REG - Airtel Africa PLC - Q3 Results
02/02/2023 07:00
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RNS Number : 6599O Airtel Africa PLC 02 February 2023
Airtel Africa plc
Results for nine-month period ended 31 December 2022
2 February 2023
Strong execution continues to deliver double-digit revenue and EBITDA growth
despite a challenging macro-environment.
Highlights
· Total customer base increased to 138.5 million (up 10.1%), as the
penetration of mobile data and mobile money services continued to rise,
driving the data customer base up 13.6% and mobile money customer base up
22.2%. Strong execution continues to deliver double-digit revenue and EBITDA
growth despite a challenging macro-environment.
· ARPU growth of 7.2% in constant currency, largely driven by
increased usage across voice, data, and mobile money.
· Mobile money transaction value increased by 37.0%, to an
annualised value of almost $100bn in Q3'23.
· Revenue in reported currency grew by 12.1%, to $3,914m with Q3'23
growth of 10.7%.
· Revenue growth in constant currency was 17.3% (18.0% in Q3'23) driven
by double digit growth across all reporting segments. Mobile Services
revenue in Nigeria grew by 20.9%, in East Africa by 11.9% and in
Francophone Africa by 11.8% (and across the Group by 15.9%, with voice
revenue growth of 12.7% and data revenue up 22.3%). Mobile
Money revenue grew by 29.8%, driven by 32.5% growth in East Africa and
21.7% in Francophone Africa.
· EBITDA was $1,916m, up 12.6% in reported currency and 17.4% in
constant currency, with an EBITDA margin of 49.0%, increasing 20 basis points
in reported currency and broadly flat in constant currency.
· Profit after tax was $523m, up 1.7%, as EBITDA growth was
partially offset by higher foreign exchange and derivative losses of $184m.
· EPS before exceptional items was 10.8 cents, a reduction of 5.8%
largely driven by higher foreign exchange and derivative losses of $184m.
Basic EPS increased to 12.5 cents (up by 6.3%) as a result of deferred tax
asset recognition in Kenya. EPS before exceptional items and excluding foreign
exchange and derivative losses increased by 21.6%.
· Capex increased 5.8% to $457m, in line with our guidance, as we
continue to invest for future growth. Additionally, we acquired spectrum in
Nigeria, DRC, Tanzania, Zambia and Kenya over the nine-month period.
· 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. The leverage ratio of 1.4x was slightly higher than the September 2022
level (1.3x), largely driven by the acquisition of spectrum in Nigeria.
Alternative performance measures (1) GAAP measures
(Nine-month period ended)
(Nine-month period ended)
Description Dec-22 Dec-21 Reported Constant Description Dec-22 Dec-21 Reported
currency
currency
currency
$m $m change change $m $m change
Revenue 3,914 3,492 12.1% 17.3% Revenue 3,914 3,492 12.1%
EBITDA 1,916 1,702 12.6% 17.4% Operating profit 1,318 1,146 15.1%
EBITDA margin 49.0% 48.8% 20 bps 3 bps Profit after tax 523 514 1.7%
EPS before exceptional items ($ cents) 10.8 11.5 (5.8%) Basic EPS ($ cents) 12.5 11.7 6.3%
Operating free cash flow 1,459 1,270 14.9% Net cash generated from operating activities 1,697 1,499 13.2%
(()(1)) Alternative performance measures (APM) are described on page 17.
Segun Ogunsanya, chief executive officer, on the trading update:
"Providing affordable, innovative and essential services to customers in our
14 markets with unparalleled network quality and customer service is integral
to our ambition of transforming lives across Africa. These strong results are
testament to this strategy despite the current macro-economic and geopolitical
uncertainties. The execution of our six-pillar strategy continues to provide
the foundation for growth, driving 10% customer growth, supported by 14%
growth in data customers and over 22% growth in mobile money customers. Higher
usage across voice, data and money, have contributed to further ARPU growth of
over 7%, resulting in 18% revenue growth in the quarter as penetration across
each segment continues to increase. I am particularly excited by the
performance of our mobile money business, with annualized transaction value
reaching nearly $100bn, as we continue to drive financial inclusion in the
continent. Despite the inflationary pressures across our markets, the strong
revenue performance in the first nine months of the year, combined with
continued focus on cost optimisation, contributed to EBITDA growth of over 17%
in constant currency, with stable EBITDA margins. Our strong operating
performance, combined with continued focus on our capital allocation
priorities has facilitated the de-risking of our balance sheet with the early
repayment of $450m HoldCo debt in July this year.
We will continue to invest in expanding our network and evolving our service
offerings to further deepen both financial and digital inclusion across our
markets. We have especially focussed on enhancing our spectrum footprint
across all our markets. Over the last nine months we have spent almost $490m
on 4G and 5G spectrum across key markets to improve network capacity and
quality, future-proof the company for continued growth opportunities and
facilitate economic progress in all our markets.
I am particularly pleased with these results which demonstrate the
opportunities these markets offer, our ability to deliver against these
opportunities and the contribution we make to local communities and economies
across our footprint. For the remainder of the financial year. we continue to
anticipate sustained growth in the business with continued EBITDA margin
resilience."
