Airtel Africa Plc (NSE – AIRTELAFRI) recorded increases in revenue and customers base in the first half of its financial year for the period ended 30 September 2020. The operating profit rose, however the profit after tax declined. This is according to the half yearly results released by the company.
Customer base: Total customer base grew by 12.0% YoY to 116.4 million in the first half of 2020 from 103.9 million in 2019. The data customer base grew by 24.1% YoY to 39.6 million in 2020 from 31.9 million in 2019.
The total customer base in Nigeria rose by 11.5% to 44.1 million while the data customer base rose 22.8% to 19.0 million
Revenue reported on currency change increased by 10.7% YoY to $1,815 million, while QoQ grew by 14.3% to $965 million. Growth was recorded YoY across all regions: Nigeria up 20.2% ($718 million), East Africa up 21.9% ($659 million), and Francophone Africa up 4.4% ($445 million).
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Major components of the total revenue are; voice revenue up by 7.0% ($972 million), data revenue rose by 33.4% (548) and mobile money increased by 30.4% ($181 million).
Components of revenue in Nigeria:
- Voice revenue rose by 3.9% YoY to $413 million;
- Data revenue rose by 28.9% YoY to $257 million
- Other revenue rose by 10.6% YoY to $48 million
Underlying EBITDA increased by 12.8% YoY to $812m. The reported underlying EBITDA margin was 44.7%, up by 85 bps (110 bps in constant currency).
The underlying EBITDA in Nigeria rose by 13.4% YoY to $386 million. The reported underlying EBITDA margin in Nigeria was 53.8%.
Operating profit increased by 19.5% YoY to $472m and by 24.8% QoQ to $262 million. 57.4% ($271 million) of the operating profit was recorded in Nigeria.
Net finance cost rose by 28% YoY to $191 million and by 39.3% QoQ to $92 million.
Profit before tax dropped by 11.1% YoY to $281 million, due to the absence of “non-operating exceptional items” against $69 million recorded as non-operating exceptional items” in H1 2019. On the contrary, the profit before rose by 13.4% QoQ to $170 million.
Profit after tax also dropped by 36.6% YoY to $145 million due to increased tax expense. The tax expense rose by 25.6% YoY to $146 from $88 in 2019.
Basic EPS was $3.0¢, down 52.9% largely as a result of exceptional items and a one-off derivative gain incurred in the prior year.
Dividend: The board declared an interim dividend of $1.5¢ (one and a half cents of the U.S dollar) per share in line with the new progressive dividend policy to focus on growth opportunities and faster deleveraging.
The newly adopted dividend policy aims to grow the dividend annually by a mid to high single-digit percentage from a base of 4 cents per share for FY 2021 until reported leverage (calculated as net debt to underlying EBITDA) falls below 2.0x.
At the point when reported leverage (calculated as net debt to underlying EBITDA) is below 2.0x, the Board will reassess the dividend policy in light of the growth outlook for the Group according to Airtel Africa.
Free cash flow was $319m compared to $210m in the same period last year. The operating free cash flow in Nigeria was $289 million compared to $226 million in the same in 2019.
Developments during the financial year 2020
Additional spectrum In June 2020, Airtel Malawi plc was allocated a spectrum of 10 MHz in the 2600 band.
Abandonment of merger of Airtel Networks Kenya Limited with Telkom Kenya Limited
In August 2020, Airtel Africa plc announced that its subsidiary Airtel Networks Kenya Limited (“Airtel Kenya”) and Telkom Kenya Limited (“Telkom”) have decided to no longer pursue completion of the M&A transaction. The transaction was announced in February 2019 and was subject to the satisfaction of various conditions precedent, including regulatory approvals. Despite Airtel Africa plc and Telkom’s respective endeavors to reach a successful closure, the transaction has gone through a very lengthy process which has led the parties to reconsider their stance.
Partnership with UNICEF
In May 2020, Airtel Africa announced a partnership with UNICEF aimed at providing children with access to remote learning and enabling access to cash assistance for their families via mobile cash transfers. Under this partnership, UNICEF and Airtel Africa will use mobile technology to benefit an estimated 133 million school-age children currently affected by school closures in 13 countries across sub-Saharan Africa during the COVID-19 pandemic.
(a) Partnership with remittance leading institutions Airtel Africa entered into several strategic partnerships with MoneyGram, Mukuru, and WorldRemit.
(b) Partnership with Standard Charted Bank In August 2020, Airtel Africa announced a strategic partnership with Standard Chartered Bank, a leading international banking group, to drive financial inclusion across key markets in Africa by providing customers with increased access to mobile financial services.
(c) Partnership with Mastercard, Samsung, and Asante In September 2020, Airtel Africa announced an expansion of its partnership with Mastercard by launching a Pay-on-Demand payments platform and drive the digital economy across Africa. This Pay-on-Demand platform enables safe, secure, and convenient consumer financing via Samsung devices with an embedded Knox security platform, through Airtel Africa’s network. The partnership facilitates usage-based payments and builds creditworthiness. These partnerships align with the Group’s strategy of expanding the range and depth of Airtel Money offerings to drive customer growth and penetration.
The equity price of Airtel Africa Plc stood at N410.20 per share at the close of trading on Friday. YTD the share price is up 37.24%.
By Ifunanya Ikueze