constant currency growth was evident in
all regions and key services. Mobile services revenue grew in Nigeria by
18.3%, in East Africa by 11.1% and in Francophone Africa by 10.6%.
Voice revenue grew by 11.3% in constant currency, supported by both customer
base growth of 8.9% and voice ARPU growth of 1.8%. Customer base growth was
driven by the expansion of our network and distribution infrastructure. The
slowdown in voice revenue growth this quarter was due to the barring of
outgoing calls for those customers in Nigeria who had not submitted their
NINs. A total of 13.6 million customers were initially barred out of which 5.3
million (39%) have subsequently submitted their NIN and 2.3 million (17%) have
subsequently been verified and unbarred. The voice ARPU growth of 1.8% was
driven by an increase in voice usage per customer of 6.0%, reaching 264
minutes per customer per month, with total minutes on the network increasing
by 15.9%.
Data revenue grew by 19.8% in constant currency, driven by both customer base
growth of 9.7% and data ARPU growth of 5.0%. The customer base growth was
recorded across all the regions supported by the expansion of our 4G network.
88.4% of our total sites are now on 4G, compared with 79.4% in the prior
period. 44.1% of total data customers are 4G users (up from 37.9%)
contributing to 71.9% of total data usage. Data usage per customer increased
to 4.0 GB per customer per month (from 3.2 GB in the prior period) while 4G
data usage per customer reached 6.6 GB per month (from 5.1 GB in the prior
period). In the quarter, data revenue contributed to 36.8% of total mobile
services revenue, up from 35.0% in the prior period. Compared to recent
quarters, data revenue growth was slower largely the result of a slowdown in
the growth of data usage per customer as well as higher churn due to
NIN-related call barring in Nigeria and lower ARPU growth in certain markets.
EBITDA was $526m, growing by 11.3% in constant currency. The EBITDA margin
declined by 93 basis points to 46.3% (declined by 119 basis points in constant
currency). The reduction in EBITDA margin was due to an increase in operating
cost.
Operating free cash flow was $399m, up by 7.2%, due to the expansion of EBITDA
partially offset by higher capex.
Mobile money
Description Unit of measure Quarter ended
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Summarised statement of operations
Revenue ((1)) $m 159 124 28.6% 26.5%
Nigeria ((2)) $m 0 0 - -
East Africa $m 121 91 32.8% 26.9%
Francophone Africa $m 38 33 16.9% 25.4%
EBITDA $m 79 60 30.5% 28.3%
EBITDA Margin % 49.5% 48.8% 70 bps 67 bps
Depreciation & Amortization $m (4) (3) 27.7% 28.5%
Operating Profit $m 75 57 30.9% 28.3%
Capex $m 9 3 173.3% 173.3%
Operating Free Cash Flow $m 70 57 22.0% 20.1%
Operating KPIs
Transaction value $m 18,886 14,651 28.9% 26.1%
Active customers Mn 27.6 23.1 19.7%
Mobile money ARPU $ 2.0 1.8 7.7% 5.9%
( )
( (1)) Mobile money service revenue post inter-segment eliminations with
mobile services was $123m in the quarter ended 30 June 2022 and $96m in the
prior period.
((2)) On 19 May 2022, we announced that Smartcash had commenced operations in
Nigeria. Services were initially made available at selected retail
touchpoints, and operations are now being expanded gradually across the
country.
Mobile money revenue grew by 28.6% in reported currency, with constant
currency growth of 26.5%. The reported currency growth was higher than
constant currency due to appreciation in the Zambian kwacha. The slowdown in
mobile money revenue growth since July 2021 has been largely due to the
implementation of levies by the Government of Tanzania on mobile money
withdrawal and P2P transactions (subsequently revised on several occasions).
Excluding Tanzania, mobile money revenue grew by 34.2%. The constant currency
mobile money revenue growth was driven by revenue growth in both East Africa
and Francophone Africa, of 26.9% and 25.4% respectively. In Nigeria, mobile
money services (Smartcash) launched in June 2022.