Airtel Africa plc ("Airtel Africa" or "Group") results for nine-month period
ended 31 December 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 in this press release has been drawn from
interim financial statements prepared based on International Accounting
Standard 34 (IAS 34) issued by the International Accounting Standards Board
(IASB) approved for use in the United Kingdom ("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 audited annual consolidated financial
statements and related notes for the year ended 31 March 2022. Comparative
annual information has been drawn based on Airtel Africa plc's Audited
Consolidated Financial Statements for the year ended 31 March 2022; 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 quarterly and nine-month period ended 31 December 2021 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
Alastair Jones +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 (GMT), on Thursday 2 February 2023, 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=2705586&linkSecurityString=5ebbbff3e)
Key consolidated financial information
Description Unit of measure Nine-month period ended Quarter ended
Dec-22 Dec-21 Reported currency Constant currency Dec-22 Dec-21 Reported currency Constant currency
change %
change %
change %
change %
Profit and loss summary
Revenue (1) $m 3,914 3,492 12.1% 17.3% 1,350 1,219 10.7% 18.0%
Voice revenue $m 1,872 1,747 7.2% 12.7% 646 606 6.5% 13.9%
Data revenue $m 1,318 1,127 16.9% 22.3% 454 395 15.0% 22.7%
Mobile money revenue (2) $m 515 406 26.9% 29.8% 183 148 24.2% 30.3%
Other revenue $m 321 306 5.1% 10.2% 105 105 0.5% 6.8%
Expenses $m (2,007) (1,797) 11.7% 17.2% (691) (616) 12.1% 19.5%
EBITDA (3) $m 1,916 1,702 12.6% 17.4% 661 605 9.3% 16.4%
EBITDA margin % 49.0% 48.8% 20 bps 3 bps 49.0% 49.6% (60) bps (65) bps
Depreciation and amortisation $m (598) (556) 7.6% 13.0% (215) (190) 12.9% 20.4%
Operating exceptional items $m - - 0.0% 0.0% - - 0.0% 0.0%
Operating profit $m 1,318 1,146 15.1% 19.5% 446 414 7.8% 14.6%
Net finance costs (4) $m (519) (291) 78.0% (161) (122) 32.2%
Non-operating exceptional items(5) $m - 9 (100.0%) - 5 (100.0%)
Profit before tax (6) $m 801 864 (7.3%) 285 297 (4.2%)
Tax $m (340) (350) (2.9%) (112) (117) (4.3%)
Tax - exceptional items (7) $m 62 - 0.0% 21 - 0.0%
Total tax charge $m (278) (350) (20.6%) (92) (117) (22.0%)
Profit after tax $m 523 514 1.7% 193 180 7.5%
Non-controlling interest $m (55) (74) (25.1%) (21) (25) (12.4%)
Profit attributable to owners of the company - before exceptional items $m 406 431 (5.9%) 151 150 0.8%
Profit attributable to owners of the company $m 468 440 6.2% 172 155 10.7%
EPS - before exceptional items cents 10.8 11.5 (5.8%) 4.0 4.0 0.9%
Basic EPS cents 12.5 11.7 6.3% 4.6 4.1 10.8%
Weighted average no of shares million 3,752 3,755 (0.1%) 3,750 3,754 (0.1%)
Capex $m 457 432 5.8% 147 187 (21.7%)
Operating free cash flow $m 1,459 1,270 14.9% 514 418 23.2%
Net cash generated from operating activities $m 1,697 1,499 13.2% 689 577 19.3%
Net debt $m 3,620 3,050 3,620 3,050
Leverage (net debt to EBITDA) times 1.4x 1.4x 1.4x 1.4x
Return on capital employed % 23.3% 21.0% 225 bps 23.8% 20.9% 283 bps
Operating KPIs
ARPU $ 3.3 3.2 2.5% 7.2% 3.3 3.3 0.6% 7.2%
Total customer base million 138.5 125.8 10.1% 138.5 125.8 10.1%
Data customer base million 51.3 45.1 13.6% 51.3 45.1 13.6%
Mobile money customer base million 31.4 25.7 22.2% 31.4 25.7 22.2%
((1)) Revenue includes inter-segment eliminations of $112m for nine-month
period ended 31 December 2022 and $94m for the prior period.
((2)) Mobile money revenue post inter-segment eliminations with mobile
services was $403m for nine-month period ended 31 December 2022, and $312m for
the prior period.
((3)) EBITDA includes other income of $9m for nine-month period ended 31
December 2022, and $9m for the prior period.
((4)) Net finance costs of $519m, has increased $228m from the prior period
largely due to higher foreign exchange and derivative losses of $184m mainly
comprised of a $40m loss on derivatives and higher foreign exchange losses
arose from the restatement of balance sheet liabilities (a loss of $70m on
devaluation of the Nigerian Naira, and other devaluation losses of $53m mainly
arising from the Malawian Kwacha, Ugandan and Kenyan shilling).
((5)) Non-operating exceptional items in the previous period include a profit
of $9m from the sale of towers in Rwanda and Madagascar.
((6)) Profit before tax in nine-month period ended 31 December 2022 include a
$2m gain on share of profit from associates.
((7)) Tax exceptional items in the nine-month period ended 31 December 2022
reflect the initial recognition of a deferred tax credit of $62m in Kenya.
( )
( )
( )
Financial review for nine-month period ended 31 December 2022
Reported currency revenue grew by 12.1%, with constant currency revenue growth of 17.3% partially offset by currency devaluation. Revenue growth was impacted by the effect of some voice customers being barred in Nigeria and the loss of tower sharing revenues following the sale of towers in Tanzania, Madagascar and Malawi in H2'22. Excluding these, the growth would have been around 20.6% in constant currency. Total revenue for mobile services and mobile money services combined grew in Nigeria by 20.9%, East Africa by 16.1% and Francophone Africa by 12.7% over the period.
Revenue growth was recorded across all reporting segments, with mobile services revenue for the Group up 15.9% reflecting Nigeria up 20.9%, East Africa up 11.9% and Francophone Africa up 11.8%. Voice revenues saw double digit revenue growth of 12.7%, while data revenues grew 22.3%. Mobile money revenue grew by 29.8% in constant currency, driven by 32.5% growth in East Africa and 21.7% growth in Francophone Africa.
Net finance costs increased by $228m largely due to higher foreign exchange and derivative losses of $184m mainly comprised of a $40m loss on derivatives and higher foreign exchange losses arose from the restatement of balance sheet liabilities (a loss of $70m on devaluation of the Nigerian Naira, and other devaluation losses of $53m mainly arising from the Malawian Kwacha, Ugandan and Kenyan shilling).
Total tax charges were lower by $72m mainly due to the initial recognition of a deferred tax credit of $62m in Kenya. Non-controlling interests was down $19m due to the buy-back of minorities in Nigeria and lower minority allocation charges in Tanzania, partially off-set by the increase in Airtel Money minority shareholdings.
EPS before exceptional items was 10.8 cents, a reduction of 5.8% largely as a
result of higher foreign exchange and derivative losses of $184m. Basic EPS
increased to 12.5 cents (up by 6.3%) as a result of deferred tax asset
recognition in Kenya. Excluding Foreign exchange and derivative losses EPS
before exceptional items would have been up by 21.6%.
Leverage at 1.4x, remained largely stable over the period. Our balance sheet
has also been further de-risked by continued localisation of our debt into the
OpCos and continued debt reduction in HoldCo, following the $450m HoldCo bond
prepayment in July 2022. The 1.4x leverage ratio increased slightly from 1.3x
in September 2022 as a result of the acquisition of spectrum in Nigeria during
the period.
In terms of outlook, long-term opportunities for us remain attractive. Whilst
mindful of currency devaluation and repatriation risks, we continue to work
actively to mitigate all our material risks and deliver value for all our
stakeholders.
GAAP measures
Revenue
Revenue was $3,914m, growing 12.1% in reported currency and 17.3% in constant
currency. The differential in growth rates was due to an average currency
devaluation between the periods, mainly in the Central African franc (14.1%)
which is largely pegged to the Euro, the Nigerian naira (4.5%), the Kenyan
shilling (8.8%), the Ugandan shilling (5.0%) and the Malawian kwacha (21.2%),
in turn partially offset by appreciation in the Zambian kwacha (14.5%). The
revenue growth of 17.3% in constant currency growth was driven by both
customer base growth of 10.1% and ARPU growth of 7.2%.
