Q3 Results
04/02/2022 06:59
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RNS Number : 6659A Airtel Africa PLC 04 February 2022
Airtel Africa plc
Results for nine-month period ended 31 December 2021
4 February 2022
Strong growth across all key metrics, with Nigeria PSB approval in principle
to unlock further mobile money opportunity
Highlights
· Reported revenue grew by 21.7% to $3,492m.
· Constant currency underlying revenue grew by 24.8%.
· Constant currency underlying revenue growth was recorded across
all regions: Nigeria up 29.0%, East Africa up 24.4% and Francophone Africa up
19.0%; and across all key services, with revenue in Voice up 16.1%, and in
Data and Mobile Money both up 37.2%.
· Underlying EBITDA was $1,703m, growing by 31.3% in reported
currency with an EBITDA margin of 48.8%, an increase of 326 basis points led
by both revenue growth and improved operational efficiencies.
· Operating profit grew by 43.1% to $1,146m in reported currency.
· Profit after tax almost doubled to $514m as higher profit before
tax more than offset associated tax charges.
· Basic EPS was 11.7 cents, an increase of 113.8%, largely as a
result of higher profit. EPS before exceptional items increased to 11.5 cents,
up from 5.0 cents in the previous period.
· Operating free cash flow grew by 42.2% to $1,271m and net cash
generated from operating activities was up 23.1% to $1,499m.
· Leverage ratio improved to 1.4x from 2.1x in the previous period.
· The customer base expanded to 125.8 million, growing by 5.8%,
with increased penetration across mobile data (customer base up 11.1%) and
mobile money services (customer base up 19.6%). Customer base growth was
affected by the NIN/SIM regulations in Nigeria but returned to growth in this
region in the third quarter; excluding Nigeria the customer base grew by
12.0%.
Alternative performance measures (2) GAAP measures
(Nine-month period ended)
(Nine-month period ended)
Description Dec-21 Dec-20 Reported Constant Description Dec-21 Dec-20 Reported
currency
currency
currency
$m $m change % change % $m $m change %
Underlying revenue (1) 3,492 2,850 22.5% 24.8% Revenue 3,492 2,870 21.7%
Underlying EBITDA 1,703 1,297 31.3% 34.1% Operating profit 1,146 800 43.1%
Underlying EBITDA margin 48.8% 45.5% 326 bps 338 bps Profit after tax 514 261 97.3%
EPS before exceptional items ($ cents) 11.5 5.0 131.3% Basic EPS ($ cents) 11.7 5.5 113.8%
Operating free cash flow 1,271 894 42.2% Net cash generated from operating activities 1,499 1,217 23.1%
(()(1)) Underlying revenue excludes a one-time exceptional revenue of $20m
relating to a settlement in Niger in the previous period (December 2020).
(()(2)) Alternative performance measures (APM) are described on page 17.
Segun Ogunsanya, chief executive officer, on the trading update:
"A strong third quarter has contributed to a pleasing nine-month financial
performance across all key metrics.
Operationally we have continued to execute on our network and distribution
expansion plans, driving continued strong growth in ARPUs across voice, data
and mobile money. We have also seen further improvement in our customer growth
trends for the Group with Nigeria returning to strong customer growth after a
period affected by the implementation of new 'know your customer'
requirements, posting 1.9 million net additions in the third quarter, taking
total Group customer additions to 3.1 million.
I am particularly pleased with developments in Nigeria, where in November we
received approval in principle for both a payment service bank (mobile money)
licence and a super-agent licence. We are now working closely with the Central
Bank to meet all its conditions to receive the final operating licences and
commence operations. This will enable us to expand our digital financial
products and reach the millions of Nigerians that do not have access to
traditional financial services.
We continued to strengthen our balance sheet, with our leverage ratio now 1.4
times underlying EBITDA, thanks both to the continued increases in operating
cash flow delivery and to the $550m of cash that has now been received from
minority investments into our mobile money business.
We will continue to invest in expanding and evolving our platform to further
deepen both financial and digital inclusion across Africa. I continue to see
huge growth potential across voice, data and mobile money and our strategy is
delivering against this opportunity. Our sustained investments in both network
and distribution expansion will help to ensure that both the communities and
economies across our footprint will continue to benefit from increased and
affordable connectivity and financial inclusion. We are committed to continue
to improve the delivery of our services to our customers, with sustainability
at the heart of our continued purpose to transform lives across Africa."
Airtel Africa plc ('Airtel Africa' or 'Group') results for nine-month period
ended 31 December 2021 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 2021 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 2021. Comparative
annual information has been drawn based on Airtel Africa plc's Audited
Consolidated Financial Statements for the year ended 31 March 2021; with
quarterly and nine-month period information drawn from the unaudited IAS 34
financials of the respective periods. All comparatives and references to the
'prior period' or 'previous period' in this report are for the reported
metrics for the nine-month period ended 31 December 2020 unless otherwise
stated.
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
Bertie Berger
airtelafrica@hudsonsandler.com (mailto:airtelafrica@hudsonsandler.com) +44 207 796 4133
Conference call
The management team will host an analyst and investor conference call at
12:00pm UK time (GMT), on Friday 4 February 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:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=7504208&linkSecurityString=d475ef700
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=7504208&linkSecurityString=d475ef700)
Key financial information
Description Unit of measure Nine-month period ended Quarter ended
Dec-21 Dec-20 Reported currency Constant currency Dec-21 Dec-20 Reported currency Constant currency
change %
change %
change %
change %
Profit and loss summary
Underlying revenue (1) $m 3,492 2,850 22.5% 24.8% 1,219 1,034 17.9% 20.0%
Voice revenue $m 1,747 1,537 13.6% 16.1% 606 565 7.4% 9.9%
Data revenue $m 1,127 842 33.9% 37.2% 395 294 34.4% 37.7%
Mobile money revenue (2) $m 406 291 39.6% 37.2% 148 110 34.4% 29.2%
Other revenue $m 306 255 19.9% 22.0% 105 90 15.8% 18.2%
Expenses $m (1,797) (1,563) 15.0% 16.9% (616) (551) 11.9% 14.0%
Underlying EBITDA (3) $m 1,703 1,297 31.3% 34.1% 605 485 24.7% 26.8%
Underlying EBITDA margin % 48.8% 45.5% 326 bps 338 bps 49.6% 46.9% 273 bps 268 bps
Depreciation and amortisation $m (556) (505) 10.3% 12.4% (190) (176) 8.0% 10.7%
Operating exceptional items $m - 14 (100.0%) (100.0%) - 20 (100.0%) (100.0%)
Operating profit (4) $m 1,146 800 43.1% 46.6% 414 328 26.4% 27.8%
Net finance costs $m (291) (318) (8.4%) (122) (128) (4.5%)
Non-operating exceptional items(5) $m 9 - 0.0% 5 - 0.0%
Profit before tax $m 864 482 79.4% 297 200 48.5%
Tax $m (350) (235) 48.6% (117) (89) 31.6%
Tax - exceptional items $m - 14 (100.0%) - 5 (100.0%)
Total tax charge $m (350) (221) 58.3% (117) (84) 39.1%
Profit after tax (6) $m 514 261 97.3% 180 116 54.4%
Non-controlling interest $m (74) (55) 35.8% (25) (21) 14.3%
Profit attributable to owners of the company - before exceptional items $m 431 187 131.0% 150 74 102.0%
Profit attributable to owners of the company $m 440 206 113.6% 155 95 63.3%
EPS - before exceptional items cents 11.5 5.0 131.3% 4.0 2.0 102.2%
Basic EPS cents 11.7 5.5 113.8% 4.1 2.5 63.5%
Weighted average no of shares million 3,755 3,758 (0.1%) 3,754 3,758 (0.1%)
Capex $m 432 403 7.2% 187 188 (0.2%)
Operating free cash flow $m 1,271 894 42.2% 418 298 40.4%
Net cash generated from operating activities $m 1,499 1,217 23.1% 577 474 21.9%
Net debt $m 3,050 3,518 3,050 3,518
Leverage (net debt to underlying EBITDA) times 1.4x 2.1x 1.4x 2.1x
Return on capital employed % 21.9% 15.4% 653 bps 21.5% 15.5% 600 bps
Operating KPIs
ARPU $ 3.2 2.8 14.9% 17.1% 3.3 2.9 12.8% 14.8%
Total customer base million 125.8 118.9 5.8% 125.8 118.9 5.8%
Data customer base million 45.1 40.6 11.1% 45.1 40.6 11.1%
Mobile money customer base million 25.7 21.5 19.6% 25.7 21.5 19.6%
((1) )Revenue includes intra-segment eliminations of $94m for the nine-month
period ended 31 December 2021 and $75m for the prior period. And it also
excludes one-time exceptional revenue of $20m relating to a settlement in
Niger in the nine-month and three-month periods ended 31 December 2020.