The constant currency revenue growth of 26.5% was driven by both customer base
growth of 19.7% and mobile money ARPU growth of 5.9%, with the growth largely
coming from Zambia, Uganda, Malawi and DRC. The expansion of our distribution
network, particularly our exclusive channels of Airtel Money branches and
kiosks, supported customer base growth of 19.7% in both East Africa and
Francophone Africa. The mobile money ARPU growth of 5.9% was driven by an
increase in the transaction value per customer of 5.6% to $234 per customer
per month.
Q1'23 annualised transaction value reached $75.7bn in constant currency, with
mobile money revenue contributing 12.7% of total Group revenue in the quarter.
The mobile money customer base increased to 27.6 million, up by 19.7%. Mobile
money customer base penetration reached 21.0%, an increase of 1.9 percentage
points. Mobile money ARPU growth of 5.9% was largely driven by an increase in
transaction values and higher contributions from cash transactions, merchant
payments and mobile service recharges through Airtel Money.
EBITDA was $79m, up by 28.3% in constant currency. The EBITDA margin reached
49.5%, an improvement of 67 basis points in constant currency.
Regional Performance
Nigeria
Description Unit of measure Quarter ended
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Revenue $m 517 445 16.2% 18.3%
Voice Revenue $m 259 238 8.8% 10.8%
Data Revenue $m 210 171 22.6% 24.8%
Mobile Money Revenue $m 0 0 - -
Other Revenue $m 48 36 34.5% 37.0%
EBITDA $m 263 246 6.9% 8.9%
EBITDA Margin % 50.8% 55.2% (441) bps (441) bps
Operating KPIs
ARPU $ 3.8 3.6 4.9% 6.8%
East Africa
Description Unit of measure Quarter ended
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Revenue $m 455 394 15.3% 14.1%
Voice Revenue $m 203 178 14.2% 14.1%
Data Revenue $m 123 105 16.6% 15.9%
Mobile Money Revenue $m 121 91 32.8% 26.9%
Other Revenue $m 32 38 (16.2%) (15.2%)
EBITDA $m 221 184 19.9% 17.9%
EBITDA Margin % 48.5% 46.6% 187 bps 157 bps
Operating KPIs
ARPU $ 2.6 2.4 8.0% 6.8%
Francophone Africa
Description Unit of measure Quarter ended
Jun-22 Jun-21 Reported Constant
currency currency
change
change
Revenue $m 288 276 4.6% 11.7%
Voice Revenue $m 148 146 1.4% 8.8%
Data Revenue $m 85 80 6.8% 14.3%
Mobile Money Revenue $m 38 33 16.9% 25.4%
Other Revenue $m 28 26 4.6% 9.2%
EBITDA $m 122 111 10.0% 16.5%
EBITDA Margin % 42.4% 40.3% 210 bps 172 bps
Operating KPIs
ARPU $ 3.6 3.9 (7.3%) (0.9%)
Consolidated performance
Description UoM Quarter ended- June 2022 Quarter ended- June 2021
Mobile services Mobile money Unallocated Eliminations Total Mobile services Mobile money Unallocated Eliminations Total
Revenue $m 1,135 159 (0) (37) 1,257 1,018 124 (0) (30) 1,112
Voice revenue $m 610 (0) (0) 610 562 (0) (0) 562
Data revenue $m 418 - - 418 356 - (0) 356
Other revenue $m 107 - (1) 106 99 - (1) 98
EBITDA $m 526 79 9 0 614 481 60 (7) (0) 534
EBITDA margin % 46.3% 49.5% 48.8% 47.2% 48.8% 48.0%
Depreciation and amortization $m (182) (4) (3) - (189) (171) (3) (8) - (182)
Operating $m - - - - - - - -
exceptional items
Operating profit $m 344 75 6 0 425 310 57 (15) (0) 352
( )
( )Forward looking statements
This document contains certain forward-looking statements regarding our
intentions, beliefs or current expectations concerning, amongst other things,
our results of operations, financial condition, liquidity, prospects, growth,
strategies and the economic and business circumstances occurring from time to
time in the countries and markets in which the Group operates.