Mobile services revenue grew by 15.9% in constant currency supported by growth
across the regions, with Nigeria growing 20.9%, East Africa by 11.9% and
Francophone Africa by 11.8%. Voice revenue grew by 12.7% and data revenue was
up 22.3%. Mobile money revenue growth of 29.8% was driven by both East Africa
and Francophone Africa, of 32.5% and 21.7% respectively.
Though strong, revenue growth was impacted by the effect of some voice
customers being barred in Nigeria and the loss of tower sharing revenues
following the sales of towers in Tanzania, Madagascar and Malawi in the prior
period. A total of 13.6 million customers were originally barred, out of which
6.2 million customers (46%) have subsequently submitted their NINs and 3.2
million customers (23%) have been fully verified and unbarred. We estimate
that this resulted in the loss of approximately $87m of revenues in nine-month
period. Other revenues were impacted by c.$21m of tower sharing revenues lost
through associated tower sales in the second half of the previous year.
Excluding these the growth would have been around 20.6% in constant currency
terms.
Operating profit
Operating profit of $1,318m, grew by 15.1% as a result of strong revenue
growth and continued improvements in operating efficiency in East Africa and
Francophone Africa.
Net finance costs
Net finance costs were $519m, an increase of $228m largely due to higher
foreign exchange losses of $144m and higher derivative losses of $40m. The
higher foreign exchange losses arose from the restatement of balance sheet
liabilities (including current and non-current borrowings and finance lease
obligations) following certain currency devaluations across most of our OpCos,
including a loss of $70m on devaluation of the Nigerian naira, and other
devaluation losses of $53m mainly arising from the Malawian kwacha, Ugandan
shilling and Kenyan shilling. Interest costs were $262m, an increase of $31m,
largely driven by higher lease liabilities. Interest costs on market debt was
broadly flat.
The Group's effective interest rate increased to 7.2% compared to 5.6% in the
prior period, largely driven by an increase in base rates and higher
proportion of debt in OPCOs.
Taxation
Total tax charges were lower by $72m mainly due to the initial recognition of
a deferred tax credit of $62m in Kenya. Excluding this exceptional item, tax
was lower by $10m mainly due to lower profit before tax impacted by higher
foreign exchange and derivative losses.
Profit after tax
Profit after tax was up 1.7% to $523m. The slowdown in growth was due to
higher foreign exchange and derivative losses of $184m. Profit after tax
excluding foreign exchange and derivative losses was up by 24.7%.
Basic EPS
Basic EPS was 12.5 cents, up by 6.3% from 11.7 cents in prior period. This
increase was mainly due to higher operating profits and the recognition of a
deferred tax credit of $62m in Kenya, which more than offset higher foreign
exchange and derivative losses of $184m.
Net cash generated from operating activities
Net cash generated from operating activities was $1,697m, up by 13.2% largely
driven by higher operating profit which was partially offset by higher tax
payments on the increased profits and withholding tax on dividends by
subsidiaries. While in some markets we face instances of shortage of foreign
currency within the local monetary system, we benefit from a broad
geographical diversification which enables access to liquidity, with limited
impact to the Group requirements.
Alternative performance measures 1 (#_ftn1)
EBITDA
EBITDA was $1,916m, up by 12.6% in reported currency and 17.4% in constant currency, driven by strong revenue growth. EBITDA margin was at 49.0%, an improvement of 20 basis points in reported currency and 3 basis points in constant currency. We continue to work towards mitigating the inflationary cost pressures through various cost initiatives.
Foreign exchange had an adverse impact of $174m on revenue, and $79m on
EBITDA, as a result of currency devaluations. Currency devaluations between
the periods is mainly in the Central African franc (14.1%), the Nigerian naira
(4.5%), the Kenyan shilling (8.8%), the Ugandan shilling (5.0%) and the
Malawian kwacha (21.2%), in turn partially offset by appreciation in the
Zambian kwacha (14.5%).
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 $49m on revenues, $29m on EBITDA and $25m on finance costs
(excluding derivatives). Our largest exposure is to the Nigerian naira, for
which a 1% devaluation would have a negative impact of $21m on revenues, $11m
on EBITDA and $8m on finance costs (excluding derivatives).
Refer to the Risk Factors section for detailed disclosure on the currency
devaluation risk posed to the Group.
Effective tax rate
The effective tax rate was 38.8%, compared to 39.6% in the prior period,
largely due to 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 withholding taxes
on dividends by subsidiaries.
Exceptional items
Non-operating exceptional items in the previous period relates to a gain of
$9m from the profit on the sale of towers in Rwanda and Madagascar. The tax
exceptional item in current period related to the initial recognition of a
deferred tax credit of $62m in Kenya.
EPS before exceptional items
EPS before exceptional items was 10.8 cents, a reduction of 5.8% largely as a
result of higher foreign exchange and derivative losses of $184m. Excluding
foreign exchange and derivative losses, the EPS before exceptional item was
15.8 cents, an increase of 21.6%.
Operating free cash flow
Operating free cash flow was $1,459m, up by 14.9%, as higher EBITDA more than
offset increased capital expenditure. Capital expenditure during the period
was higher by $25m related to planned network expansion and investment in PSB
opportunity in Nigeria.
Leverage
Leverage at 1.4x net debt/EBITDA, was largely stable from the prior period.
Our balance sheet has also been further de-risked by continued localisation of
our debt into the OpCos and continued debt reduction in HoldCo, following the
$450m HoldCo bond prepayment in July 2022. Leverage has increased marginally
from 1.3x in September 2022 primarily due to the acquisition of Nigerian
spectrum in December 2022 ($316.7m).
Other significant updates
IFC loan facility
On 6 December 2022, we announced the signing of a new $194m facility with
International Finance Corporation ('IFC'), a sister organisation of the World
Bank and a member of the World Bank Group. The new financing facility is in
line with Airtel Africa's strategy to increase debt within its operating
companies.
The facility has a tenor of eight years, it is largely in local currency, and
will be used to support Airtel Africa's operations and investments in
Democratic Republic of Congo, Kenya, Madagascar, Niger, Republic of Congo and
Zambia, providing a more diversified access to local funding.
As part of IFC's loan facility, Airtel Africa has committed to comply with the
applicable requirements of IFC Performance Standards on Social and
Environmental Sustainability and has put in place a dedicated Environmental
and Social Action plan. This will further underpin the Group's commitment to
transforming lives across the communities in which Airtel operates and provide
clarity on how the Group can help address inequality and support economic
growth in these communities.