((2)) Mobile money revenue post intra-segment eliminations with mobile
services was $312m for the nine-month period ended 31 December 2021, and $216m
for the prior period.
((3) )Underlying EBITDA includes other income of $9m for the nine-month period
ended 31 December 2021, and $10m for the prior period.
((4) )Operating profit includes $1m CSR (Corporate Social Responsibility)
expense for the period, and $6m CSR expense in the prior period.
((5)) Non-operating exceptional items in the nine-month period ended 31
December 2021 include a gain of $9m on the sale of telecommunication tower
assets in the Group's subsidiaries in Rwanda and Madagascar.
((6) )Profit after tax increase was largely due to higher operating profit
more than offsetting the associated increase in tax charges.
( )
( )
( )
( )
( )
( )
Financial review for nine-month period ended 31 December 2021
Effective execution of our strategy resulted in another strong set of results across all our regional segments and key services. Reported revenue grew by 21.7%.
Underlying revenue in constant currency grew by 24.8%. Revenue in Nigeria grew by 29.0%, in East Africa by 24.4% and in Francophone Africa by 19.0% in constant currency. We continued our strong double-digit growth across all key services: our voice revenue grew by 16.1%, and both data revenue and mobile money revenue grew by 37.2%, and other revenue by 22.0%. As a result, mobile services revenue grew by 23.3% in constant currency (20.7% in reported currency) and mobile money services revenue grew by 37.2% (39.6% in reported currency). The year-on-year constant currency revenue growth rate for Q3'22 of 20.0% was lower than the nine-month growth rate of 24.8% primarily due to softer comparatives in the first quarter of the prior year during the peak period of Covid-19 related restrictions across the region.
Net finance costs were lower compared with the previous period driven by lower forex losses. The increase in tax charges of $129m was due to higher operating profit and withholding tax on dividends by subsidiaries, with the prior period also benefitting from $14m deferred tax credit recognition.
Basic EPS improved to 11.7 cents and EPS before exceptional items improved to 11.5 cents, with higher profits more than offsetting the associated increased tax.
Net debt was $3,050m, a reduction of $468m mainly due to increased cash generation and proceeds from Airtel Money investments. Leverage improved to 1.4x from 2.1x in the previous period, largely driven by increased cash generation, expansion in underlying EBITDA and $550m of receipts from mobile money minority investors. Our balance sheet has also been further de-risked by continued localisation of our debt into the OpCos.
GAAP measures
Revenue
Reported revenue grew by 21.7% to $3,492m. The prior period benefitted from a
one-time exceptional revenue of $20m relating to a settlement in Niger.
Excluding this, revenue grew by 22.5% in reported currency and by 24.8% in
constant currency. The difference relates to currency devaluations, mainly in
the Nigerian naira (6.3%) and the Malawian kwacha (8.2%), in turn partially
offset by appreciation in the Ugandan shilling (4.3%) and the Central African
franc (2.0%). Revenue growth for the 9 months period benefitted from a
weakened performance in the first quarter of the prior year during the peak
period of Covid-19 related restrictions across the region. However, even after
adjusting for this, Group revenue growth rates were ahead of FY'21.
Operating profit
Operating profit was $1,146m, growing by 43.1% in reported currency as a
result of strong revenue growth and improvements in operating efficiency
across all our regional segments.
Net finance costs
Net finance costs decreased by $27m, as a result of lower foreign exchange
losses and a one-time $12m gain in other finance charges as a result of the
reversal of an interest provision in one of our operating entities.
The Group effective interest rate increased from 4.8% to 5.6% largely driven
by the repayment of the Eurobond in May 2021, which carried a lower than
average coupon and higher local currency debt at the OpCo level.
Taxation
Total tax charges increased by $129m, largely due to higher operating profit
and withholding tax on dividends by subsidiaries. The prior period also
benefited from the recognition of a deferred tax credit of $14m in Tanzania.
Profit after tax
Profit after tax almost doubled to $514m, an increase of 97.3%. The increase
was mainly led by higher operating profits along with lower net finance costs,
which more than offset the increase in tax charges due to increased profits.
Basic EPS
Basic EPS more than doubled to 11.7 cents, an improvement of 6.2 cents, up
from 5.5 cents in the prior period. The increase was mainly due to higher
operating profits which more than offset the increased tax charges.
Net cash generated from operating activities
Net cash generated from operating activities increased by $282m, an increase
of 23.1% to $1,499m (from $1,217m in the previous period), mainly driven by
higher profit before tax of $382m partially offset by higher tax payments on
the increased profits.
Alternative performance measures 1 (#_ftn1)
Underlying revenue
Underlying revenue in constant currency grew by 24.8% driven by customer base
growth of 5.8% to 125.8 million and strong ARPU growth of 17.1%. Customer base
growth was affected by the new NIN/SIM registration regulations in Nigeria;
excluding Nigeria the customer base grew by 12.0%. In Nigeria, while year on
year our customer base has declined by 2 million, our customer base returned
to growth in the third quarter, adding 1.9 million customers and contributing
towards total Group net customer additions of 3.1 million. ARPU growth of
17.1% was driven largely by growth in the contribution from data ARPU of 8.5%,
followed by voice contribution growth of 4.8%, mobile money contribution
growth of 3.0%, and with the balance coming from growth in other revenue.
All our regional segments and key services posted strong revenue growth;
Nigeria grew by 29.0%, East Africa by 24.4% and underlying revenue in
Francophone Africa grew by 19.0%. Voice revenue grew by 16.1%, and both data
and mobile money grew by 37.2% in constant currency.
Underlying EBITDA
Underlying EBITDA increased by 31.3% to $1,703m in reported currency while in
constant currency growth was 34.1%. The growth in underlying EBITDA was led by
revenue growth and supported by improved operating efficiencies. The
underlying EBITDA margin was 48.8%, an improvement of 326 basis points in
reported currency and 338 basis points in constant currency.
During the period, foreign exchange had an adverse impact of $47m on revenue
and $23m on underlying EBITDA, as a result of devaluation of the Nigerian
naira and the Malawian kwacha, in turn partially offset by appreciation in the
Ugandan shilling, the Zambian kwacha and the Central African franc.