These statements are often, but not always, made through the use of words or
phrases such as "believe," "anticipate," "could," "may," "would," "should,"
"intend," "plan," "potential," "predict," "will," "expect," "estimate,"
"project," "positioned," "strategy," "outlook", "target" and similar
expressions.
It is believed that the expectations reflected in this document are
reasonable, but they may be affected by a wide range of variables that could
cause actual results to differ materially from those currently anticipated.
All such forward-looking statements involve estimates and assumptions that are
subject to risks, uncertainties and other factors that could cause actual
future financial condition, performance and results to differ materially from
the plans, goals, expectations and results expressed in the forward-looking
statements and other financial and/or statistical data within this
communication.
Among the key factors that could cause actual results to differ materially
from those projected in the forward-looking statements are uncertainties
related to the following: the impact of competition from illicit trade; the
impact of adverse domestic or international legislation and regulation;
changes in domestic or international tax laws and rates; adverse litigation
and dispute outcomes and the effect of such outcomes on Airtel Africa's
financial condition; changes or differences in domestic or international
economic or political conditions; the ability to obtain price increases and
the impact of price increases on consumer affordability thresholds; adverse
decisions by domestic or international regulatory bodies; the impact of market
size reduction and consumer down-trading; translational and transactional
foreign exchange rate exposure; the impact of serious injury, illness or death
in the workplace; the ability to maintain credit ratings; the ability to
develop, produce or market new alternative products and to do so profitably;
the ability to effectively implement strategic initiatives and actions taken
to increase sales growth; the ability to enhance cash generation and pay
dividends and changes in the market position, businesses, financial condition,
results of operations or prospects of Airtel Africa.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser. The forward-looking
statements contained in this document reflect the knowledge and information
available to Airtel Africa at the date of preparation of this document and
Airtel Africa undertakes no obligation to update or revise these
forward-looking statements, whether as a result of new information, future
events or otherwise. Readers are cautioned not to place undue reliance on such
forward-looking statements.
No statement in this communication is intended to be, nor should be construed
as, a profit forecast or a profit estimate and no statement in this
communication should be interpreted to mean that earnings per share of Airtel
Africa plc for the current or any future financial periods would necessarily
match, exceed or be lower than the historical published earnings per share of
Airtel Africa plc.
Financial data included in this document are presented in US dollars rounded
to the nearest million. Therefore, discrepancies in the tables between totals
and the sums of the amounts listed may occur due to such rounding. The
percentages included in the tables throughout the document are based on
numbers calculated to the nearest $1,000 and therefore minor rounding
differences may result in the tables. Growth metrics are provided on a
constant currency basis unless otherwise stated. The Group has presented
certain financial information on a constant currency basis. This is calculated
by translating the results for the current financial year and prior financial
year at a fixed 'constant currency' exchange rate, which is done to measure
the organic performance of the Group. Growth rates for our reporting regions
and service segments are provided in constant currency as this better
represents the performance of the business.
Alternative performance measures (APMs)
Introduction
In the reporting of financial information, the directors have adopted various
APMs. These measures are not defined by International Financial Reporting
Standards (IFRS) and therefore may not be directly comparable with other
companies APMs, including those in the Group's industry.
APMs should be considered in addition to, and are not intended to be a
substitute for, or superior to, IFRS measurements.
Purpose
The directors believe that these APMs assist in providing additional useful
information on the trends, performance and position of the Group.
APMs are also used to enhance the comparability of information between
reporting periods and geographical units (such as like-for-like sales), by
adjusting for non-recurring or uncontrollable factors which affect IFRS
measures, to aid users in understanding the Group's performance. Consequently,
APMs are used by the directors and management for performance analysis,
planning, reporting and incentive-setting purposes.
