Airtel Africa Ends H1 With 116.4m Subscribers

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Airtel Africa’s subscriber base across 14 African countries grew 4.4% on-quarter and stood at 116.4 million with an Average Revenue Per User (ARPU) of USD$2.8, up from preceding quarter’s USD$2.6.

Airtel Africa’s profit after tax after exceptional items, however, grew 54.3% from preceding quarter’s $57 million.

Revenue growth in constant currency was 16.4% in H1, and 19.6% in Q2. Growth was recorded across all regions: Nigeria up 20.2%, East Africa up 21.9% and Francophone Africa up 4.4%, and services, with voice revenue up by 7.0%, data by 33.4% and mobile money by 30.4%.

Airtel Nigeria’s voice revenue increased 11.4% to $413m, this was driven by customer base increase of 11.5% which was partially offset by a 0.8% drop in voice ARPU. The customer base growth was driven by the expansion of our distribution network and the expansion of network infrastructure. Voice usage per customer increased by 13.5%. On the other hand, the average revenue per user (ARPU) decline of 0.8% was a result of a change in the customer mix due to the COVID-19 pandemic in the first quarter.

Data revenue growth of 38.1% in constant currency was supported by 22.8% growth in data customers and 17.4% growth in data ARPU.

Data customer penetration was up by 4ppts from the previous period and reached 43.1% as of September 2020. The data customer base growth of 22.8% was a result of the expansion of the 4G network, with 76% of total sites now on 4G. The total data usage on our network grew by 89.5%, almost double the previous period.

4G data usage almost tripled and now contributes to 60% of the total data usage. Data usage per customer was up by 61% and the data revenue accounted for 35.7% of total revenue, up by 4.6ppts from 31.1% in the previous period.

Underlying EBITDA grew by 13.4% in reported currency, with constant currency growth of 21.5%. Underlying EBITDA margin improved by 60 bps in constant currency as a result of opex efficiencies. In Q2’21, underlying EBITDA grew by 25.7%, with margin improvement of 112 bps, mainly as a result of the bad debt collection of Q1’21 from enterprise customers.

Capital expenditure amounted to $97m as against $115m in the previous period. Capex expenditure was lower during the period because of lockdown measures in April and May 2020.

Operating free cash flow was $289m, up by 42.6%, largely as a result of double-digit underlying EBITDA growth and slightly lower capital expenditure in the first half of the year.

Airtel operating profit increased by 19.5 percent to $472 million, representing an increase of 28.3 percent in constant currency. The company’s free cash flow stood at $319 million, up from $210 million filed in the same period of last year.

Airtel’s mobile money transaction value shot up 28.87% to USD$116.4 million sequentially. The mobile money revenue was USD$100 million and average revenue per user was USD$1.7 during the period.

The board declared an interim dividend of $1.5¢ per share in line with the new progressive dividend policy to focus on growth opportunities and faster deleveraging. The new 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 falls below 2.0x

Raghunath Mandava, Chief Executive Officer, on the trading update:

“The first half of our fiscal year included the peak impact of the COVID-19 pandemic in the countries where we operate, as lockdown measures were swiftly implemented to stem the initial spread of contagion. In these unprecedented times, the telecoms industry has emerged as a key and essential service for these economies, allowing customers to work remotely, reduce their travels, keep them connected and allow access to affordable entertainment.

In these exceptional circumstances, in the first half, we delivered a strong set of results and as lockdown restrictions eased during Q2 our performance continued to improve with constant currency revenue growth of 19.6%, up 6.6% from the prior quarter.

Importantly, the fundamentals of our business remain strong and revenue growth further benefitted from the execution of our strategy with a specific focus on expanding distribution in the rural areas, investing in our network and increasing 4G coverage, as well as benefitting from the fact we provide an essential service to consumers.

In Q2, performance in our mobile money business also significantly improved with constant currency revenue growth of 33.9%, up 8% from the prior quarter, as lockdown restrictions were eased and fees on certain transactions, which had been previously waived, were largely reintroduced.

We also continued to enter new partnerships with leading institutions such as WorldRemit, MoneyGram, Standard Chartered Bank, and Mukuru to increase use cases and improve customers’ access to digital payments and financial services.

We remain alert to the potential for further disruptions from a second wave of COVID-19 across Africa, and the associated actions of governments to minimise contagion.

Nevertheless, we are in a strong financial position to capture the opportunities in a fast-growing region that is vastly underpenetrated in terms of mobile and banking services. We remain confident of delivering long term sustained growth for our shareholders.”

 

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