With respect to currency sensitivity, on a 12-month basis, a 1% currency devaluation across all currencies in our OpCos would have a negative impact of $41m on revenues, $25m on underlying EBITDA and $22m on finance costs. Our largest exposure is to the Nigerian naira, for which each 1% of devaluation would have a negative impact of $17m on revenues, $10m on underlying EBITDA and $7m on finance costs.
Tax
The effective tax rate was 39.6% compared to 45.5% in the prior period,
largely a result of profit mix changes amongst the OpCos. 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 the
withholding tax on dividends by subsidiaries.
Exceptional items
An exceptional gain of $9m was recorded in the nine-month period ended 31
December 2021 on the sale of telecommunication tower assets in the Group's
subsidiaries in Rwanda and Madagascar. The prior period exceptional gain of
$28m includes one-time exceptional revenue of $20m relating to a settlement in
Niger and a deferred tax credit recognition in Tanzania amounting to $14m,
partially offset by one-off costs of $6m in Francophone Africa.
EPS before exceptional items
EPS before exceptional items more than doubled to 11.5 cents, an improvement
of 6.5 cents, up from 5.0 cents in the prior period. The increase was mainly
due to higher operating profits which more than offset the increased tax
charges.
Operating free cash flow
Operating free cash flow increased by 42.2% to $1,271m due to higher
underlying EBITDA more than offsetting increased capital expenditure. Capital
expenditure in the prior period was slightly lower due to logistical
challenges as a result of the pandemic.
Leverage
Leverage (net debt to underlying EBITDA) improved to 1.4x at 31 December 2021,
from 2.1x at 31 December 2020, largely driven by increased cash generation,
expansion in underlying EBITDA and receipts of $550m from mobile money
minority investments. Our balance sheet continued to be de-risked through a
reduction of net debt (now $3.0bn, from $3.5bn in the prior period) and
increased localisation of our debt into the OpCos, such that our gross OpCo
debt of $2,636m is now higher than our HoldCo debt of $1,505m.
Other significant updates
Payment service bank licence in Nigeria
On 4 November 2021, Airtel Africa's subsidiary SMARTCASH Payment Service Bank
Limited ('Smartcash') was granted approval in principle to operate a payment
service bank ('PSB') business in Nigeria.
The PSB licence is required for Airtel to provide financial services in
Nigeria, such as accepting cash deposits and carrying out payments and
remittances, issuing debit and prepaid cards, operating electronic wallets and
rendering other financial services.
Airtel Nigeria is working closely with the Central Bank to meet all its
conditions to receive the operating licence and commence operations. The final
operating licence will enable us to expand our digital financial products and
reach the millions of Nigerians that do not have access to traditional
financial services.
Final approval is subject to the Group satisfying certain standard conditions
within six months.
Super-agent licence in Nigeria
On 14 November 2021, Airtel Africa's subsidiary Airtel Mobile Commerce Nigeria
Ltd was granted approval in principle by the Central Bank of Nigeria to
operate as a super-agent in Nigeria.
The super-agent licence is distinct from the PSB licence. Under the
super-agent licence, we are able to create an agent network that can service
the customers of licensed Nigerian banks, payment service banks and licenced
mobile money operators in Nigeria.
Final approval of the super-agent licence is subject to the Group satisfying
certain standard conditions.
Early Bond redemption
Post period end, on 4 February 2022, Airtel Africa announced that its 100%
owned subsidiary, Bharti Airtel International (Netherlands) B.V., had elected
to redeem all of its 5.125% Guaranteed Senior Notes due 2023 ('Notes'),
aggregating to US$504,915,000, on 4 March 2022 ('Redemption Date'), ahead of
its maturity in March 2023.
In addition to the outstanding principal, the redemption price will include
settlement of all outstanding accrued interest up to the Redemption Date, plus
the applicable make-whole premium in accordance with the terms of the Notes.
This early redemption aligns with the continuation of our pursuit of a
reduction of external foreign currency debt at Group level.
Completion of Airtel Nigeria minority buyout offer
On 2 December 2021, further to the buyout offer announcement of 4 October
2021, Airtel Africa announced the completion of the minority shareholding
buyback of Airtel Networks Limited ('Airtel Nigeria'), a subsidiary of Airtel
Africa plc and a leading provider of telecommunication services in Nigeria.
The purchase consideration for the 8.22% minority shareholdings acquired under
the buyback was NGN 61bn, equivalent to $147m at an exchange rate of 415.07
NGN/USD.
Airtel Africa now holds 99.96% of the issued share capital of Airtel Nigeria.
NIN / SIM registration rules 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.
Initially, new customer acquisitions were discontinued until significant
progress had been made on linking the active customer base with verified NINs.
Natural churn in the customer base tempered the growth in active mobile
customers in the nine-month period to only 0.4 million (an addition of 1.9
million customers in Q3, after net losses of 1.1 million customers in Q1 and
0.4 million in Q2) following on from the net loss of 2.5 million customers in
the final quarter of the year to 31 March 2021. However, the financial impact
has been minimal, with continued revenue growth, largely due to the
significantly lower ARPU of the churned base and increased usage by the active
base. In April, the NCC announced that it would allow new customer enrolment
to recommence from certified outlets (a branch or kiosk where customers can
sign up to Airtel). To date, Airtel Nigeria has received approvals for over
9,800 outlets and new customer registrations have recommenced in those
outlets. The NCC also issued a further directive in April with the effect that
no individual customers can register more than four SIM cards under one NIN on
any network.
The original regulatory directive set an initial deadline for customers to
register their NIN with their SIM of 30 December 2020. This was subsequently
moved several times, with the latest deadline set for 31 March 2022.
We have made significant progress on capturing existing NINs and building the
database in collaboration with National Identity Management Commission (NIMC).
To date, out of Airtel Nigeria's 42.4 million active customers, we have
collated NIN information for 30.0 million active mobile customers. To complete
the registration process, we must also verify the NIN information we have
received from our subscribers with the NIMC.
First closing of towers sale in Tanzania
Post period end, on 5 January 2022, Airtel Africa announced the first closing
of the transaction to sell its telecommunications tower assets in Tanzania to
a joint venture company owned by a wholly-owned subsidiary of SBA
Communications Corporation, a leading global independent owner and operator of
wireless communications infrastructure, as majority owner, and by Paradigm
Infrastructure Limited, a UK company focused on developing, owning and
operating shared passive wireless infrastructure in selected growth markets.
The gross consideration for the transaction will be $176m. Under the terms of
the transaction, Airtel Africa's subsidiary in Tanzania will continue to
develop, maintain and operate its equipment on the towers under separate lease
arrangements, largely made in local currencies, with the purchaser.
With first closing, approximately $159m of the proceeds for the transaction
has now been received, with the balance receivable in instalments upon the
completion of the transfer of remaining towers to the purchaser. Around $60m
from the proceeds will be used to invest in network and sales infrastructure
in Tanzania and for distribution to the Government of Tanzania, as per the
settlement described in the Airtel Africa IPO Prospectus document published in
June 2019. The balance of the proceeds will be used to reduce debt at Group
level. As first closing was completed after 31 December 2021, the accounting
effects shall be reflected in the financial information for the period ending
31 March 2022.
First closing of towers sale in Madagascar
On 3 November 2021, Airtel Africa announced the first closing of the
transaction to sell its telecommunications tower company in Madagascar to
Helios Towers plc, a leading independent telecommunications infrastructure
company in Africa.
The gross consideration for the transaction will be $52m. Under the terms of
the transaction, Airtel Africa's subsidiary will continue to develop, maintain
and operate its equipment on the towers under separate lease arrangements,
largely made in local currencies, with the purchaser.
