TIDMAAF
RNS Number : 2553E
Airtel Africa PLC
27 October 2022
Airtel Africa plc
Results for half year ended 30 September 2022
27 October 2022
Highlights
-- Total customer base increased to 134.7 million, up 9.7%, with
increased penetration across mobile data (customer base up 10.6%)
and mobile money services (customer base up 24.0%).
-- ARPU growth of 7.2% in constant currency, largely driven by
increased usage across voice, data and mobile money.
-- Mobile money transaction value increased by 31.7%, to an
annualized value of $86.1bn in Q2'23.
-- Reported revenue grew by 12.9% in the half, to $2,565m, and
12.7% for Q2'23. Constant currency growth rate accelerated to 18.5%
in Q2, supporting half year growth of 16.9%.
-- Strong revenue growth in constant currency was posted across
all four reporting segments. Mobile Services revenue in Nigeria
grew by 19.7%, in East Africa by 12.4% and in Francophone Africa by
12.1% (and across the Group by 15.6%, with voice revenue up by
12.0% and data revenue up by 22.1%). Mobile Money revenue grew by
29.5%, driven by growth of 31.5% in East Africa and 23.6% in
Francophone Africa.
-- EBITDA increased by 14.3% to $1,255m in reported currency and
by 17.8% in constant currency, with an EBITDA margin of 48.9%, an
increase of 60 basis points in reported currency and 38 basis
points in constant currency.
-- Profit after tax was $330m, lower by 1.5% due to higher
foreign exchange and derivative losses of $160m. Profit after tax
excluding foreign exchange and derivative losses was up by
30.4%.
-- EPS before exceptional items was 6.8 cents, a reduction of
9.5% largely as a result of higher foreign exchange and derivative
losses of $160m. Basic EPS increased to 7.9 cents (up by 3.7%) as a
result of deferred tax asset recognition in Kenya.
-- The board has declared an interim dividend of 2.18 cents per share (2 cents in H1'22).
-- In July 2022, the Group prepaid $450m of outstanding external
debt at HoldCo. The remaining debt at HoldCo is now $550m, falling
due in May 2024. The leverage ratio has fallen to 1.3x from 1.5x in
the prior period.
-- Capex increased by 26.9% to $310m, in line with our guidance,
as we continue to invest for future growth. Additionally, we
acquired spectrum in key markets including DRC and Kenya.
-- Inaugural sustainability report published today, reflecting
the Group's commitment to documenting progress against its
long-term sustainability strategy launched in October 2021.
Alternative performance measures (1) GAAP measures
(Half year ended) (Half year ended)
------------------------------------------------------------------ -------------------------------------------------
Description Sep-22 Sep-21 Reported Constant Description Sep-22 Sep-21 Reported
currency currency currency
------------------------ -------------------
$m $m change change $m $m change
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Revenue 2,565 2,272 12.9% 16.9% Revenue 2,565 2,272 12.9%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
EBITDA 1,255 1,098 14.3% 17.8% Operating profit 872 732 19.1%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Profit after
EBITDA margin 48.9% 48.3% 60 bps 38 bps tax 330 335 (1.5%)
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
EPS before exceptional Basic EPS ($
items ($ cents) 6.8 7.5 (9.5%) cents) 7.9 7.6 3.7%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Net cash generated
Operating free from operating
cash flow 945 853 10.7% activities 1,008 922 9.4%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
( (1) Alternative performance measures (APM) are described on
page 42.
Segun Ogunsanya, chief executive officer, on the trading
update:
" Airtel Africa continued to deliver strong results as its
purpose of transforming the lives of people across sub-Saharan
Africa through digital and financial inclusion gained further
momentum, with growth accelerating in the second quarter. Whilst we
are not immune to the current macro-economic challenges and
currency devaluation risks, I am pleased to report double-digit
reported revenue growth in the period, largely driven by customer
growth of 9.7% and ARPU growth of 7.2%, as we increased penetration
and usage through our affordable service offerings. Our cost
efficiency initiatives combined with improving growth trends have
also helped offset inflationary pressures on our cost base and
expand our EBITDA margin by 38bps in constant currency. We continue
to de-risk our balance sheet and have further reduced HoldCo debt
with the early repayment of $450m of bond in July.
We continue to invest for growth and have increased capital
expenditure by 27% over the period, alongside a substantial
investment into additional spectrum across several markets.
Following the receipt of the Payment Service Bank and
Super-Agent licence in Nigeria during the period, we have launched
our mobile money operations. We are excited about the opportunity
in our biggest market and will continue to build trust and
confidence in the brand, whilst investing in distribution to
increase access to financial services for underserved communities
within the country.
Today we have also published our inaugural sustainability
report. The report provides a detailed review of our sustainability
strategy that underpins our corporate purpose and sets out our
achievements to date and our focus for the future.