The directors believe the following metrics to be the APMs used by the Group
to help evaluate growth trends, establish budgets and assess operational
performance and efficiencies. These measures provide an enhanced understanding
of the Group's results and related trends, therefore increasing transparency
and clarity into the core results of the business.
The following metrics are useful in evaluating the Group's operating
performance:
APM Closest equivalent IFRS measure Adjustments to reconcile to IFRS measure Definition and purpose
EBITDA and margin Operating profit · Depreciation and amortisation The Group defines EBITDA as operating profit/(loss) for the period before
depreciation and amortisation and adjusted for exceptional items.
· Exceptional items
The Group defines EBITDA margin as EBITDA divided by revenue.
EBITDA and margin are measures used by the directors to assess the trading
performance of the business and are therefore the measure of segment profit
that the Group presents under IFRS. EBITDA and margin are also presented on a
consolidated basis because the directors believe it is important to consider
profitability on a basis consistent with that of the Group's operating
segments. When presented on a consolidated basis, EBITDA and margin are APMs.
Depreciation and amortisation is a non-cash item which fluctuates depending on
the timing of capital investment and useful economic life. Directors believe
that a measure which removes this volatility improves comparability of the
Group's results period on period and hence is adjusted to arrive at EBITDA and
margin.
Exceptional items are additional specific items that because of their size,
nature or incidence in the results, are considered to hinder comparison of the
Group's performance on a period-to-period basis and could distort the
understanding of our performance for the period and the comparability between
periods and hence are adjusted to arrive at EBITDA and margin.
Underlying profit / (loss) before tax Profit / (loss) before tax · Exceptional items The Group defines underlying profit/(loss) before tax as profit/(loss) before
tax adjusted for exceptional items.
The directors view underlying profit/(loss) before tax to be a meaningful
measure to analyse the Group's profitability.
Exceptional items are additional specific items that because of their size,
nature or incidence in the results, are considered to hinder comparison of the
Group's performance on a period-to-period basis and could distort the
understanding of our performance for the period and the comparability between
periods and hence are adjusted to arrive at underlying profit/(loss) before
tax.
Effective tax rate Reported tax rate · Exceptional items The Group defines effective tax rate as reported tax rate (reported tax charge
divided by reported profit before tax) adjusted for exceptional items, foreign
· Foreign exchange rate movements exchange rate movements and one-off tax items of prior period adjustment, tax
settlements and impact of permanent differences on tax.
· One-off tax impact of prior period, tax litigation settlement and
impact of tax on permanent differences This provides an indication of the current on-going tax rate across the Group.
Exceptional tax items or any tax arising on exceptional items are additional
specific items that because of their size, nature or incidence in the results,
are considered to hinder comparison of the Group's performance on a
period-to-period basis and could distort the understanding of our performance
for the period and the comparability between periods and hence are adjusted to
arrive at effective tax rate.
Foreign exchange rate movements are specific items that are non-tax deductible
in a few of the entities which are loss making and where DTA is not yet
triggered and hence are considered to hinder comparison of the Group's
effective tax rate on a period-to-period basis and therefore excluded to
arrive at effective tax rate.
One-off tax impact on account of prior period adjustment, any tax litigation
settlement and tax impact on permanent differences are additional specific
items that because of their size and frequency in the results, are considered
to hinder comparison of the Group's effective tax rate on a period-to-period
basis.
Underlying profit/(loss) after tax Profit/(loss) for the period · Exceptional items The Group defines underlying profit/(loss) after tax as profit/(loss) for the
period adjusted for exceptional items.
The directors view underlying profit/(loss) after tax to be a meaningful
measure to analyse the Group's profitability.