The proceeds from the transaction will be used to reduce Group external debt
and to invest in network and sales infrastructure in Madagascar.
Strategic investments in our mobile money business
Following earlier similar announcements of investments in our mobile money
business of $200m by TPG's The Rise Fund and $100m by Mastercard (made on 18
March 2021 and 1 April 2021 respectively) in July 2021, Airtel Africa signed
agreements with Qatar Holding LLC, an affiliate of the Qatar Investment
Authority ('QIA'), regarding their investment of $200m in Airtel Mobile
Commerce BV ('AMC BV'), a subsidiary of Airtel Africa plc. AMC BV is the
holding company for several of Airtel Africa's mobile money operations; and
ultimately is intended to own and operate the mobile money businesses across
all of Airtel Africa's 14 operating countries.
On 2 August 2021 and 20 August 2021 Airtel Africa announced first closings
relating to the Airtel Money minority investment transactions with TPG's The
Rise Fund and Mastercard, and subsequently with Qatar Holding LLC
respectively. Upon first closings, The Rise Fund, Mastercard and QIA
invested $150m, $75m and $150m respectively in a secondary purchase of
shares in AMC BV from a subsidiary of Airtel Africa, and both QIA and TPG
each appointed a director to the board of AMC BV.
In November 2021, Airtel Africa announced second closings relating to these
Airtel Money minority investment transactions, with a further $50m, $25m and
$50m invested into AMC BV by The Rise Fund, Mastercard and QIA respectively.
In December 2021, Airtel Africa announced the introduction of Chimera
Investment LLC as an additional investor in AMC BV through a $50m secondary
purchase of shares from a subsidiary of Airtel Africa plc. Chimera Investment
LLC (through its subsidiary Chimetech Holding Ltd.) now holds minority stakes
in AMC BV alongside the other minority investors, with Airtel Africa
continuing to hold the majority stake.
These transactions are a continuation of the Group's pursuit of strategic
asset monetisation and investment opportunities, and it is the aim of Airtel
Africa to explore the potential listing of the mobile money business within
four years of the original deal announcement made in March 2021.
Airtel Africa has now received a total of $550m cumulative proceeds from
minority stake sales in Airtel Money from the four investors. As previously
reported, the proceeds from these secondary stake sale transactions were used
for repayment of Group debt and for investment in network and sales
infrastructure in the respective operating countries.
Airtel Money partnership in East Africa with Flutterwave
On 5 October 2021, Airtel Money announced a new partnership with leading
African payments company, Flutterwave, to expand Airtel Money's services to
businesses across East Africa. The partnership enables businesses integrating
Flutterwave in Uganda, Tanzania, Zambia, Malawi, Kenya and Rwanda, to receive
payments from Airtel Money customers, as well as make bulk payments into
Airtel Money wallets thanks to Airtel Money's proprietary fintech platforms.
The new services will go live subject to regulatory approvals in the
respective countries and will reach Airtel Money's 20 million customers based
in East Africa.
Launch of sustainability strategy
Within our Full Year Results announcement in May 2021, we highlighted that we
would publish the measurable medium to long-term sustainability goals we set
ourselves. In the first six months of this financial year, we identified the
programmes needed, along with key milestones towards these goals. We also
conducted a consultation progress with our stakeholders to gather feedback and
further inform our sustainability strategy.
In October 2021, Airtel Africa launched an ambitious sustainability strategy
that underpins our well-established corporate purpose of 'Transforming Lives.'
The strategy demonstrates our commitment to developing the infrastructure and
services that will drive both digital and financial inclusion for people
across Africa and provides a framework to contribute to six of the United
Nations' Sustainable Development Goals ('SDGs') where we believe we can have
the biggest impact. These are SDG 4: Delivering quality education;
SDG 5: Gender equality; SDG 8: Decent work and economic growth; SDG 9:
Industry innovation and infrastructure; SDG 10: Reduced inequalities; and SDG
12: Responsible consumption and production.
The launch of our sustainability strategy builds upon the Group's
sustainability framework, announced with the FY'21 results, with its four key
pillars of 'Our business', 'Our people', 'Our communities' and 'Our
environment', and the strong foundations of the work we are already doing at a
Group level and across all our local operations. The new sustainability
strategy covers every aspect of our business activities, and has
environmental, social and governance criteria at its core.
The sustainability strategy includes nine goals and commitments, with
corresponding programmes that address the business' material topics
(identified through an extensive consultation at the beginning of the year)
and enable the Group to continue delivering sustainable growth and uphold the
best governance standards:
· Data security goal: Establish industry-leading data security for
our customers; through investments in technology and expertise, updated
processes and consumer awareness - with focus areas around confidentiality,
integrity and availability.
· Service quality goal: Provide underserved communities with access
to reliable networks and connectivity; through the rollout of new
infrastructure and technology, improved fibre connectivity and capacity - with
focus areas on service accessibility, delivery and reliability.
· Supply chain goal: Ensure all our suppliers are aligned with our
sustainability agenda; through programmes to increase supplier disclosure and
audit ESG performance - with focus areas on enhanced supplier due diligence
and ongoing ESG compliance.
· Commitments to our people: with our ambition to provide rewarding
employment opportunities and to achieve genuine diversity and inclusion at all
levels across the business through four key commitments:
o Delivering equality in our workforce; through recruitment and programmes
to provide training and advancement for everyone regardless of gender,
nationality or disability;
o Providing best practice training and development; through upskilling and
reskilling initiatives to ensure they can succeed in their future careers. And
through supporting female entrepreneurs through training and increasing
women's participation in the technology and engineering sectors;
o Providing the highest standards of health and safety for our employees and
contractors; through the introduction of a best practice social and health and
safety management system, improved policies and full compliance with all
legislation and regulation; and,
o Maintaining the highest levels of employee engagement; through the
introduction of additional channels that provide every one of our people with
a voice.
· Digital inclusion goal: significantly improve digital Inclusion
across Africa; by driving the penetration of mobile, smartphones and home
broadband in rural areas through the provision of retail and support services.
· Financial inclusion goal: significantly increase financial
inclusion in Africa, with particular support for women; through the
development of affordable financial products to meet the needs of the un- and
under-banked, a reliable service and financial confidence and literacy.
· Access to education goal: helping transform the lives of over
one million children through improving access to education - with programmes
around connectivity, the provision of zero-rated education content under a
five-year UNICEF partnership, connecting 1,400 schools to the internet by
2027, and the adoption and support of schools in all our markets.
· Greenhouse gas emissions reduction goal: Our ambition is to
achieve net zero greenhouse gas ('GHG') emissions ahead of the 2050 deadline
set out in the Paris Agreement. To do this we must fully identify, measure and
reduce our GHG emissions which can only be achieved in partnership with our
peers and the wider industry. We will establish and launch a sector leading
and credible decarbonisation pathway in 2022, ahead of the publication of our
first Sustainability Report. In January 2022, we have engaged with the Carbon
Trust for their advice and assistance with several aspects of our Greenhouse
gas emissions measurement, management and reporting.
· Environmental stewardship: Eliminate hazardous waste from our
operations, significantly reduce our non-hazardous waste and minimise our
water consumption; with programmes to replace damaging materials, expand
recycling schemes and build employees' awareness around the protection of our
natural resources.
Partnership with UNICEF
On 1 November 2021, Airtel Africa and UNICEF announced a five-year
pan-African partnership to help accelerate the roll-out of digital learning
through connecting schools to the internet and ensuring free access to
learning platforms across 13 countries. By providing equal access to quality
digital learning, particularly for the most vulnerable children, the
partnership will help to ensure that every child reaches their full potential.