Nigeria 4G and 5G Spectrum Acquisition
On 9 January 2023, we announced that, Airtel Networks Limited ('Airtel
Nigeria'), had purchased 100 MHz of spectrum in the 3500MHz band and 2x5MHz of
2600MHz from the Nigerian Communications Commission (NCC) for a gross
consideration of $316.7m, paid in local currency. This additional spectrum
will support our investments in network expansion for both mobile data and
fixed wireless home broadband capability, including 5G rollout, providing
significant capacity to accommodate our continued strong data growth in the
country and exceptional customer experience.
Airtel Nigeria is Airtel Africa's largest market, with significant growth
potential. The company led the industry in providing affordable 4G services
across the country following the deployment of a fully modernised network
which facilitated a 4-fold increase in data traffic over the last three years.
The penetration of data customers in Nigeria remains low, providing
significant opportunity for future growth.
The acquisition of 5G spectrum will underpin our growth strategy by enabling
the launch of higher speed connectivity to enhance customer service and
accelerate digitalisation for consumers, enterprises and the public sector.
The key benefits of 5G will include higher speeds, lower latency, significant
network capacity as well as an improved user experience. Furthermore, the
deployment of 5G will accelerate the availability and efficiency of fixed
wireless access products across the country, contributing towards Airtel
Nigeria's progress in meeting the National Broadband Plan targets. The
acquisition of 2600MHz spectrum will complement our already strong spectrum
position in the market to enhance network capacity and future-proof our growth
opportunity.
Other spectrum acquisitions
During the year, we acquired the following additional spectrum across our
OpCos:
In October 2022, Airtel Tanzania plc purchased 110 MHz spectrum spread across
the 2600 MHz (2 blocks of 2x15MHz) and 3500 MHz bands from the Tanzania
Communications Regulatory Authority (TCRA) for a gross consideration of $60m.
Airtel Zambia purchased 60 MHz of additional spectrum in October 2022 spread
across the 800 MHz and 2600 MHz bands from the Zambia Information and
Communications Technology Authority (ZICTA), for a gross consideration of
$29m, payable in local currency. Further, we acquired an additional 40 MHz of
spectrum in the 2600 band for $12m in November 2022.
In July 2022, Airtel Kenya Networks Limited purchased 60 MHz of additional
spectrum in the 2600 MHz band from the Communications Authority of Kenya, for
a gross consideration of $40m, for a period of 15 years.
Airtel DRC purchased 58 MHz of additional spectrum, spread across 900, 1800,
2100 and 2600 MHz bands, for a gross consideration of $42m in June 2022. The
licence for paired spectrum in the 2100 band comes up for renewal in September
2032. All the other licences continue until July 2036.
Launch of inaugural Sustainability Report
The publication of Airtel Africa's inaugural Sustainability Report on the
27(th) October 2022 follows the launch of the Group's sustainability strategy
in October 2021. The report reflects the Group's firm commitment to
sustainability and details the business' progress against the goals outlined
in the sustainability strategy. The report adheres to international
best-practice ESG Reporting standards, including the Global Reporting
Initiative (GRI) Standards and TCFD recommendations.
The publication of the report constitutes an important step forward in
enhancing the non-financial information transparency of the Group. The report
provides accurate and verified baselines for scope 1, 2 and 3 emissions and
total energy consumption.
In October 2021, the Group committed to publishing a 'pathway to carbon
neutrality' report, outlining the Group's strategy and timeline for achieving
net zero greenhouse gas emissions targets, ahead of the publication of its
first sustainability report. While significant progress has been made on this
important project, due to its ambitious scale, additional time is required to
comprehensively incorporate the many variables affecting our decarbonisation
strategy in all 14 markets, and to consult with stakeholders. The Group is now
confident of publishing a robust pathway to carbon neutrality by the end of
the 2023 financial year.
Uganda listing obligation
Under Article 16 of Uganda's National Telecom Operator ('NTO') licence, Airtel
Uganda limited is obliged to comply with the sector policy, regulations and
guidelines requiring the listing of part of its shares on the Uganda Stock
Exchange. The current Uganda Communications (Fees & Fines) (Amendment)
Regulations 2020, creates a public listing obligation for all NTO licensees,
and specifies that 20% of the shares of the operator must be listed within two
years of the date of the effective date of the licence. This imposed a listing
requirement by 15 December 2022 on Airtel Uganda. In April 2022, the company
applied for an extension of time to list the shares, which was granted by the
Regulator thereby extending the deadline to 16 December 2023. Preparatory
steps are underway by Airtel Uganda and its advisors in order to comply with
this deadline.
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, all our customers were
required to provide their valid National Identification Numbers (NINs) to
update SIM registration records, with a final deadline of 31 March 2022.
In April 2022, the voice services for 13.6 million customers were barred due
to non-submission of NIN information. As of December 2022, 6.2 million
customers (46%) have subsequently submitted their NINs and 3.2 million
customers (23%) have been fully verified and unbarred. Revenue growth for the
first nine-months of the year was impacted by the effect of barring outgoing
voice calls in Nigeria for those customers who had not submitted their NINs.
We estimate that this resulted in the loss of approximately $87m of revenues
in nine-month period, providing a drag on revenue growth of almost 2.5% at
Group level (impact of 6.4% in Nigeria).
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 in 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.
During the period we launched Smartcash, our Nigerian mobile money offering,
initially in Lagos, before rolling out further across the country. One of our
key commitments is to guarantee data privacy and security controls across the
business to build trust and confidence in the brand. In that light, we have
focussed our investments on the IT infrastructure and business systems and
processes to ensure we meet this commitment. This investment, combined with
our continued focus on the expansion of the distribution network, will drive
increased access to financial services for underserved communities in
Nigeria.
$450m early bond redemption
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 $463m. 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 reducing external
foreign currency debt at a Group level.
First sustainability-linked loan facility
On 10 August 2022, the group announced the signing of a $125m revolving credit
facility with Citi through its branch offices/subsidiaries in sub-Saharan
Africa. This facility is in line with our strategy to raise debt in our local
operating companies and will include both local currency and US dollar
denominated debt. The facility has a tenor up to September 2024 and will be
used to support Airtel Africa's operations and investments in four of its
subsidiaries. The facility provides potential interest rate savings in
exchange for achieving social impact milestones relating to digital inclusion
and gender diversity, with a focus on rural areas and women, and aligning with
the Group's sustainability strategy
(https://airtel.africa/assets/pdf/Airtel_Africa_Sustainability_Strategy_2021.pdf)
, launched in October 2021. The facility further strengthens the Group's
commitment to transforming lives across the communities in which we operate.
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/#/pages/investors?tab=investment-case) .