Exceptional items are additional specific items that because of their size,
nature or incidence in the results, are considered to hinder comparison of the
Group's performance on a period-to-period basis and could distort the
understanding of our performance for the period and the comparability between
periods and hence are adjusted to arrive at underlying profit/(loss) after
tax.
Earnings per share before exceptional items EPS · Exceptional items The Group defines earnings per share before exceptional items as profit/(loss)
for the period before exceptional items attributable to owners of the company
divided by the weighted average number of ordinary shares in issue during the
financial period.
This measure reflects the earnings per share before exceptional items for each
share unit of the company.
Exceptional items are additional specific items that because of their size,
nature or incidence in the results, are considered to hinder comparison of the
Group's performance on a period-to-period basis and could distort the
understanding of our performance for the period and the comparability between
periods and hence are adjusted to arrive at earnings for the purpose of
earnings per share before exceptional items.
Operating free cash flow Cash generated from operating activities · Income tax paid The Group defines operating free cash flow as net cash generated from
operating activities before income tax paid, changes in working capital, other
· Changes in working capital non-cash items, non-operating income and exceptional items, less capital
expenditures. The Group views operating free cash flow as a key liquidity
· Other non-cash items measure, as it indicates the cash available to pay dividends, repay debt or
make further investments in the Group.
· Non-operating income
· Exceptional items
· Capital expenditures
Net debt and leverage ratio Borrowings The Group defines net debt as borrowings including lease liabilities less cash
and cash equivalents, term deposits with banks, deposits given against
· Lease liabilities borrowings/non-derivative financial instruments, processing costs related to
borrowings and fair value hedge adjustments.
· Cash and cash equivalent
The Group defines leverage ratio as net debt divided by EBITDA for the
· Term deposits with banks preceding 12 months.
· Deposits given against borrowings/ non-derivative financial instruments The directors view net debt and the leverage ratio to be meaningful measures
to monitor the Group's ability to cover its debt through its earnings.
· Fair value hedges
Return on capital employed No direct equivalent · Exceptional items to arrive at EBIT The Group defines return on capital employed ('ROCE') as EBIT divided by
average capital employed.
The directors view ROCE as a financial ratio that measures the Group's
profitability and the efficiency with which its capital is being utilised.
The Group defines EBIT as operating profit/(loss) for the period adjusted for
exceptional items.
Exceptional items are additional specific items that because of their size,
nature or incidence in the results, are considered to hinder comparison of the
Group's performance on a period-to-period basis and could distort the
understanding of our performance for the period and the comparability between
periods and hence are adjusted to arrive at EBIT.
Capital employed is defined as sum of equity attributable to owners of the
company, non-controlling interests and net debt. Average capital employed is
average of capital employed at the closing and beginning of the relevant
period.
For quarterly computations, ROCE is calculated by dividing EBIT for the
preceding 12 months by the average capital employed (being the average of the
capital employed averages for the preceding four quarters).
Some of the Group's IFRS measures and APMs are translated at constant currency
exchange rates to measure the organic performance of the Group. In determining
the percentage change in constant currency terms, both current and previous
financial reporting period's results have been converted using exchange rates
prevailing as on 31 March 2022. Reported currency percentage change is derived
on the basis of the average actual periodic exchange rates for that financial
period. Variances between constant currency and reported currency percentages
are due to exchange rate movements between the previous financial reporting
period and the current period.
Changes to APMs
· Underlying revenue: The underlying revenue has not been defined
as an APM due to the absence of any exceptional items during the period.
Glossary
Technical and Industry Terms
4G data customer A customer having a 4G handset and who has used at least 1 MB on any of the
Group's GPRS, 3G & 4G network in the last 30 days.
Airtel Money (mobile money) Airtel Money is the brand name for Airtel Africa's mobile money products and
services. The term is used interchangeably with 'mobile money' when referring
to our mobile money business, finance, operations and activities.
Airtel Money ARPU Mobile money average revenue per user per month. This is derived by dividing
total mobile money revenue during the relevant period by the average number of
active mobile money customers and dividing the result by the number of months
in the relevant period.