Airtel Africa is the first African private sector partner to make a
multimillion-dollar commitment to 'Reimagine Education', a global initiative
launched by UNICEF in 2020 calling for public and private sector investment
in digital learning as an essential service for every child and young person
across the globe. This initiative aims to give children a chance to catch up
on their learning needs amid the ongoing global pandemic.
Airtel Africa's financial and in-kind contribution for this partnership
is $57m over five years to 2027. The programme will call on technology and
expertise, in addition to direct financial support to connect schools and
communities to the internet and enable free access to online educational
content for students. It will also provide vital data insights to
inform UNICEF's work to scale-up digital learning and help ensure it is
sustainable and meets students' needs across Africa.
The Airtel Africa and UNICEF pan-African partnership will benefit students
in Chad, Congo, Democratic Republic of the Congo, Gabon,
Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Tanzania, Uganda and Zambia.
Dividend policy
In October 2021, the Board approved an upgrade to the progressive dividend
policy as a result of continued strong business performance and significant
progress made in reducing the leverage ratio. The new policy aims to grow the
dividend annually by a mid to high-single digit percentage from a new base of
5 cents per share for FY 2022, with a continued focus to further strengthen
the balance sheet. The Board declared an interim dividend of 2 cents per share
(1.5 cents in H1'21) in line with this upgraded dividend policy, which was
subsequently paid on or around 10 December 2021.
Covid update
The Covid-19 pandemic contributed to a rapid acceleration of already existing
macro trends across the countries where we operate, with people, businesses
and governments seeking access to more and better connectivity and improved
financial inclusion. These challenging times have shown that the telecoms
industry is a key and essential service for these economies, allowing
customers to work remotely, reduce their travel, keep connected and have
access to affordable entertainment and financial services.
Covid-19 presented significant challenges to the business, particularly during
the initial phase of the pandemic in Q1 last year, when mobile money and
mobile services growth both slowed. However, the actions taken by the Board at
that time enabled the continued execution of our strategy, including meeting
increased customer demand for data, mobile money and mobile services.
Through multiple lockdowns and during times of national crisis our people have
kept our distribution channels available and our networks fully operational.
Our business partners have similarly continued to deliver their services
despite numerous logistical challenges, and governments and regulators have
continued to support the industry and helped facilitate our continued support
to the economies of the countries and the communities we serve.
Several times through the pandemic, the governments in the countries where we
operate have acted swiftly to implement and enforce restrictions on the
movement of people to prevent contagion. These swift actions, along with low
population density and relatively youthful population demographics, less
frequent travel, and local experience in dealing with contagious diseases,
have resulted in generally lower infection rates in sub-Saharan Africa
relative to some other regions. Around the world the vaccination effort is
well under way, with a significant easing of social distancing rules and
travel restrictions, although Africa lags most developed economies in
attaining full vaccination cover.
Despite the resilience demonstrated by our business during the last two years,
we are constantly monitoring how the situation is evolving to identify key
risks and to put in place adequate mitigation plans to minimise any potential
disruptions.
The Group will continue to focus on ensuring the safety of our employees, our
outsourced partners and our customers; ensuring that our network and
distribution channels remain fully operational and available; ensuring that
our customers continue to have access to financial services and ensuring that
at Group level we are in the right financial position to meet our financial
obligations at all times.
New shareholding requirements in Kenya
On 9 April 2021, the Minister for ICT in Kenya published an amendment to the
National Information Communications and Technology (ICT) Policy Guidelines,
2020 (ICT Policy). The ICT Policy amendment will affect Airtel Africa's Kenya
business as follows:
· Airtel Networks Kenya Limited, which currently holds an
indefinite exemption from the Minister for ICT, dated 20 March 2013, has three
years with effect from 9 April 2021 to comply with the requirement to have a
30% local shareholding.
· Airtel Money Kenya Limited, which holds a Content Service
Provider Licence from the Communications Authority of Kenya, with effect from
November 2020, has three years from the date of the licence to comply with the
requirement to have a 30% local shareholding.
Under the amended ICT policy, a licensee may apply to the ICT Minister for an
extension of time to comply with the requirement, or to obtain an exemption.
Appointment of new CEO, and other Board appointments and changes
On 29 April 2021, Airtel Africa announced that Olusegun 'Segun' Ogunsanya,
managing director and chief executive officer Airtel Nigeria was to succeed
Raghunath 'Raghu' Mandava, as managing director and chief executive officer
following Raghu Mandava's informing the Board of his intention to retire.
Segun Ogunsanya joined the Board of Airtel Africa plc with effect from 1
October 2021.
Segun Ogunsanya joined Airtel Africa in 2012 as managing director and chief
executive officer Airtel Nigeria and has been responsible for the overall
management of our operations in Nigeria, our largest market in Africa. Segun
has more than 25 years' business management experience in banking, consumer
goods and telecoms. Before joining Airtel in 2012, Segun held leadership roles
at Coca-Cola in Ghana, Nigeria, and Kenya (as managing director and chief
executive officer). He has also been the managing director of Nigerian
Bottling Company Ltd (Coca-Cola Hellenic owned) and Group head of retail
banking operations at Ecobank Transnational Inc, covering 28 countries in
Africa. He is an electronics engineer and also a chartered accountant.
Raghu Mandava has retired as managing director and chief executive officer, as
a director of Airtel Africa plc and as a member of the Market Disclosure
Committee as of 30 September 2021. Following his cessation of employment at
Airtel Africa, Mr. Mandava remains available to advise the Chairman, the
Airtel Africa Board and the newly appointed managing director and chief
executive officer for a nine-month period.
Jaideep Paul, chief financial officer, was appointed as an executive director
and joined the Board of Airtel Africa plc with effect from 1 June 2021.
On 12 October 2021, Airtel Africa announced the appointment of Ms Tsega
Gebreyes to the Board as an independent non-executive director, with immediate
effect.
New administrative office in Dubai
Airtel Africa plc has opened a new office in Dubai, adding to its existing
administrative office locations in Nairobi, London, Amsterdam and Delhi.
The executive committee of Airtel Africa plc now operates out of the new
office, which provides for significantly improved connectivity and enhanced
cooperation with our 14 operating markets across Africa and with our other
administrative offices.
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 nine-month period, ended 31 December 2021
Nigeria
Description Unit of Nine-month period ended Quarter ended
measure
Dec-21 Dec-20 Reported currency Constant currency Dec-21 Dec-20 Reported currency Constant currency
change %
change %
change %
change %
Summarised statement of operations
Revenue $m 1,370 1,130 21.3% 29.0% 476 412 15.5% 23.3%
Voice revenue (1) $m 717 657 9.1% 16.0% 246 244 0.9% 7.6%
Data revenue $m 539 397 35.9% 44.5% 189 140 34.6% 43.6%
Other revenue (1) $m 115 76 51.5% 61.1% 41 28 48.0% 57.9%
Underlying EBITDA $m 758 608 24.7% 32.6% 266 221 20.1% 28.1%
Underlying EBITDA margin % 55.3% 53.8% 150 bps 148 bps 55.9% 53.8% 212 bps 212 bps
Depreciation and amortisation $m (196) (177) 11.0% 18.0% (68) (62) 10.1% 17.7%
Exceptional item $m - - 0.0% 0.0% - - 0.0% 0.0%
Operating profit $m 562 431 30.4% 38.6% 198 159 24.0% 32.2%
Capex $m 182 178 2.2% 2.2% 78 81 (3.8%) (3.8%)
Operating free cash flow $m 576 430 34.0% 46.2% 188 140 33.9% 47.9%
Operating KPIs
ARPU $ 3.7 2.9 28.7% 36.8% 3.9 3.0 27.5% 36.1%
Total customer base million 42.4 44.4 (4.7%) 42.4 44.4 (4.7%)
Data customer base million 19.0 18.8 0.7% 19.0 18.8 0.7%
((1) )Voice revenue includes inter-segment revenue of $1m and other revenue
includes inter-segment revenue of $2m in the nine-month period ended 31
December 2021. Excluding inter-segment revenue, voice revenue was $716m and
other revenue was $113m in the nine-month period ended 31 December 2021.