Overall these results continue to demonstrate the effectiveness
of our strategy, sound execution, and the resilience of our
business despite the uncertain macro-economic environment. For the
remainder of the financial year, we anticipate sustained growth in
the business, alongside EBITDA margin resilience."
Airtel Africa plc ("Airtel Africa" or "Group") results for half
year ended 30 September 2022 are unaudited and in the opinion of
management, include all adjustments necessary for the fair
presentation of the results of the same period. The financial
information in this press release has been drawn from interim
financial statements prepared based on International Accounting
Standard 34 (IAS 34) issued by the International Accounting
Standards Board (IASB) approved for use in the UK by the UK
Accounting Standards Endorsement Board (UKEB) and apply the same
accounting policies, presentation and methods of calculation as
those followed in the preparation of the Group's annual
consolidated financial statements for the year ended 31 March 2022
except to the extent required/ prescribed by IAS 34. The Group's
auditors provide an independent review report on such interim
financial statements (as reproduced on page 48 of this press
release). This report should be read in conjunction with audited
annual consolidated financial statements and related notes for the
year ended 31 March 2022. Comparative annual information has been
drawn based on Airtel Africa plc's Audited Consolidated Financial
Statements for the year ended 31 March 2022; with quarterly and
half yearly information drawn from the unaudited IAS 34 financials
of the respective periods. The Group's auditors provided an
independent review report on such half-yearly interim financial
statements for the period ended 30 September 2021. All comparatives
and references to the 'prior period' or 'previous period' in this
report are for the reported metrics for the half year ended 30
September 2021 unless otherwise stated.
About Airtel Africa
Airtel Africa is a leading provider of telecommunications and
mobile money services, with a presence in 14 countries in Africa,
primarily in East Africa and Central and West Africa.
Airtel Africa offers an integrated suite of telecoms solutions
to its subscribers, including mobile voice and data services as
well as mobile money services, both nationally and internationally.
We aim to continue providing a simple and intuitive customer
experience through streamlined customer journeys.
Enquiries
Airtel Africa - Investor Relations
Pier Falcione +44 7446 858 280
Alastair Jones +44 7464 830 011
Investor.relations@africa.airtel.com +44 207 493 9315
Hudson Sandler
Nick Lyon
Emily Dillon
airtelafrica@hudsonsandler.com +44 207 796 4133
Conference call
Management will host an analyst and investor presentation and
investor conference call at 12:00pm UK time (BST), on Thursday 27
October 2022, including a Question-and-Answer session.
To receive an invitation with the dial in numbers to participate
in the event, please register beforehand using the following
link:
Webcast and conference call registration link
Key consolidated financial information
Description Unit Half year ended Quarter ended
of measure
----------------- ------------------------------------------ ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
% % % %
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit and loss
summary
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Revenue (1) $m 2,565 2,272 12.9% 16.9% 1,308 1,160 12.7% 18.5%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue $m 1,226 1,140 7.5% 12.0% 616 578 6.5% 12.7%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 864 733 17.9% 22.1% 446 377 18.4% 24.3%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
revenue
(2) $m 332 259 28.4% 29.5% 173 135 28.1% 32.3%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Other revenue $m 216 200 7.9% 11.9% 110 102 7.9% 13.4%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Expenses $m (1,316) (1,181) 11.5% 16.0% (671) (599) 12.0% 18.2%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
EBITDA (3) $m 1,255 1,098 14.3% 17.8% 641 564 13.8% 19.1%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
EBITDA margin % 48.9% 48.3% 60 bps 38 bps 49.0% 48.6% 45 bps 23 bps
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Depreciation and
amortisation $m (383) (366) 4.8% 9.1% (195) (184) 5.6% 11.5%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating
exceptional
items $m - - 0.0% 0.0% - - 0.0% 0.0%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating profit $m 872 732 19.1% 22.2% 446 380 17.5% 22.9%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Net finance
costs
(4) $m (358) (169) 111.6% (206) (71) 189.0%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Non-operating
exceptional
items(5) $m - 4 (100.0%) - - 0.0%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit before
tax (6) $m 516 567 (9.1%) 240 308 (22.3%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Tax $m (228) (232) (2.0%) (109) (116) (5.8%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Tax -
exceptional
items (7) $m 42 - 0.0% 21 - 0.0%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Total tax charge $m (186) (232) (19.9%) (88) (116) (23.8%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit after
tax $m 330 335 (1.5%) 152 192 (21.2%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Non-controlling
interest $m (34) (50) (31.4%) (19) (32) (39.6%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit
attributable
to owners of
the
company -
before
exceptional
items $m 254 281 (9.5%) 112 160 (30.2%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit
attributable
to owners of
the
company $m 296 285 3.7% 133 160 (17.2%)
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
EPS - before
exceptional
items cents 6.8 7.5 (9.5%) 3.0 4.3 (30.2%)
================= ============= ======== ======== ========== ========== ======= ======= ========== ==========
Basic EPS cents 7.9 7.6 3.7% 3.5 4.3 (17.2%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Weighted average
no of shares million 3,753 3,755 (0.0%) 3,752 3,755 (0.1%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 310 245 26.9% 169 139 21.8%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 945 853 10.7% 472 425 11.1%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Net cash
generated
from operating
activities $m 1,008 922 9.4% 620 475 30.7%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Net debt $m 3,278 3,127 3,278 3,127
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Leverage (net
debt to EBITDA) times 1.3x 1.5x 1.3x 1.5x
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Return on
capital 390 411
employed % 23.5% 19.6% bps 23.7% 19.6% bps
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.2 3.1 3.5% 7.2% 3.3 3.2 3.5% 8.9%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 134.7 122.7 9.7% 134.7 122.7 9.7%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 48.6 43.9 10.6% 48.6 43.9 10.6%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
customer
base million 29.7 23.9 24.0% 29.7 23.9 24.0%
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
(1) Revenue includes inter-segment eliminations of $73m for half
year ended 30 September 2022 and $60m for the prior period.
