Airtel Africa has announced financial results for the quarter ending June 2023. Despite facing foreign exchange headwinds in Nigeria, the company showcased robust operating performance with significant growth in revenue and improved EBITDA margins, according to the results.
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Data Services and Mobile Money Drive Performance
Operating Key Performance Indicators (KPIs) demonstrated Airtel's continued regional expansion and growth. The total customer base increased by 8.8 percent, reaching 143.1 million, fueled by the rising penetration of mobile data and mobile money services. Notably, the number of data customers also increased by 22.0 percent to 56.8 million, while mobile money customers grew by 24.3 percent to 34.3 million.
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The company's constant currency Average Revenue Per User (ARPU) experienced a notable growth of 11.1 percent, driven by increased usage across voice, data, and mobile money services. Across the group mobile service segment, revenue witnessed a 19.1 percent growth in constant currency, bolstered by 11.9 percent growth in voice revenue and a substantial 29.8 percent surge in data revenue. Mobile money revenue also showed impressive growth, recording a remarkable 31.2 percent increase in constant currency.
The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) demonstrated significant growth, rising by 22.5 percent in constant currency, resulting in a reported currency increase of 11.1 percent to $682 million. Remarkably, Airtel Africa achieved an EBITDA margin of 49.5 percent, reflecting a 69 basis point margin improvement despite inflationary cost pressures.
Negative Profit after Tax Reported
However, the company reported a negative profit after tax of ($151 million), primarily due to a substantial foreign exchange loss of $471 million recorded in finance cost before tax, followed by $317 million after tax. This loss was attributed to the devaluation of the Nigerian naira in June 2023, stated the release. The impact of this foreign exchange challenge was categorized as a non-operating exceptional item.
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Capital Allocation Strategy
Airtel Africa stated that its capital allocation strategy remained focused on future growth. The company maintained a flat capital expenditure (Capex) at $140 million compared to the previous period as it continued to invest strategically.
Reduced External Debt
Additionally, the Group significantly reduced its external debt at HoldCo, with a remaining debt of $550 million, falling due in May 2024. Cash reserves at the holding companies amounted to $505 million at the end of the period.
Spectrum Investments
The company's leverage remained stable at 1.3x as of June 2023, despite investing over $500 million in spectrum and renewing its 2100 MHz spectrum license in Nigeria during the reporting period.
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Sustainability Strategy
Airtel Africa emphasized its commitment to sustainability as part of its business strategy. The company said it published its Annual Report and Accounts 2022/23, highlighting progress towards sustainability goals and contributions to the United Nations Sustainable Development Goals (SDGs).
A landmark partnership with UNICEF, worth $57 million over five years, was launched to provide educational resources to over 250,000 children across eight markets, with a goal to reach one million children by 2027.
The company also aimed to achieve a near-term target of a 62 percent reduction in Scope 1 and 2 emissions intensity by 2032 and achieve net-zero emissions by 2050.
Olusegun Ogunsanya, the Chief Executive Officer of Airtel Africa, expressed confidence in the company's performance despite the foreign exchange challenges. He noted that the FX market reform in Nigeria, which caused significant naira devaluation, would have a positive impact on the company's long-term development in the country. Ogunsanya emphasized the company's focus on providing reliable telecom and mobile money services at affordable rates, highlighting the strong operating performance as a testament to the success of their strategic 'win-with' approach.
"Our focus remains on areas which we can control: the provision of reliable telecom and mobile money services, at affordable rates across our 14 sub-Saharan markets in Africa where demand for these services remains significant. The excellent operating performance over the last quarter highlights this success, and we are well positioned to deliver against the growth opportunities these markets offer, with a continued focus on margin resilience," he concluded.
While Airtel Africa continues to navigate foreign exchange uncertainties, the company remains well-positioned to capitalize on the untapped growth potential in its African markets, driven by its commitment to delivering reliable and affordable telecommunications services.
