Airtel Africa Nets $132.2m Profit, Awaits Approval Of Payment Banking Licence

The board of Aitel Africa Plc presented its performance score-card for the half-year ended June 30, 2019, the first since the July 9, dual listing of its shares on the Nigerian Stock Exchange (NSE), showing that revenue rose marginally by 6.9%, while after-tax profit for the period dropped by 12.2%.
Commenting on the performance, Raghunath Mandava, Chief Executive of Airtel Africa expressed pleasure at the strong start in its first quarterly results since the Initial Public Offering.
The results, he continued, “are in line with our expectations, are clear evidence of the effectiveness of our strategy across Voice, Data and Mobile Money.
“In the quarter, we delivered a 10% increase in revenue in constant currency terms, with even higher underlying EBITDA growth largely as a result of operating leverage and a tight focus on costs which led to underlying EBITDA margin expansion of 101bps.”
In the period under review, he added that data revenue was the group’s largest contributor to growth, “rising up 36% as an increasing number of customers relied on our high-quality and high-speed LTE network, resulting in a 79% growth in data usage. Mobile Money revenue, our fastest growing business, increased by 42% as we expanded our distribution reach.”
He announced plans ongoing preparations to launch its Mobile Money business in Nigeria, with Africa’s largest population and market, having secured the approval of its brand name, while awaiting approval for its payment service bank license.
“The business continues to show momentum and we are confident of delivering sustained growth across Voice, Data and Mobile Money, underpinning our medium-term aspirations for revenue and profit growth,” he stressed.
Meanwhile, total revenue for the period rose by 6.9% to $795.9m from N744.5m in the half-year of 2018; lifted by mobile voice revenue of $469.9m, which was flat, compared to the $469.6m reported in the corresponding period of last year, even while customer base climbed to 99.7m, from 91.2m. Mobile data revenue, however, grew at a faster rate of 32.2% from $156.6m to $207.1m; just as data customer base climbed 13.7% from 26.4m to 30m.
Mobile money revenue recorded the biggest percentage rise of 36.5% from $49.5m in the first half of 2018 to $67.6m; even as total mobile money transaction value jumped by 18.6% from $5.996bn to $7.111bn, while active customer increased to 14.6m from 11.8m, an increase of about 23.6%.
Total expenses climbed 3.2% up from $438.5m in the corresponding period of last year to $452.3m. Underlying EBITDA, therefore, stood at $347.6m from $316.9m, a 9.7% increase; while the underlying EBITDA margin increased to 43.7%, compared to 42.6% previously.
Depreciation and amortization jumped from $128.2m to $148m; as operating exceptional items fell to $12.1m from $17.7m; resulting in operating profit of $186.2m, representing an improvement of 9.7% from $169.8m.
Net finance costs rose 10.4% from $73.9m to $81.5m; just the directors reported non-exceptional items for the first time at $62.6m; resulting in profit before tax of $167.4m, as against the previous $80.2m, representing an increase of 108.8%.
Tax expense rose marginally from $46m to $47.7m; leaving net profit at $132.2m, as against the previous $150.6m.
A breakdown of the report showed that the Nigerian operations yielded $312.9m earnings, representing 39.31% of the group’s total revenue, 22.2% rise over the previous $256.2m, which was 34.41% of the total for the period. Data revenue from Nigeria, the directors explained soared by 73.1% in the period, making it the largest contributor to revenue growth, driven by a 21% increase in customer base and ARPU growth, which was helped by increased penetration of 4G data customers. Capital expenditure in the country more than doubled to $53.2m, due to continued expansion and the need to invest in 4G network, just there was a fivefold rise in 4G sites, representing 60% of total sites.
The East African operations followed with $276.6m in revenue, or 34.75% of the total; which dropped 4% from $265.9m, or 35.71% of the total. Operations in the rest of Africa, however, amounted to $208.7m or 26.22%; which declined from $226.8m or 30.46%.
Earnings Per Share (EPS) for the period stood 4 cents, down from 11 cents in the first quarter of 2018, which was further diluted by 163% due to the IPO shares, which rose to 3.08bn shares as against the previous 1.17bn shares in 2018.
Although the numbers came below market expectations, analysts believe it may be too early yet to conclude that the company may not meet its projection as stated in the IPO prospectus. Although some investors who participated in the IPO have expressed disappointment at the numbers, they have expressed optimism for better results when the net proceeds of the IPO are put into use.