(2) Mobile money revenue post inter-segment eliminations with
mobile services was $259m for half year ended 30 September 2022,
and $199m for the prior period.
(3) EBITDA includes other income of $6m for half year ended 30
September 2022, and $6m for the prior period.
(4) Net finance costs of $358m includes foreign exchange and
derivative losses of $184m for half year ended 30 September 2022
against $24m the in prior period, an increase of $160m largely due
to a $31m derivative loss, Nigerian Naira devaluation impact of
$30m, CFA (Central African Franc) devaluation of $45m and the
balance being devaluation in the Malawian Kwacha, Ugandan shilling
& Kenyan shilling.
(5) Non-operating exceptional items in the previous period
include a profit of $4m from the sale of towers in Rwanda.
(6) Profit before tax in half year ended 30 September 2022
include a $2m gain on share of profit from associates.
(7) Tax exceptional items in the half year ended 30 September
2022 reflect the initial recognition of a deferred tax credit of
$42m in Kenya.
Financial review for half year ended 30 September 2022
Revenue growth in reported currency was 12.9%, as 16.9% constant
currency revenue growth was partially offset by currency
devaluation. In Q2, constant currency revenue growth accelerated to
18.5% driven by ARPU growth of 8.9%. Revenue growth in the half was
impacted again by the effect of some voice customers being barred
in Nigeria and the loss of tower sharing revenues following the
recent sales of towers in Tanzania, Madagascar and Malawi.
Excluding these specific challenges growth for the half would have
been around 20.4% in constant currency terms.
Total revenue for mobile services and mobile money services
combined, grew in Nigeria by 19.7%, East Africa by 16.2% and
Francophone Africa by 13.0% over the period.
Strong constant currency revenue growth was posted across all
reporting segments: with mobile services revenue for the Group up
15.6% driven by Nigeria up 19.7%, East Africa up 12.4% and
Francophone Africa up 12.1%. Voice revenues continued to see double
digit revenue growth of 12.0%, whilst data revenues grew 22.1%.
Revenue in mobile money grew by 29.5% in constant currency, driven
by 31.5% growth in East Africa and 23.6% growth in Francophone
Africa.
Revenue growth in Q2'23 accelerated to 18.5% in constant
currency from 15.3% in Q1'23: Nigeria mobile services grew by
21.0%, East Africa by 13.6% and Francophone Africa by 13.5%.
Further, mobile money revenue grew by 32.3% in Q2'23 in constant
currency.
Finance costs increased by $189m, largely driven by a $160m
increase in foreign exchange and derivative losses, as a result of
a $31m derivative loss, a Nigerian naira devaluation impact of
$30m, a CFA (Central African franc) devaluation impact of $45m and
the balance being devaluation in the Malawian kwacha, Ugandan
shilling & Kenyan shilling.
Total tax charges were lower by $46m mainly due to the initial
recognition of a deferred tax credit of $42m in Kenya.
Non-controlling interests were lower by $16m due to the buy-back of
minorities in Nigeria and lower minority allocation charges in
Tanzania, partially off-set by the increase in Airtel Money
minority shareholdings.
EPS before exceptional items was 6.8 cents, a reduction of 9.5%
largely because of higher foreign exchange and derivative losses of
$160m. Basic EPS increased to 7.9 cents (up by 3.7%) as a result of
deferred tax asset recognition in Kenya.
Leverage improved to 1.3x from 1.5x in the prior period, largely
driven by increased cash generation, the growth of EBITDA and
proceeds from Airtel Money investments. Our balance sheet has also
been further de-risked by continued localisation of our debt into
the OpCos and continued debt reduction in HoldCo, following the
$450m HoldCo bond prepayment in July 2022.
