Airtel Africa levels Up Earnings, Upgrades Dividend Despite FX Loss
Airtel Africa delivered double-digit earnings growth in its first-half earnings scorecard amidst a tough operating environment in its key markets. The group’s beautiful performance was however peppered by foreign exchange loss while the board of directors Upgrades Airtel’s dividend policy while moving to reduce its leverage position.
According to its recent financial scorecard, Airtel said the group balance sheet has also been further de-risked by the continued localisation of its debt. After the beautiful earnings debut, Airtel Africa proposes an interim dividend of 2 cents, more than 33.33% ahead of 1.5 cents paid to shareholders in the comparable period in 2020.
The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a new base of 5 cents per share for the financial year 2022, with a continued focus to further strengthen the balance sheet.
Following Its share buy back announcement, Ticker: AirtelAfri price has jumped to N780 on the Nigerian Exchange. Airtel Africa seeks to buy out Nigerian minority shareholders, a move analysts said could stabilise the heavily priced Telcos share.
Read Also: Airtel Africa Moves to Buy Back Shares from Nigerian Shareholders
However, the income Chief Executive of the group, Segun Ogunsanya appears optimistic about the future of the Telcos giant.
In the first half of the company’s unaudited financial statement for 2022, revenue expanded by 25.2% to $2.272 billion with double-digit growth across all regions.
In the second quarter of the year, Airtel reported revenue growth of 20.3%. According to Airtel, there was strong double-digit constant currency revenue growth across all regions.
Nigeria up 32.4%, East Africa up 25.8% and Francophone Africa up 22.1%; and across all key services as revenue from Voice up 19.7%, Data spiked 36.9% and Mobile Money increased by 42.0%.
Airtel Africa unaudited statement for the period also shows that underlying earnings before interest tax, depreciation and amortisation (EBITDA) grew by 35.2% to $1.098 billion in reported currency and underlying EBITDA margin improved to 48.3%, an increase of 360 basis points led by both revenue growth and improved operational efficiencies.
The group operating profit expanded 55.1% to $732 million in reported currency.
For the period under review, Airtel Africa delivered a Profit after tax that was more than doubled to $335 million, largely due to higher profit before tax which more than offset the associated increase in tax charges.
Its EPS was 7.6 cents, representing an increase of 155.9%, as a result of higher profit. EPS before exceptional items increased to 7.5 cents from 3.0 cents in the previous period.
Operating free cash flow was $853 million, up 43.1%, and over the last 18 months, the group said they have upstreamed more than $570 million across its operating entities. On borrowings, the group recorded a slow down as leverage ratio reduced to 1.5x from 2.2x despite improvement in activities level.
For example, Airtel Africa’s customer base grew by 5.4% to 122.7 million, with increased penetration across mobile data (customer base up 10.9%) and mobile money services (customer base up 19.0%).
It said customer base growth was affected by the new National Identification Numbers linking requirement with SIM registration regulations in Nigeria.
Excluding Nigeria, Airtel said its customer base grew by 13.7%. Due to a better than expected performance, the board of directors declared an interim dividend of 2 cents per share, higher than 1.5 cents in the comparable period in 2020 in line with an upgraded dividend policy.
The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a new base of 5 cents per share for the financial year 2022, with a continued focus to further strengthen the balance sheet.
Speaking to the result, Segun Ogunsanya, chief executive officer, said “Our first-half financial performance has been strong.
He noted that the first half of last year, and especially the first quarter, was impacted by the start of Covid, but even after adjusting for these effects, Airtel revenue growth rates for the half-year for the Group and all our service segments are ahead of its 2021 revenue growth trends, and in reported terms, these are all in strong double digits.
Airtel Chief explained that the risks from Covid still remain, with sub-Saharan Africa continuing to experience a third wave of the pandemic, noting that Governments continue to implement balanced measures of lockdowns and restrictions accordingly.
“But vaccination levels remain low, and we continue to monitor the situation for potential impacts on economies and consumers.
“Operationally, we have continued our network modernisation and expansion, aligned with an extension of our distribution capabilities, which have together contributed towards continued strong growth in ARPUs across voice, data and mobile money.
“We have seen an improvement in our customer growth trends for the Group as we approach stability of net monthly movements in Nigeria”, Airtel Africa Chief explained.
Airtel Africa launched a sustainability strategy, saying the group has always been a business with a sustainable premise at the heart of its purpose to transform lives across Africa through the promotion of both digital and financial inclusion.
“Our sustainability strategy builds upon this, extending and more comprehensively articulating our sustainability goals and credentials. I am excited by the new initiatives we have launched and I look forward to reporting back on our developments in this area with our first sustainability report next year”.
As incoming Group CEO, Ogunsanya said he has inherited the responsibility to build upon a business with solid foundations. Looking ahead; “I continue to see huge potential across voice, data and mobile money from low penetration levels across Africa”.
He said the continent continues to be a growth story for Airtel Africa despite the pandemic.
“We will continue to invest in mobile and digital technologies to drive digital and financial inclusion sustainably in Africa. I am pleased with the progress we have made in the last couple of years on delivering value to everyone touched by our network.”
Financial review for the half year ended 30 September 2021
Speaking further to the result, Ogunsanya said, “We have recorded another strong set of results that demonstrate the effective execution of our strategy, with strong performance across our regional segments and key services”.
Regionally, Airtel Africa revenue in Nigeria grew by 32.4%, in East Africa by 25.8% and in Francophone Africa by 22.1% in constant currency.
“We were able to deliver strong double-digit growth across all key services; our voice revenue grew by 19.7%, data revenue by 36.9%, mobile money revenue by 42.0% and other revenue by 24.1%”.
As a result, mobile services revenue grew by 25.5% in constant currency (22.9% in reported currency) and mobile money services revenue grew by 42.0% (42.7% in reported currency).
The CEO said the year-on-year constant currency revenue growth rate for Q2’22 of 22.7% was lower than the 33.1% of Q1’22 primarily due to a weakened performance in the first quarter of the prior year during the peak period of Covid-19 related restrictions across the region.
The Telcos giant net finance costs were lower compared with the previous period due to higher derivatives and foreign exchange loss of $11 million in the prior period.
Tax charges however increased by $96 million due to higher operating profit, a one-time tax settlement charge of $9 million and higher withholding tax on dividends by subsidiaries, with the prior period, also benefitting from $10 million deferred tax credit recognition.
Basic EPS and EPS before exceptional items significantly improved to 7.6 cents and 7.5 cents respectively, with higher profits more than offsetting the associated increased tax.
The group leverage improved to 1.5x at 30 September 2021 from 2.2x in the previous period, largely driven by increased cash generation, expansion in underlying EBITDA and $375 million of receipts from the first closings of the mobile money minority investments.
This came despite investing $247 million of intangible capital expenditure renewing licences in two of its largest markets, Nigeria and Uganda, and acquiring an additional spectrum. # Airtel Africa levels Up Earnings, Upgrades Dividend Despite FX Loss
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