Financial review for nine-month period ended 31 December 2022
Nigeria - Mobile services
Description Unit of Nine-month period ended Quarter ended
measure
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Summarised statement of
Operations
Revenue $m 1,585 1,370 15.6% 20.9% 545 476 14.6% 23.1%
Voice revenue (1) $m 791 717 10.3% 15.4% 279 246 13.6% 22.1%
Data revenue $m 653 539 21.1% 26.6% 222 189 17.6% 26.3%
Other revenue (1) $m 141 115 22.6% 27.9% 43 41 6.5% 14.3%
EBITDA $m 815 758 7.5% 12.4% 284 266 6.8% 14.8%
EBITDA margin % 51.4% 55.3% (388) bps (385) bps 52.1% 55.9% (379) bps (377) bps
Depreciation and amortisation $m (248) (196) 26.3% 32.2% (92) (68) 34.3% 44.4%
Operating exceptional items $m - - 0.0% 0.0% - - 0.0% 0.0%
Operating profit $m 542 562 (3.5%) 0.8% 184 198 (6.9%) 0.0%
Capex $m 167 182 (8.2%) (8.2%) 34 78 (56.3%) (56.3%)
Operating free cash flow $m 648 576 12.5% 19.0% 250 188 32.9% 44.3%
Operating KPIs
Total customer base million 47.8 42.4 13.0% 47.8 42.4 13.0%
Data customer base million 22.0 19.0 16.0% 22.0 19.0 16.0%
Mobile services ARPU $ 3.8 3.7 2.4% 7.0% 3.9 3.9 (0.2%) 7.2%
((1)) Voice revenue includes inter-segment revenue of $1m and other revenue
includes inter-segment revenue of $2m in nine-month period ended 31 December
2022. Excluding inter-segment revenue, voice revenue was $790m and other
revenue was $139m in nine-month period ended 31 December 2022.
In reported currency, Nigeria revenue grew by 15.6% to $1,585m and 20.9% in
constant currency. Strong growth in both voice and data contributed to revenue
growth, driven mainly by overall customer base growth of 13.0% and data
customer base growth of 16.0%. ARPU grew by 7.0%, largely driven by higher
data and other revenue. Q3'23 revenue growth accelerated to 23.1% from 21.0%
in Q2'23.
Voice revenue increased by 15.4% in constant currency, largely driven by
customer base growth of 13.0% supported by voice ARPU growth of 2.2%. The
barring of outgoing calls for customers who had not submitted their NINs had
an adverse impact on voice revenue. A total of 13.6 million customers were
originally barred, out of which 6.2 million customers (46%) have subsequently
submitted their NINs and 3.2 million customers (23%) have been fully verified
and unbarred. We estimate that this resulted in the loss of approximately $87m
of revenues in nine-month period ended 31 December 2022, providing a drag on
revenue growth of 6.4% in Nigeria.
Data revenue increased by 26.6% in constant currency, driven by both data
customer base growth of 16.0% and data ARPU growth of 9.2%. Over the last
year, we have enhanced our 4G network with ample data network capacity to
provide high speed data to our customers with almost 100% of our sites now on
4G and data capacity increase of 28%. This has contributed to 4G data customer
growth of 20.7%. Data usage per customer increased by 25.6% facilitating
continued data ARPU growth. Data usage per customer reached 5 GB per customer
per month from 4 GB per customer per month in the previous period. In Q3'23,
4G data usage per customer increased to 9.0 GB per month (up by 53%) from 5.9
GB per customer per month in prior period. 4G data usage now contributes to
81.1% of total data usage on our network.
Other revenues grew by 27.9% in constant currency, with the main contribution
coming from the growth in value added services revenue, led by airtime credit
services.
Nigeria Mobile services EBITDA was $815m, up by 12.4% in constant currency.
The EBITDA margin declined to 51.4% from 55.3% due to an increase in operating
costs arising from inflationary pressure, particularly related to the fuel
costs. The Q3'23 EBITDA margin of 52.1% has increased from 49.5% in Q2'23
EBITDA largely as a result of operating leverage from higher revenue growth
and one-time benefits of about 100bps in the quarter.
Operating free cash flow was $648m, up by 19.0%, due to the expansion of
EBITDA and lower capex in Q3'23. Q3'23 capex was lower than prior period
largely due to phasing of materials received with no impact on full year capex
expectations.
East Africa - Mobile services (1)
Description Unit of Nine-month period ended Quarter ended
measure
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Summarised statement of
operations
Revenue $m 1,129 1,046 8.0% 11.9% 388 372 4.5% 10.8%
Voice revenue $m 632 586 7.8% 11.9% 215 210 2.5% 8.8%
Data revenue $m 397 339 17.3% 20.8% 140 121 15.3% 21.9%
Other revenue (2) $m 101 120 (16.3%) (13.2%) 34 41 (16.9%) (11.4%)
EBITDA $m 561 501 12.0% 15.9% 201 184 9.1% 16.0%
EBITDA margin % 49.7% 47.9% 178 bps 173 bps 51.7% 49.5% 219 bps 230 bps
Depreciation and amortisation $m (190) (172) 10.2% 13.9% (67) (59) 11.9% 17.9%
Operating exceptional items $m - - 0.0% 0.0% - - 0.0% 0.0%
Operating profit $m 344 312 10.3% 14.3% 125 120 4.8% 11.9%
Capex $m 159 150 6.2% 6.2% 69 73 (5.8%) (5.8%)
Operating free cash flow $m 402 351 14.4% 19.9% 132 111 18.9% 30.7%
Operating KPIs
Total customer base million 62.4 57.4 8.8% 62.4 57.4 8.8%
Data customer base million 21.2 18.6 14.1% 21.2 18.6 14.1%
Mobile services ARPU $ 2.1 2.1 0.8% 4.5% 2.1 2.2 (3.1%) 2.8%
((1)) The East Africa business region includes Kenya, Malawi, Rwanda,
Tanzania, Uganda and Zambia.
((2)) Voice revenue includes inter-segment revenue of $1m and other revenue
includes inter-segment revenue of $9m in nine-month period ended 31 December
2022. Excluding inter-segment revenue, voice revenue was $631m and other
revenue was $92m in nine-month period ended 31 December 2022.
In East Africa, mobile services revenue grew by 8.0% in reported currency, and
11.9% in constant currency. The differential in growth rates was due to a
devaluation of the Kenyan shilling, Ugandan shilling and Malawian kwacha,
partially offset by an appreciation in the Zambian kwacha. Current year was
impacted by the loss of tower sharing revenues (c.$20m) following the sales of
towers in Tanzania and Malawi which is reflected in the 13.2% decline in other
revenues over the period. Revenue growth, excluding the site sharing revenue
impact of tower sales, was 14.0% for the period.
Voice revenue grew by 11.9% in constant currency, driven by both customer base
growth of 8.8% and voice ARPU growth of 4.5%. The customer base growth of 8.8%
was supported by the expansion of our network, enhanced coverage, and
distribution infrastructure. Site count increased by 12.8% and activating
outlets increased by 18.9%. Voice usage per customer increased by 10.2% to 385
minutes per customer per month resulted in voice ARPU growth of 4.5%. Total
minutes on the network increased by 18.0% to 207.8 billion minutes.