Revenue in reported currency grew by 21.3% while in constant currency revenue
grew by 29.0%. The differential in growth rates is due to devaluation of the
Nigerian naira by 6.3%. The constant currency revenue growth of 29.0% was
driven by ARPU growth of 36.8%, to which voice contributed 13.4%, data
contributed 18.7% and the balance came from other revenue.
Voice revenue grew by 16.0%, driven by an increase in voice usage per customer
of 23.1% with voice ARPU growth of 23.0%. The year-on-year decline in the
customer base of 2 million was due to the implementation of new
"Know-Your-Customer" (KYC) requirements in Nigeria, which initially included a
temporary halt to new customer activations. New activations have been
permitted in regulatory approved outlets since the end of April 2021. The
number of regulatory approved outlets expanded to over 9,800 on 31 December
2021. Accordingly, while year on year our Nigerian customer base has declined
by 2 million, in Q3'22 we added 1.9 million customers.
Data revenue growth continued to be a key driver of growth in Nigeria, growing
by 44.5% in constant currency, driven by the growth in data usage per customer
to 4.0 GB per month (from 2.7 GB per month in the prior period). The expansion
of our 4G network and increase in smartphone penetration supported this growth
in data usage. Almost 90% of our total sites in Nigeria are now on 4G and
there has been a 2% increase in smartphone penetration. This has resulted in
data ARPU growth of 44.1%. Data revenue accounted for 39.4% of total revenue
in Nigeria in the nine-month period to 31 December 2021, up by 4.2% from the
previous period. In Q3'22, 43.4% of our data customer base were 4G users,
contributing to 73.4% of total data usage. 4G data usage per customer reached
5.9 GB per month in Q3'22, from 4.8 GB per customer per month in Q3'21.
Other revenue grew by 61.1%, with the main contribution coming from the growth
in value added services revenue, led by airtime credit services.
Underlying EBITDA was $758m, an increase of 24.7% in reported currency and a
constant currency growth of 32.6%. The underlying EBITDA margin was 55.3%, an
increase of 150 basis points in reported currency and 148 basis points in
constant currency as a result of improvements in operational efficiency.
Operating free cash flow increased to $576m, up by 46.2%, due to the expansion
of underlying EBITDA.
East Africa(1)
Description Unit of Nine-month period ended Quarter ended
measure
Dec-21 Dec-20 Reported currency Constant currency Dec-21 Dec-20 Reported currency Constant currency
change %
change %
change %
change %
Summarised statement of operations
Revenue (2) $m 1,282 1,023 25.2% 24.4% 459 364 26.0% 21.9%
Voice revenue (3) $m 586 486 20.6% 20.2% 210 174 20.5% 17.3%
Data revenue $m 339 262 29.4% 28.5% 121 88 38.5% 34.0%
Mobile money revenue (4) $m 300 211 42.0% 39.3% 111 80 38.9% 30.8%
Other revenue (3) $m 118 112 4.9% 5.9% 40 38 4.5% 4.0%
Underlying EBITDA $m 630 463 36.2% 34.4% 233 170 37.0% 31.4%
Underlying EBITDA margin % 49.2% 45.2% 395 bps 365 bps 50.9% 46.8% 409 bps 365 bps
Depreciation and amortisation $m (180) (164) 9.5% 9.3% (62) (58) 7.7% 5.9%
Exceptional item $m - - 0.0% 0.0% - - 0.0% 0.0%
Operating profit (5) $m 450 297 51.6% 49.1% 171 112 52.1% 44.5%
Capex $m 160 168 (4.8%) (4.8%) 76 87 (12.3%) (12.3%)
Operating free cash flow $m 470 295 59.5% 57.5% 157 83 88.3% 77.4%
Operating KPIs
ARPU $ 2.5 2.3 12.1% 11.4% 2.7 2.3 14.3% 10.5%
Total customer base million 57.4 52.6 9.0% 57.4 52.6 9.0%
Data customer base million 18.6 15.6 18.7% 18.6 15.6 18.7%
Mobile money customer base million 21.4 17.9 19.7% 21.4 17.9 19.7%
((1) )The East Africa business region includes Kenya, Malawi, Rwanda,
Tanzania, Uganda and Zambia.
((2)) Revenue includes intra-segment eliminations of $62m for the nine-month
period ended 31 December 2021 and $48m for the prior period.
((3) )Voice revenue includes inter-segment revenue of $0.4m and other
revenue includes inter-segment revenue of $4m in the nine-month period ended
31 December 2021. Excluding inter-segment revenue, voice revenue was $586m and
other revenue was $114m in the nine-month period ended 31 December 2021.
((4)) Mobile money revenue post intra-segment eliminations with mobile
services was $238m for the nine-month period ended 31 December 2021 and $163m
for the prior period.
((5) )Operating profit includes CSR (Corporate social responsibility) expense
of $2m in the prior period.
Reported currency revenue in East Africa grew by 25.2% to $1,282m with 24.4%
growth in constant currency. Revenue growth was recorded across all service
segments; In constant currency terms, voice revenue grew by 20.2%, data
revenue by 28.5% and mobile money revenue by 39.3%. Reported currency revenue
growth was slightly higher due to currency appreciation in the Ugandan
shilling and the Zambian kwacha, partially offset by currency devaluation in
the Malawian kwacha.
Voice revenue grew by 20.2%, supported by customer base growth of 9.0% and
ARPU growth of 7.6%. The customer base growth was largely driven by expansion
of both network coverage and the distribution network. Voice usage per
customer increased to 350 minutes per customer per month, up by 5.5%,
resulting in voice ARPU growth of 7.6%.
Data revenue grew by 28.5%, largely driven by data customer base growth of
18.7% and supported by data ARPU growth of 4.8%. The expansion of our 4G
network infrastructure helped drive the growth in our data customer base.
32.4% of customers in East Africa are data users, out of a total customer base
of 57.4 million. In East Africa, 84.1% of our sites are now on 4G, compared
with 71.8% during the prior period. In Q3'22, 38% of data customers were 4G
customers, contributing to 61.3% of total data usage. Data usage per customer
reached 3.2 GB per customer per month, up by 20.8% from 2.6 GB per customer
per month in the prior period. 4G data usage per customer grew by 4.1%,
reaching 5.6 GB per customer per month in Q3.
Mobile money revenue grew by 39.3%, largely driven by growth in Zambia, Uganda
and Malawi. This revenue growth was driven by customer base growth of 19.7%
and mobile money ARPU growth of 15.8%, due largely to expansion of our
distribution network. Transaction value per customer was $183 per customer per
month, up by 18.4% from $152 per customer per month in prior period. This
resulted in mobile money ARPU growth of 15.8%. Mobile money revenue accounted
for 23.4% of total East Africa revenue, up from 20.7% in the prior period, an
increase of 2.8 percentage points. The slowdown in mobile money revenue growth
in Q3'22 was due to the implementation of additional levies by the Government
of Tanzania on mobile money withdrawal and P2P transactions from July 2021,
which were subsequently revised downwards in early September 2021.