Airtel Money customer base Total number of active subscribers who have enacted any mobile money usage
event in last 30 days.
Airtel Money customer penetration The proportion of total Airtel Africa active mobile customers who use mobile
money services. Calculated by dividing the mobile money customer base by the
Group's total customer base.
Airtel Money transaction value Any financial transaction performed on Airtel Africa's mobile money platform.
Airtel Money transaction value per customer per month Calculated by dividing the total mobile money transaction value on the Group's
mobile money platform during the relevant period by the average number of
active mobile money customers and dividing the result by the number of months
in the relevant period.
Airtime credit service A value-added service where the customer can take an airtime credit and
continue to use our voice and data services, with the credit recovered through
subsequent customer recharge. This is classified as a Mobile Services product
(not a Mobile Money product).
ARPU Average revenue per user per month. This is derived by dividing total revenue
during the relevant period by the average number of customers during the
period and dividing the result by the number of months in the relevant period.
Average customers The average number of active customers for a period. Derived from the monthly
averages during the relevant period. Monthly averages are calculated using the
number of active customers at the beginning and the end of each month.
Capital expenditure An alternative performance measure (non-GAAP). Defined as investment in gross
fixed assets (both tangible and intangible but excluding spectrum and
licences) plus capital work in progress (CWIP), excluding provisions on CWIP
for the period.
Constant currency The Group has presented certain financial information that is calculated by
translating the results for the current financial year and previous financial
years at a fixed 'constant currency' exchange rate, which is done to measure
the organic performance of the Group. Growth rates for reporting regions and
service segments are in constant currency as it better represents the
performance of the business. Constant currency growth rates for prior periods
are calculated using closing exchange rates as at the end of prior period.
Customer Defined as a unique active subscriber with a unique mobile telephone number
who has used any of Airtel's services in the last 30 days.
Customer base The total number of active subscribers that have used any of our services
(voice calls, SMS, data usage or mobile money transaction) in the last 30
days.
Data ARPU Data average revenue per user per month. Data ARPU is derived by dividing
total data revenue during the relevant period by the average number of data
customers and dividing the result by the number of months in the relevant
period.
Data customer base The total number of subscribers who have consumed at least 1 MB on the Group's
GPRS, 3G or 4G network in the last 30 days.
Data customer penetration The proportion of customers using data services. Calculated by dividing the
data customer base by the total customer base.
Data usage per customer per month Calculated by dividing the total MBs consumed on the Group's network during
the relevant period by the average data customer base over the same period and
dividing the result by the number of months in the relevant period.
Digitalisation We use the term digitalisation in its broadest sense to encompass both
digitisation actions and processes that convert analogue information into a
digital form and thereby bring customers into the digital environment, and the
broader digitalisation processes of controlling, connecting and planning
processes digitally; the processes that effect digital transformation of our
business, and of industry, economics and society as a whole through bringing
about new business models, socio-economic structures and organisational
patterns.
Diluted earnings per share Diluted EPS is calculated by adjusting the profit for the year attributable to
the shareholders and the weighted average number of shares considered for
deriving basic EPS, for the effects of all the shares that could have been
issued upon conversion of all dilutive potential shares. The dilutive
potential shares are adjusted for the proceeds receivable had the shares
actually been issued at fair value. Further, the dilutive potential shares are
deemed converted as at beginning of the period, unless issued at a later date
during the period.
Earnings per share (EPS) EPS is calculated by dividing the profit for the period attributable to the
owners of the company by the weighted average number of ordinary shares
outstanding during the period.
Foreign exchange rate movements for non-DTA operating companies Foreign exchange rate movements are specific items that are non-tax deductible
in a few of our operating entities, hence these hinder a like-for-like
and holding companies comparison of the Group's effective tax rate on a period-to-period basis and
are therefore excluded when calculating the effective tax rate.