Data revenue grew by 20.8% in constant currency, largely driven by both data
customer base growth of 14.1% and data ARPU growth of 9.4%. The expansion of
our 4G network and ample data network capacity helped us to grow both the data
customer base and data usage. 89.8% of our total sites in East Africa are on
4G as compared with 84.1% in prior period. 44.5% of our total data customer
base is on 4G which contributes to 69.2% of total data usage (in Q3'23). Data
usage per customer increased by 29.6% resulted in data ARPU growth of 9.4%,
data usage per customer reached 4.1 GB per customer per month from 3.2 GB per
customer per month. In Q3'23, 4G data usage per customer was 6.6 GB per month
from 5.6 GB per customer per month (up by 16.6% from the prior period).
Mobile services EBITDA increased to $561m, up by 15.9% in constant currency.
EBITDA margin improved to 49.7%, an improvement of 173 basis points in
constant currency, as a result of revenue growth and improved operating
efficiencies.
Operating free cash flow was $402m, up by 19.9%, largely due to expansion of
EBITDA partially offset by slightly higher capex.
Francophone Africa - Mobile services (1)
Description Unit of Nine-month period ended Quarter ended
measure
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Summarised statement of
operations
Revenue $m 807 776 4.1% 11.8% 275 263 4.5% 11.2%
Voice revenue (2) $m 453 446 1.5% 9.4% 154 152 0.8% 7.6%
Data revenue $m 268 249 7.4% 15.0% 92 84 9.0% 15.8%
Other revenue (2) $m 86 79 9.6% 15.1% 29 26 11.9% 16.8%
EBITDA $m 352 317 11.3% 18.7% 112 109 2.6% 8.8%
EBITDA margin % 43.6% 40.8% 281 bps 256 bps 40.6% 41.4% (77) bps (89) bps
Depreciation and amortisation $m (143) (153) (6.6%) 0.9% (50) (50) (0.1%) 6.9%
Operating exceptional items $m - - 0.0% 0.0% - - 0.0% 0.0%
Operating profit $m 184 140 31.5% 38.4% 53 51 5.0% 10.2%
Capex $m 94 73 28.9% 28.9% 36 25 43.0% 43.0%
Operating free cash flow $m 258 244 5.9% 15.6% 76 84 (9.7%) (1.6%)
Operating KPIs
Total customer base million 28.3 26.0 8.5% 28.3 26.0 8.5%
Data customer base million 8.1 7.6 6.4% 8.1 7.6 6.4%
Mobile services ARPU $ 3.3 3.5 (4.4%) 2.7% 3.3 3.4 (2.6%) 3.6%
((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 $2m and other revenue
includes inter-segment revenue of $2m in nine-month period ended 31 December
2022. Excluding inter-segment revenue, voice revenue was $451m and other
revenue was $84m in nine-month period ended 31 December 2022.
In Francophone Africa, mobile services revenue grew by 4.1% in reported
currency and 11.8% in constant currency. The differential in growth rates was
driven primarily by the 14.1% devaluation of the Central African franc.
Voice revenue increased by 9.4% in constant currency, mainly driven by
customer base growth of 8.5%. With continued investments in network expansion
and distribution infrastructure, total sites increased by 10.6% and activating
outlets increased by 17% (exclusive outlets increased by 31%). Voice usage per
customer grew by 10.6% to 149 minutes per customer per month thereby resulting
in an 20.4% growth in total voice minutes on our network.
Data revenue increased by 15.0% in constant currency, driven by both customer
base growth of 6.4% and data ARPU growth of 7.0%. We continue to expand our 4G
network, with 69.1% of our sites in Francophone Africa on 4G (up from 63.8% in
prior period) and data capacity on our network increased by 43.4%. Total data
usage increased by 57.1% primarily driven by increase in data usage per
customer by 46.1% to 3.4 GB per customer per month compared with 2.3 GB in the
prior period. As of Q3'23, 54% of the data customer base is on 4G contributing
to 70.8% of total data usage. 4G data usage per customer increased to 5.8 GB
per month (up by 30.8%) compared with 4.4 GB per customer per month.
Mobile services EBITDA at $352m, increased by 18.7% in constant currency.
EBITDA margin improved to 43.6%, an improvement of 256 basis points in
constant currency. However, the current year had a one-time opex benefit of
approximately $19m in the first half and a normalized EBITDA margin of 41.3%,
an improvement of 30 basis points in constant currency.
Operating free cash flow was $258m, increased by 15.6%, driven by the
expansion in EBITDA and partially offset by higher capex.
Mobile services
Description Unit of measure Nine-month period ended Quarter ended
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Summarised statement of operations
Revenue (1) $m 3,515 3,183 10.5% 15.9% 1,207 1,107 9.0% 16.4%
Voice Revenue $m 1,872 1,747 7.2% 12.7% 646 606 6.5% 13.9%
Data Revenue $m 1,318 1,127 16.9% 22.3% 454 395 15.0% 22.7%
Other Revenue $m 325 309 5.3% 10.4% 106 106 0.7% 7.1%
EBITDA $m 1,728 1,576 9.6% 14.7% 597 559 6.7% 14.0%
EBITDA Margin % 49.1% 49.5% (36) bps (50) bps 49.4% 50.5% (106) bps (105) bps
Depreciation & Amortization $m (581) (521) 11.5% 17.1% (209) (178) 17.1% 25.0%
Operating Exceptional Items $m - - 0.0% 0.0% - - 0% 0%
Operating Profit $m 1,070 1,015 5.4% 10.0% 362 368 (1.5%) 5.2%
Capex $m 420 405 3.9% 3.9% 139 176 (21.1%) (21.1%)
Operating Free Cash Flow $m 1,308 1,171 11.7% 18.5% 458 383 19.5% 30.4%
Operating KPIs
Mobile voice
Customer base million 138.5 125.8 10.1% 138.5 125.8 10.1%
Voice ARPU $ 1.6 1.6 (2.0%) 3.0% 1.6 1.6 (3.2%) 3.6%
Mobile data
Data customer base million 51.3 45.1 13.6% 51.3 45.1 13.6%
Data ARPU $ 3.0 2.9 4.2% 9.0% 3.0 3.0 2.6% 9.5%
( (1)) Mobile service revenue after inter-segment eliminations was $3,511m in
nine-month period ended 31 December 2022 and $3,179m in the prior period.
Overall mobile services revenue increased to $3,515m, up by 10.5% in reported
currency, while growth in constant currency was 15.9%. Revenue growth was
recorded across all regions and key services: Nigeria up by 20.9%, East Africa
by 11.9% and Francophone Africa by 11.8%.