Underlying EBITDA margin improved to 49.2%, an increase of 395 basis points in
reported currency and 365 basis points in constant currency, as a result of
strong revenue growth and improvements in operating efficiency. Operating free
cash flow increased to $470m, up 57.5% due largely to the expansion of
underlying EBITDA.
Francophone Africa(1)
Description Unit of Nine-month period ended Quarter ended
measure
Dec-21 Dec-20 Reported currency Constant currency Dec-21 Dec-20 Reported currency Constant currency
change %
change %
change %
change %
Summarised statement of operations
Underlying revenue (2) $m 849 704 20.5% 19.0% 288 259 11.5% 13.5%
Voice revenue (3) $m 446 397 12.3% 11.0% 152 146 4.6% 6.9%
Data revenue $m 249 183 36.3% 34.2% 84 66 28.6% 30.5%
Mobile money revenue (4) $m 106 79 33.4% 32.2% 37 30 22.5% 25.4%
Other revenue (3) $m 79 71 11.0% 9.3% 26 26 (1.5%) (1.0%)
Underlying EBITDA $m 346 254 36.2% 34.8% 120 108 10.9% 12.9%
Underlying EBITDA margin % 40.8% 36.1% 471 bps 479 bps 41.5% 41.7% (20) bps (25) bps
Depreciation and amortisation $m (156) (155) 0.4% (0.9%) (51) (57) (10.1%) (8.5%)
Exceptional item $m - 14 (100.0%) (100.0%) - 20 (100.0%) (100.0%)
Operating profit (5) $m 190 112 70.2% 106.9% 68 71 (3.9%) 57.6%
Capex $m 83 56 48.6% 48.6% 31 20 57.1% 57.1%
Operating free cash flow $m 263 198 32.8% 30.8% 89 88 0.6% 2.8%
Operating KPIs
ARPU $ 3.8 3.8 0.5% (0.8%) 3.7 4.0 (6.9%) (5.2%)
Total customer base million 26.0 21.8 19.3% 26.0 21.8 19.3%
Data customer base million 7.6 6.2 23.2% 7.6 6.2 23.2%
Mobile money customer base million 4.2 3.6 19.1% 4.2 3.6 19.1%
((1)) The Francophone Africa business region includes Chad, Democratic
Republic of the Congo, Gabon, Madagascar, Niger, Republic of the Congo, and
Seychelles.
((2)) Underlying revenue includes intra-segment eliminations of $32m for the
nine-month period ended 31 December 2021 and $27m for the prior period. It
also excludes one-time exceptional revenue of $20m relating to a settlement in
Niger in the nine-month and three-month periods ended 31 December 2020.
((3)()) Voice revenue includes inter-segment revenue of $1m in the nine-month
period ended 31 December 2021. Excluding inter-segment revenue, voice revenue
was $445m in the nine-month period ended 31 December 2021.
((4)()) Mobile money revenue post intra-segment eliminations with mobile
services was $74m in the nine-month period ended 31 December 2021 and $53m in
the prior period.
((5) )Operating profit includes CSR (Corporate Social Responsibility) expense
of $1m in nine-month period ended 31 December 2020.
Revenue in reported currency grew by 20.5%. In constant currency, revenue
growth was 19.0%, largely driven by growth in Democratic Republic of the Congo
(DRC), Chad, Niger and Gabon. The reported currency revenue growth is higher
than constant currency due to appreciation of the Central African franc
(2.0%).
Voice revenue grew by 11.0% in constant currency, driven by customer base
growth of 19.3% partially offset by ARPU decline of 7.4%. Customer base growth
was largely driven by expansion of both network coverage and distribution
infrastructure. ARPU decline of 7.4% was mainly due to reductions in
international revenue and local incoming call revenues due to changes in
interconnect rates in Gabon and Republic of the Congo.
Data revenue grew by 34.2% in constant currency, largely due to customer base
growth of 23.2% and data ARPU growth of 2.0%. The expansion of both our 4G
network (with 63.8% of total sites now on 4G) and our distribution
infrastructure helped to drive our data customer base growth. The adoption of
our "more for more" bundle offerings, up by 8.7% and contributing 93.3% of
data revenue in Q3'22 helped us to grow data revenue by 34.2%. As on Q3'22,
44.5% of data customers are 4G customer which contributes to 64.7% of total
data usage on 4G network. Data usage per customer was 2.4 GB per month in
Q3'22 (up 20.3% from prior period) while 4G data usage per customer reached
4.4 GB per customer (up 2.7%).
Mobile money revenue grew by 32.2% in constant currency, driven by both
customer base growth of 19.1% and mobile money ARPU growth of 6.4%. The
expansion of our agents and exclusive distribution network helped us to grow
the mobile money customer base. Transaction value per customer reached $431
per month, up by 8.9%, driving mobile money ARPU growth of 6.4%.
The underlying EBITDA margin was 40.8% for the period, reflecting an
improvement of 471 basis points in reported currency and 479 basis points in
constant currency; driven by both revenue growth and increased efficiency in
operating expenses. Operating free cash flow increased to $263m, up 30.8%, due
to the expansion in underlying EBITDA.
Mobile services
Description Unit of Nine-month period ended Quarter ended
measure
Dec-21 Dec-20 Reported currency Constant currency Dec-21 Dec-20 Reported currency Constant currency
change %
change %
change %
change %
Summarised statement of operations
Underlying revenue (1) $m 3,183 2,637 20.7% 23.3% 1,107 948 16.8% 19.5%
Underlying EBITDA $m 1,536 1,183 29.8% 33.3% 546 446 22.5% 25.4%
Underlying EBITDA margin % 48.3% 44.9% 340 bps 361 bps 49.4% 47.1% 229 bps 231 bps
Depreciation and amortisation $m (521) (489) 6.5% 8.4% (178) (175) 1.7% 4.1%
Operating exceptional items $m - 14 (100%) (100.0%) - 20 (100.0%) (100.0%)
Operating profit (2) $m 1,015 705 44.0% 53.2% 368 291 26.4% 43.0%
Capex $m 405 395 2.5% 2.5% 176 184 (4.5%) (4.5%)
Operating free cash flow $m 1,131 788 43.5% 49.5% 370 262 41.3% 47.5%
Operating KPIs
Mobile voice
Voice revenue $m 1,746 1,537 13.6% 16.1% 606 565 7.4% 9.9%
Customer base million 125.8 118.9 5.8% 125.8 118.9 5.8%
Voice ARPU $ 1.6 1.5 6.6% 8.9% 1.6 1.6 2.8% 5.2%
Mobile data
Data revenue $m 1,128 842 34.0% 37.2% 395 294 34.4% 37.7%
Data customer base million 45.1 40.6 11.1% 45.1 40.6 11.1%
Data ARPU $ 2.9 2.5 18.2% 21.0% 3.0 2.4 21.7% 24.6%
( (1)) Mobile service revenue after intersegment eliminations was $3,179m in
the nine-month period ended 31 December 2021 and $2,634m in the prior period.
Underlying revenue for Mobile service also excludes one-time exceptional
revenue of $20m relating to a settlement in Niger in the nine-month and
three-month periods ended 31 December 2020.
((2)) Operating profit includes $1m CSR (Corporate Social Responsibility)
expense for the period, and $3m CSR expense in the prior period.
Mobile services revenue in reported currency grew by 20.7%, with constant
currency growth of 23.3%, driven by growth in both voice and data revenues.