Indefeasible Rights of Use (IRU) A standard long-term leasehold contractual agreement that confers upon the
holder the exclusive right to use a portion of the capacity of a fibre route
for a stated period.
Information and communication technologies (ICT) ICT refers to all communication technologies, including the internet, wireless
networks, cell phones, computers, software, middleware, videoconferencing,
social networking, and other media applications and services.
Interconnect user charges (IUC) Interconnect user charges are the charges paid to the telecom operator on
whose network a call is terminated.
Lease liability Lease liability represents the present value of future lease payment
obligations.
Leverage An alternative performance measure (non-GAAP). Leverage (or leverage ratio) is
calculated by dividing net debt at the end of the relevant period by the
EBITDA for the preceding 12 months.
Minutes of usage Minutes of usage refer to the duration in minutes for which customers use the
Group's network for making and receiving voice calls. It includes all incoming
and outgoing call minutes, including roaming calls.
Mobile services Mobile services are our core telecom services, mainly voice and data services,
but also including revenue from tower operation services provided by the Group
and excluding mobile money services.
Net debt An alternative performance measure (non-GAAP). The Group defines net debt as
borrowings including lease liabilities less cash and cash equivalents, term
deposits with banks, processing costs related to borrowings and fair value
hedge adjustments.
Net debt to EBITDA (LTM) An alternative performance measure (non-GAAP) Calculated by dividing net debt
as at the end of the relevant period by EBITDA for the preceding 12 months
(from the end of the relevant period). This is also referred to as the
leverage ratio.
Network towers or 'sites' Physical network infrastructure comprising a base transmission system (BTS)
which holds the radio transceivers (TRXs) that define a cell and coordinates
the radio link protocols with the mobile device. It includes all ground-based,
roof top and in-building solutions.
Operating company (OpCo) Operating company (or OpCo) is a defined corporate business unit, providing
telecoms services and mobile money services in the Group's footprint.
Operating free cash flow An alternative performance measure (non-GAAP). Calculated by subtracting
capital expenditure from EBITDA.
Operating leverage An alternative performance measure (non-GAAP). Operating leverage is a measure
of the operating efficiency of the business. It is calculated by dividing
operating expenditure (excluding regulatory charges) by total revenue.
Operating profit Operating profit is a GAAP measure of profitability. Calculated as revenue
less operating expenditure (including depreciation and amortisation and
operating exceptional items).
Other revenue Other revenue includes revenues from messaging, value added services (VAS),
enterprise, site sharing and handset sale revenue.
Reported currency Our reported currency is US dollars. Accordingly, actual periodic exchange
rates are used to translate the local currency financial statements of OpCos
into US dollars. Under reported currency the assets and liabilities are
translated into US dollars at the exchange rates prevailing at the reporting
date whereas the statements of profit and loss are translated into US dollars
at monthly average exchange rates.
Smartphone A smartphone is defined as a mobile phone with an interactive touch screen
that allows the user to access the internet and additional data applications,
providing additional functionality to that of a basic feature phone which is
used only for making voice calls and sending and receiving text messages.
Smartphone penetration Calculated by dividing the number of smartphone devices in use by the total
number of customers.
Total MBs on network Total MBs consumed (uploaded & downloaded) by customers on the Group's
GPRS, 3G and 4G network during the relevant period.
EBIT Defined as operating profit/(loss) for the period adjusted for exceptional
items.
EBITDA An alternative performance measure (non-GAAP). Defined as operating profit
before depreciation, amortisation and exceptional items.
EBITDA margin An alternative performance measure (non-GAAP). Calculated by dividing EBITDA
for the relevant period by revenue for the relevant period.
Revenue An alternative performance measure (non-GAAP). Defined as revenue before
exceptional items.