Voice revenue grew by 12.7% in constant currency, driven by both customer base
growth of 10.1% and voice ARPU growth of 3.0%. Revenue growth for the first
half of the year was slightly impacted by the effect of barring outgoing calls
in Nigeria for those customers who had not submitted their National Identity
Numbers ('NINs'). We continue investing in network expansion to expand our
reach along with the expansion of distribution infrastructure to drive
customer base growth.
Our continued expansion of network and distribution infrastructure helped
drive customer additions. Voice usage per customer increased by 6.3% resulted
in Voice ARPU growth of 3.0%. Voice usage per customer increased to 272
minutes per customer per month from 256 minutes per customer per month and
total minutes on the network increased by 16.3%. Q3'23 voice revenue growth
accelerated to 13.9% from 12.7% in Q2'23, with voice ARPU growth of 3.6%.
Data revenue grew by 22.3% in constant currency, driven by strong growth in
customer base of 13.6% and data ARPU growth of 9.0%. Revenue growth was
recorded across all regions: Nigeria grew by 26.6%, East Africa by 20.8% and
Francophone Africa by 15.0%. Data customer base growth of 13.6% resulted from
the further expansion of our 4G network with 90% of total sites on 4G, up from
82.8% (almost 100% of sites in 5 OPCOs are now on 4G). Total data customer
base reached 51.3 million with 4G customer base of 23.7 million, contributing
to 46.3% of the total data customer base. Data usage per customer increased
30.1% driving data ARPU growth of 9.0%. Data usage per customer reached 4.4 GB
per customer per month from 3.4 GB per customer per month in the prior period.
Q3'23 data usage per customer increased to 4.6 GB per month (up by 32.2%) and
4G data usage per customer at 7.5 GB per month from 5.6 GB per customer per
month (up by 34.5%).
Mobile services EBITDA was $1,728m, and grew by 14.7% in constant currency
with an EBITDA margin of 49.1%, declining 50 basis points in constant
currency. The reduction in EBITDA margin was due to an increase in operating
costs in Nigeria reflecting energy price inflation.
Operating free cash flow was $1,308m, up by 18.5%, due to the expansion of
EBITDA partially offset by higher capex.
Mobile money(1)
Description Unit of measure Nine-month period ended Quarter ended
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Summarised statement of operations
Revenue (2) $m 515 406 26.9% 29.8% 183 148 24.2% 30.3%
Nigeria $m 0 0 - - 0 0 - -
East Africa $m 395 300 31.5% 32.5% 142 111 28.3% 34.3%
Francophone Africa $m 120 106 13.5% 21.7% 41 37 11.4% 18.2%
EBITDA $m 256 207 23.6% 25.9% 92 75 22.6% 28.0%
EBITDA Margin % 49.7% 51.0% (129) bps (154) bps 50.0% 50.7% (63) bps (89) bps
Depreciation & Amortization $m (13) (10) 24.4% 29.3% (5) (4) 28.2% 37.2%
Operating Profit $m 237 188 26.3% 28.3% 84 68 23.3% 28.2%
Capex $m 26 20 28.2% 28.2% 6 9 (41.8%) (41.8%)
Operating Free Cash Flow $m 230 187 23.2% 25.6% 86 66 31.7% 38.4%
Operating KPIs
Mobile money customer base million 31.4 25.7 22.2% 31.4 25.7 22.2%
Transaction value $bn 64.3 47.6 34.9% 37.0% 24.2 17.2 40.7% 46.7%
Mobile money ARPU $ 2.0 1.9 4.7% 7.1% 2.0 2.0 1.8% 6.8%
((1)) Mobile money consolidates the results of mobile money operations from
all operating entities within the Group. Airtel Money Commerce BV (AMC BV) is
the holding company for all mobile money services for the Group, and as of 31
December 2022, it consolidates mobile money operations from 10 OpCos,
currently excluding operations in Nigeria, Tanzania, Congo Brazzaville, and
Chad. It is management's intention to continue work to transfer all these
remaining mobile money services operations into AMC BV, subject to local
regulatory requirements.
( (2)) Mobile money service revenue post inter-segment eliminations with
mobile services was $403m in nine-month period ended 31 December 2022 and
$312m in the prior period.
Mobile money revenue of $515m increased 26.9% in reported currency and 29.8%
in constant currency. The constant currency growth was partially offset by
average currency devaluations mainly in the Central African franc (14.1%), the
Ugandan shilling (5.0%) and the Malawian kwacha (21.2%), in turn partially
offset by the appreciation in the Zambian kwacha (14.5%). Revenue growth of
29.8% was driven by both East Africa and Francophone Africa, of 32.5% and
21.7% respectively. In Nigeria, mobile money services (Smartcash) were
launched in June 2022. Our initial focus in the period has been to invest in
the platform technology, as well as the business systems and processes to
ensure confidence and reliability in the platform.
Constant currency revenue growth of 29.8% was largely led by customer base
growth of 22.2%. The continued investment in distribution infrastructure of
exclusive channels of Airtel Money branches and kiosks, as well as the
expansion of mobile money agents, helped us in adding more customers.
Mobile money customer base reached 31.4 million, an increase of 22.2% and
mobile money customer base penetration reached 22.6%, an increase of 2.2
percentage points. The expansion of distribution enhanced transaction value
per customer by 13.0% resulting in mobile money ARPU growth of 7.1%. Mobile
money ARPU growth was largely driven by an increase in transaction values and
higher contributions from cash transactions, merchant payments and mobile
service recharges through Airtel Money.
Our mobile money transaction value grew by 37.0% and Q3'23 annualised
transaction value reached almost $100bn in constant currency. Q3'23
transaction value per customer reached $267 per month, an increase of 20.2% in
constant currency. Mobile money revenue now accounts for 13.6% of total Group
revenue in the quarter.
Mobile money EBITDA increased to $256m, up by 25.9% in constant currency. The
drop in mobile money EBITDA margin was largely due to additional spend in
Nigeria PSB related to the launch of Smartcash.
