Airtel Africa Plc has released its first-quarter (Q1) results for the period ended 30 June 2020. The company is witnessing a good start to the year despite impact from Covid-19.
Key highlights of the results show customer base grew by 11.8percent to 111.5 million;
revenue increased by 6.9percent to $851m, with constant currency revenue growth of 13.0percent.
Constant currency revenue growth was recorded across all key business segments, with voice revenue up by 2.2percent, data by 35.7percent and mobile money by 26.3percent.
Underlying Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased by 7.9percent to $375million, with constant currency growth of 14.6percent.
Reported underlying EBITDA margin was 44.1percent, up by 40 basis points (bps) (61 bps in constant currency).
Operating profit increased by 12.9percent to $210million, an increase of 21.5percent in constant currency. Free cash flow was $96million compared to $62million in the same period last year. Earnings per share (EPS) before exceptional items was $1.0 cents and basic EPS was $1.1 cents. Net debt to underlying EBITDA was 2.2x, compared to 3.0x in June 2019.
In July 2019, after the announcement of Initial Public Offering (IPO), the company issued 676,406,927 new shares. EPS has been restated considering all the shares as of 30 June 2020 had been issued on 1 April 2019 for like comparison.
Revenue
Reported revenue grew by 6.9percent, with constant currency growth of 13percent. The constant currency growth of 13percent was partially offset by currency devaluation, mainly in Nigeria (6.9percent), Zambia (28.3percent) and Kenya (4.4percent). The revenue growth was largely driven by the growth of the company’s customer base, up by 11.8percent to 111.5million and Average revenue per user (ARPU) growth of 1.6percent in constant currency.
Revenue growth was recorded across all the regions: Nigeria up 17.1percent, East Africa up 17.5percent and Francophone Africa up 2.2percent. Notably, revenue growth was broad based across all our key segments: voice up 2.2percent, data up 35.7percent and mobile money up 26.3percent in constant currency terms.
Operating profit
Reported operating profit amounted to $210million, up 12.9percent and 21.5percent in constant currency.
Net finance costs
Net finance costs increased by $17million, driven by higher other finance costs which more than offset reduced interest costs of $5.5million
as a result of lower debt. The increase in other finance costs was primarily driven by the higher impact of devaluation on foreign exchange denominated liabilities and borrowings largely as a result of devaluation in Zambian kwacha, Madagascar Ariary and Seychelles Rupee.
Profit after tax
Profit after tax was $57million, down by 56.9percent, largely as a result of a one-off gain of $72million related to the expired indemnity to certain pre-IPO investors in the same period last year, higher finance costs and tax. Excluding one-off benefits in the previous quarter, profit after tax for the quarter reduced by $13million mainly due to higher derivative and exchange loss of $19.4million in Q1 2021.
PBT and PAT decline is largely due to one-off items incurred in the same period in the prior year.
Raghunath Mandava, chief executive officer, on the trading update said, “During last quarter our business was impacted by the Covid-19 pandemic, as restrictions on movements of people and ways of socialising were introduced to contain the spread of infection. In these unprecedented times, we have worked with governments, regulators, partners, and suppliers to keep customers and businesses connected as well as supporting the economies and communities. We focussed on expanding and maintaining our network to ensure it could cope with increasing demand, we kept our distribution up and running by increasing the penetration of digital recharges and stock levels, and we expanded our home broadband solutions to ensure customers could work and access entertainment remotely.
Covid-19 impacted customer usage pattern, particularly during the month of April, however, as some of these restrictions started to be lifted, customer usage trends in May and June returned to being broadly consistent with pre Covid-19 trends. The Group’s
performance generally reflected these trends, with revenue growth accelerating in May, and we ended the quarter with 13 percent revenue growth and 61 bps of EBITDA margin expansion in constant currency. The business showed its resilience even during
these unprecedent circumstances with all key business segments – voice, data and mobile money, and all regions – Nigeria, East Africa and Francophone Africa contributing to growth.”
He said, “During the quarter we also increased our support of the communities where we operate by providing financial support towards essential workers, free data for educational purposes and we worked together with governments to temporarily waive fees on certain mobile money transactions. We also created an exciting partnership with UNICEF to provide children with access to remote learning and enable access to cash assistance for their families via mobile cash transfers.
The outlook remains uncertain, particularly regarding a so called potential second wave of infections and the actions governments will decide to take in that event. However, these results are further evidence of the growth opportunities our markets offer and the effectiveness of our strategy to focus on winning customers, investing in our network and expanding our voice, data and mobile money businesses.”