Unstructured Supplementary Service Data Unstructured Supplementary Service Data (USSD), also known as "quick codes" or
"feature codes", is a communications protocol for GSM mobile operators,
similar to SMS messaging. It has a variety of uses such as WAP browsing,
prepaid callback services, mobile-money services, location-based content
services, menu-based information services, and for configuring phones on the
network.
Voice minutes of usage per customer per month Calculated by dividing the total number of voice minutes of usage on the
Group's network during the relevant period by the average number of customers
and dividing the result by the number of months in the relevant period.
Weighted average number of shares The weighted average number of shares is calculated by multiplying the number
of outstanding shares by the portion of the reporting period those shares
covered, doing this for each portion and then summing the total.
Abbreviations
2G Second-generation mobile technology
3G Third-generation mobile technology
4G Fourth-generation mobile technology
ARPU Average revenue per user
bn Billion
bps Basis points
CAGR Compound annual growth rate
Capex Capital expenditure
CSR Corporate social responsibility
DTA Deferred Tax Asset
EBIT Earnings before interest and tax
EBITDA Earnings before interest, tax, depreciation and amortisation
EPS Earnings per share
FPPP Financial position and prospects procedures
GAAP Generally accepted accounting principles
GB Gigabyte
HoldCo Holding company
IAS International accounting standards
ICT Information and communication technologies
ICT (Hub) Information communication technology (Hub) IFRS
IFRS International financial reporting standards
IMF International monetary fund
IPO Initial public offering
KPIs Key performance indicators
KYC Know your customer
LTE Long-term evolution (4G technology)
LTM Last 12 months
m Million
MB Megabyte
MI Minority interest (non-controlling interest)
NGO Non-governmental organisation
OpCo Operating company
P2P Person to person
PAYG Pay-as-you-go
QoS Quality of service
RAN Radio access network
SIM Subscriber identification module
Single RAN Single radio access network
SMS Short messaging service
TB Terabyte
Telecoms Telecommunications
Unit of measure Unit of measure
USSD Unstructured supplementary service data
Risk Factors
The Group's business and the industry in which it operates, together with all
other information contained in this document, including, in particular, the
risk factors summarised below. Additional risks and uncertainties relating to
the Group that are not currently known to the Group, or that the Group
currently deem immaterial, may individually or cumulatively also have a
material adverse effect on the Group's business, results of operations and
financial condition.
Principal risks summarised
1. We operate in a competitive environment with the potential for
aggressive competition by existing players, or the entry of new players, which
could both put a downward pressure on prices, adversely affecting our revenue
and profitability.
2. Failure to innovate through simplifying the customer experience,
developing adequate digital touchpoints in line with changing customer needs
and competitive landscape could lead to loss of customers and market share.
3. An inability to invest and upgrade our network and IT
infrastructure could affect our ability to compete effectively in the market.
4. Cybersecurity threats through internal or external sabotage or
system vulnerabilities could potentially result in customer data breaches
and/or service downtimes.
5. Adverse changes in our external business environment and
macro-economic conditions such as supply chain disruptions and inflationary
pressures could lead to a significant increase in our operating cost structure
and negatively impact profitability.
6. Shortages of skilled telecommunications professionals in some
markets and the inability to identify and develop successors for key
leadership positions could both lead to disruptions in the execution of our
corporate strategy.
7. Our internal control environment is subject to the risk that
controls may become inadequate due to changes in internal or external
conditions, new accounting requirements, delays, or inaccuracies in reporting.
8. Our telecommunications networks are subject to the risks of
technical failures, aging infrastructure, human error, wilful acts of
destruction or natural disasters.
9. Our multinational footprint means we are exposed to the risks of
currency fluctuations including the availability of funds for repatriation to
the Group company triggered by adverse macroeconomic conditions in the markets
where we operate.
10. We operate in a diverse and dynamic legal, tax and regulatory
environment. A failure to comply with relevant laws and regulations could lead
to penalties, sanctions, and reputational damage.
1 (#_ftnref1) Alternative performance measures (APM) are described on page
15.
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