Voice revenue grew by 16.1% in constant currency, driven by customer base
growth of 5.8% and voice ARPU growth of 8.9%. The customer base growth was
driven by expansion of our network and distribution infrastructure. Customer
base growth was affected by the new NIN/SIM registration regulations in
Nigeria; excluding Nigeria the customer base grew by 12.0%. In Nigeria, while
on a year on year basis our customer base reduced by 2 million, in Q3'22 we
added 1.9 million net new customers. Voice minutes per customer reached 256
minutes per month, an increase of 10.5%, resulting in voice ARPU growth of
8.9%. Total network minutes increased by 17.8%.
Data revenue continued as key driver of growth, growing by 37.2% in constant
currency, supported by data customer base growth of 11.1% and data ARPU growth
of 21.0%. Expansion of our 4G network infrastructure helped to drive growth in
our data customer base. 82.8% of our Group sites are now operating on 4G,
compared with 73.6% in the prior period. Data customer base penetration
(percentage of the total customer base) reached 35.9%, an increase of 1.7
percentage points. Total data usage per customer reached 3.4 GB per month, up
32.1% from the 2.6 GB per customer per month of the prior period. In Q3'22, 4G
data customers contributed to 41.4% of the total data customer base and 67.7%
to total data usage on the network (up from 58.8% in prior period). The
increase in 4G data customer penetration also helped to drive data ARPU
growth.
Data revenue contribution reached 32.3% of total Group revenue in the
nine-month period ended 31 December 2021, up from 29.5% in the prior period.
Mobile money
Description Unit of Nine-month period ended Quarter ended
measure
Dec-21 Dec-20 Reported currency Constant currency Dec-21 Dec-20 Reported currency Constant currency
change %
change %
change %
change %
Summarised statement of operations
Revenue (1) $m 406 291 39.6% 37.2% 148 110 34.4% 29.2%
Underlying EBITDA $m 198 142 39.8% 36.6% 72 54 34.6% 28.8%
Underlying EBITDA margin % 48.7% 48.7% 7 bps (22) bps 48.8% 48.7% 10 bps (17) bps
Depreciation and amortisation $m (10) (7) 56.9% 52.5% (4) (2) 130.1% 121.5%
Operating profit $m 188 135 38.9% 35.8% 68 52 31.5% 25.8%
Capex $m 20 7 195.7% 195.7% 9 3 188.4% 188.4%
Operating free cash flow $m 178 135 31.8% 28.4% 63 51 23.8% 18.2%
Operating KPIs
Mobile money key KPIs
Transaction value $m 47,644 33,471 42.3% 40.0% 17,182 12,799 34.2% 28.7%
Active customers million 25.7 21.5 19.6% 25.7 21.5 19.6%
Mobile money ARPU $ 1.9 1.7 15.4% 13.5% 2.0 1.8 12.4% 8.1%
( (1)) Mobile money service revenue post inter-segment eliminations with
mobile services was $312m in the nine-month period ended 31 December 2021 and
$216m in the prior period.
Mobile money revenue in reported currency grew by 39.6% to $406m, with
constant currency growth of 37.2%. The slowdown in mobile money revenue growth
from Q2'22 was due to the implementation of additional levies by the
Government of Tanzania on mobile money withdrawal and P2P transactions from
July 2021, which were subsequently revised downwards in early September 2021.
Constant currency revenue growth of 37.2% was driven by customer base growth
of 19.6% and ARPU growth of 13.5%. Growth in the mobile money customer base
was due to expansion of our distribution network, particularly as we continued
to expand our exclusive channel of Airtel money branches and kiosks. We
continue to expand our mobile money footprint through partnerships with
leading financial institutions, and the expansion of our merchant ecosystem
further strengthened our mobile money propositions. The mobile money ARPU
growth of 13.5% in constant currency was led by growth in the transaction
value per customer by 15.8%, reaching $224 per month. The Q3'22 annualised
transaction value reached $65bn in constant currency, with mobile money
revenue contributing 11.6% of total revenue in Q3'22.
The mobile money customer base grew by 19.6% to 25.7 million on 31 December
2021. Mobile money customer base penetration (percentage of the total customer
base) reached 20.4%, an increase of 2.4 percentage points. Mobile money ARPU
grew by 13.5%, largely driven by an increase in transaction values and higher
contributions from cash transactions, merchant payments, P2P transfers and
mobile service recharges through Airtel Money.
Underlying EBITDA grew by 39.8% to $198m in reported currency, while in
constant currency growth was 36.6%. The underlying EBITDA margin was 48.7%,
broadly in line with the prior year.
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 underlying 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 underlying 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 Adjustment to reconcile to IFRS measure Definition and purpose
Underlying Revenue Revenue · Exceptional Item The Group defines underlying revenue as revenue for the period adjusted for
exceptional items.
The Directors view underlying revenue to be a meaningful measure to analyse
the Group's revenue, excluding exception 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 underlying revenue.
Underlying EBITDA and margin Operating profit · Depreciation and amortisation The Group defines underlying EBITDA as operating profit/(loss) for the period
before depreciation and amortisation, charity and donation and adjusted for
· Charity and donation exceptional items.
· Exceptional items The Group defines underlying EBITDA margin as underlying EBITDA divided by
underlying revenue.
Underlying 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. Underlying 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, underlying
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 underlying
EBITDA and margin.
Charity and donations are not related to the trading performance of the Group
and hence adjusted to arrive at underlying 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 underlying 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 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, charity and donation and exceptional
items, less capital expenditures. The Group views operating free cash flow as
· Other non-cash items a key liquidity measure, as it indicates the cash available to pay dividends,
repay debt or make further investments in the Group.
· Non-operating income
· Charity and donation
· Exceptional items
· Capital expenditures
Net debt and leverage ratio No direct equivalent · Borrowing 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 underlying EBITDA.
· Term deposits with banks
The directors view net debt and the leverage ratio to be meaningful measures
· Deposits given against borrowings/ non-derivative financial instruments 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 underlying EBIT The Group defines return on capital employed ('ROCE') as underlying 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 underlying 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 Underlying 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 underlying 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 2021. 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
Definition of underlying EBITDA margin has been clarified as underlying EBITDA
divided by underlying revenue. Underlying revenue is included in the APM and
is defined as revenue for the period adjusted for exceptional items. The
reason for using underlying revenue is because exceptional revenue was
recorded in the nine-month period ended 31 December 2020.
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. 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.
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.
Broadband base stations Base stations that carry either 3G and/or 4G capability across all
technologies and spectrum bands.
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
underlying performance of the business. Constant currency growth rates for
prior periods are calculated using closing exchange rates as at the end of
prior period.
Churn Churn is derived by dividing the total number of customer disconnections
during the relevant period by the average number of customers and dividing the
result by the number of months in the relevant 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 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 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.
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.
Free cash flow Free cash flow is defined as operating free cash flow less cash interest,
income tax paid and change in operating working capital.
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
underlying 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 is typically
expressed over a period of one month. 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 underlying EBITDA (LTM) An alternative performance measure (non-GAAP) Calculated by dividing net debt
as at the end of the relevant period by underlying 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 underlying 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.
Underlying EBIT Defined as operating profit/(loss) for the period adjusted for exceptional
items.
Underlying EBITDA An alternative performance measure (non-GAAP). Defined as operating profit
before depreciation, amortisation, CSR cost and exceptional items.
Underlying EBITDA margin An alternative performance measure (non-GAAP). Calculated by dividing
underlying EBITDA for the relevant period by revenue for the relevant period.
Underlying 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
UoM Unit of measure
USSD Unstructured supplementary service data
1 (#_ftnref1) Alternative performance measures (APM) are described on page
17.
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