Regional Performance (mobile services and mobile money services combined)
Nigeria
Description Unit of measure Nine-month period ended Quarter ended
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Revenue $m 1,585 1,370 15.7% 20.9% 545 476 14.6% 23.1%
Voice Revenue $m 791 717 10.3% 15.4% 279 246 13.6% 22.1%
Data Revenue $m 653 539 21.1% 26.6% 222 189 17.6% 26.3%
Mobile Money Revenue $m 0 0 - - 0 0 - -
Other Revenue $m 141 115 22.6% 27.9% 43 41 6.5% 14.3%
EBITDA $m 810 757 6.9% 11.8% 282 266 6.2% 14.1%
EBITDA Margin % 51.1% 55.3% (418) bps (415) bps 51.8% 55.9% (410) bps (408) bps
Operating KPI
ARPU $ 3.8 3.7 2.4% 7.0% 3.9 3.9 (0.2%) 7.2%
East Africa
Description Unit of measure Nine-month period ended Quarter ended
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Revenue $m 1,444 1,282 12.7% 16.1% 502 459 9.5% 15.8%
Voice Revenue $m 631 586 7.8% 11.9% 215 210 2.5% 8.8%
Data Revenue $m 397 339 17.3% 20.8% 140 121 15.3% 21.9%
Mobile Money Revenue $m 395 300 31.5% 32.5% 142 111 28.3% 34.3%
Other Revenue $m 97 118 (17.8%) (14.1%) 33 40 (17.7%) (12.3%)
EBITDA $m 766 653 17.3% 20.5% 275 240 14.5% 21.1%
EBITDA Margin % 53.0% 50.9% 210 bps 194 bps 54.8% 52.4% 238 bps 239 bps
Operating KPI
ARPU $ 2.7 2.5 5.2% 8.4% 2.7 2.7 1.6% 7.4%
Francophone Africa
Description Unit of measure Nine-month period ended Quarter ended
Dec-22 Dec-21 Reported Constant Dec-22 Dec-21 Reported Constant
currency currency currency currency
change
change
change
change
Revenue $m 891 849 5.0% 12.7% 304 288 5.3% 12.0%
Voice Revenue $m 453 446 1.5% 9.4% 154 152 0.8% 7.6%
Data Revenue $m 268 249 7.3% 15.0% 92 84 9.0% 15.8%
Mobile Money Revenue $m 120 106 13.5% 21.7% 41 37 11.4% 18.2%
Other Revenue $m 86 79 9.2% 14.8% 29 26 11.8% 16.6%
EBITDA $m 414 372 11.3% 18.6% 133 128 3.8% 9.9%
EBITDA Margin % 46.5% 43.9% 262 bps 233 bps 43.9% 44.5% (63) bps (82) bps
Operating KPI
ARPU $ 3.7 3.8 (3.6%) 3.5% 3.7 3.7 (1.9%) 4.3%
Consolidated performance
Description UoM Nine-month period ended- December 2022 Nine-month period ended- December 2021
Mobile services Mobile money Unallocated Eliminations Total Mobile services Mobile money Unallocated Eliminations Total
Revenue $m 3,515 515 (0) (116) 3,914 3,183 406 (0) (97) 3,492
Voice revenue $m 1,872 (0) 0 1,872 1,747 (0) 0 1,747
Data revenue $m 1,318 - (0) 1,318 1,127 - (0) 1,127
Other revenue $m 325 - (4) 321 309 - (3) 306
EBITDA $m 1,728 256 (68) 0 1,916 1,576 207 (81) 0 1,702
EBITDA margin % 49.1% 49.7% 49.0% 49.5% 51.0% 48.8%
Depreciation and amortization $m (581) (13) (4) - (598) (521) (10) (25) - (556)
Operating $m - - - - - - - -
exceptional items
Operating profit $m 1,070 237 11 0 1,318 1,015 188 (57) 0 1,146
( )
Risk Factors
The Group's business and industry in which it operates together with all other
information contained in this document, including in particular the risk
factors are summarised below. Additional risks and uncertainties relating to
the Group that are currently unknown to the Group, or those the Group
currently deem immaterial may individually or cumulatively also have a
material adverse impact on the Group's business, results of operations and
financial position.
Summary of principal risks
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, increase in global commodity
prices and inflationary pressures could lead to a significant increase in our
operating cost structure while also negatively impacting the disposable income
of consumers. These adverse economic conditions therefore not only put
pressure on our profitability but also on customer usage for our services.
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. We operate in diverse and dynamic legal, tax and regulatory
environment. The group makes every effort to comply with its legal and
regulatory obligations in all its operating jurisdictions in line with the
group's risk appetite. However, we are continually faced with uncertain and
constantly evolving legal and regulatory requirements in some of the markets
where we operate.
10. Our multinational footprint means we are constantly exposed to the risk
of adverse currency fluctuations and the macroeconomic conditions in the
markets where we operate. We derive revenue and incur costs in local
currencies where we operate, but we also incur costs in foreign currencies,
mainly from buying equipment and services from manufacturers and technology
service providers. That means adverse movements in exchange rates between the
currencies in our OpCos and the US dollar could have a negative effect on our
liquidity and financial condition. In some markets, we face instances of
limited supply of foreign currency within the local monetary system. This not
only constrains our ability to fully benefit at Group level from strong cash
generation by those OpCos but also impacts our ability to make timely foreign
currency payments to our international suppliers.
Given the severity of this risk, specifically in some of our OpCos, Group
management continuously monitors the potential impact of this risk of exchange
rate fluctuations based on the following methodology:
a) Comparing the average devaluation of each currency in the markets
in which the Group operates against US dollar on 3-year and 5-year historic
basis and onshore forward exchange rates over a 1-year period.
b) If either of the above devaluation is higher than 5% per annum,
management selects the highest of these exchange rates.
c) Management then uses this exchange rate to monitor the potential
impact of using such rate on the Group's income statement so that the Group
can actively monitor and assess the impact on the Group's financials due to
exchange rate fluctuations.
Based on the above-mentioned methodology, the weighted average yearly
potential devaluation of the basket of currencies in which the Group is
exposed is estimated to be in the range of 7% to 8%.
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 $49m on revenues, $29m on EBITDA and $25m on finance costs
(excluding derivatives). Our largest exposure is to the Nigerian naira, for
which a 1% devaluation would have a negative impact of $21m on revenues, $11m
on EBITDA and $8m on finance costs (excluding derivatives).
This does not represent any guidance and is being used solely to illustrate
the potential impact of further currency devaluation on the Group for the
purpose of exchange rate risk management. The accounting under IFRS is based
on exchange rates in line with the requirements of IAS 21 'The Effect of
Changes in Foreign Exchange' and does not factor in the above-mentioned
devaluation.
Based on above-mentioned specific methodology, for the identified OpCos,
management evaluates specific mitigation actions based on available mechanisms
in each of the geographies. For further details on such mitigation action
refer to the risk section of the Annual Report.
( )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/or 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, exceptional items, and after 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 (grossed up for put option provided to minority shareholders to
provide them liquidity as part of the sale agreements executed with them
during year ended 31 March 2022), 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.
· Return on capital employed (ROCE): The Group has revised the
computation of ROCE by grossing up the 'equity attributable to owners of the
Company' for put option provided to minority shareholders. The previous period
ROCE has also been restated for this change.
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
ROCE Return on capital employed
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
1 (#_ftnref1) Alternative performance measures (APM) are described on page
17.
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