Turning to the outlook, long-term opportunities for us remain
attractive. While mindful of currency devaluation and repatriation
risks, we continue to work actively to mitigate all our material
risks and to deliver value for all our stakeholders.
GAAP measures
Revenue
Revenue grew by 12.9% to $2,565m in reported currency and 16.9%
in constant currency. The constant currency growth was partially
offset by average currency devaluations between the periods, mainly
in the Central African franc (15.1%), the Nigerian naira (3.0%),
the Kenyan shilling (8.7%), the Ugandan shilling (4.8%) and the
Malawian kwacha (18.9%), in turn partially offset by appreciation
in the Zambian kwacha (19.4%). The constant currency growth of
16.9% was driven by both customer base growth of 9.7% and ARPU
growth of 7.2%.
Revenue for mobile services was up 15.6% in constant currency,
with Nigeria growing 19.7%, East Africa by 12.4% and Francophone
Africa by 12.1%. Voice revenue grew by 12.0% and data revenue grew
by 22.1%. Mobile money revenue recorded a growth of 29.5% driven by
East Africa growth of 31.5% and Francophone Africa growth of
23.6%.
Revenue growth for the first half of the year was impacted by
the effect of barring outgoing calls in Nigeria for those customers
who had not submitted their National Identity Numbers ('NINs'). A
total of 13.6 million customers were originally barred, out of
which 5.7 million customers (42%) have subsequently submitted their
NINs and 2.7 million customers (20%) have been fully verified and
unbarred. We estimate that this resulted in the loss of
approximately $60m of revenues in H1'23, providing a drag on
revenue growth of almost 3% at Group level (impact of 6.8% in
Nigeria). The growth in other revenues was also impacted by c.$14m
of tower sharing revenues lost through associated tower sales in
the second half of the previous year.
Operating profit
Operating profit grew by 19.1% to $872m as a result of revenue
growth and continued improvements in operating efficiency in East
Africa and Francophone Africa.
Net finance costs
Net finance costs increased by $189m, mainly due to higher
foreign exchange and derivative losses of $160m, as a result of a
$31m derivative loss, a Nigerian naira devaluation impact of $30m,
a CFA (Central African franc) devaluation impact of $45m with the
balance being the devaluation in the Malawian kwacha, Ugandan
shilling & Kenyan shilling.
The Group's effective interest rate increased to 6.4% compared
to 5.5% in the prior period, largely driven by an increase in base
rates.
Taxation
Total tax charges were lower by $46m mainly due to the initial
recognition of a deferred tax credit of $42m in Kenya. Excluding
exceptional items, tax was lower by $4m due to lower profit before
tax impacted by higher foreign exchange and derivative losses.
Profit after tax
Profit after tax was $330m, reduced by 1.5% due to higher
foreign exchange and derivative losses of $160m partially offset by
an exceptional gain arising from the initial recognition of a
deferred tax credit of $42m in Kenya. Profit after tax excluding
foreign exchange and derivative losses was up by 30.4%.
Basic EPS
Basic EPS improved to 7.9 cents from 7.6 cents in prior period ,
an improvement of 0.3 cents. This increase was mainly due to higher
operating profits and the recognition of a deferred tax credit of
$42m in Kenya, which more than offset higher foreign exchange and
derivative losses of $160m.
Net cash generated from operating activities
Net cash generated from operating activities up 9.4% to $1,008m
(from $922m in prior period) largely driven by higher operating
profit which was partially offset by higher tax payments on the
increased profits and withholding tax on dividends by subsidiaries.
While in some markets we face instances of shortage of foreign
currency within the local monetary system, we benefit from a broad
geographical diversification which enables access to liquidity,
with limited impact to the Group requirements.
Alternative performance measures [1]
EBITDA
EBITDA grew by 14.3% to $1,255m in reported currency, and by
17.8% in constant currency. EBITDA growth was led by the strong
revenue performance. Group EBITDA margin improved by 60 basis
points in reported currency to 48.9% and 38 basis points in
constant currency. We continue to work towards mitigating the
inflationary cost pressures through various cost initiatives.
Foreign exchange had an adverse impact of $87.5m on revenue, and
$37m on EBITDA, as a result of currency devaluations. The main
currency devaluations covered within the period included the
Central African franc (15.1%), the Nigerian naira (3.0%), the
Kenyan shilling (8.7%), the Ugandan shilling (4.8%) and the
Malawian kwacha (18.9%), in turn partially offset by appreciation
in the Zambian kwacha (19.4%).
With respect to currency devaluation sensitivity, on a 12-month
basis, a 1% currency devaluation across all currencies in our OpCos
would have a negative impact of $47m on revenues, $28m on EBITDA
and $23m on finance costs (excluding derivatives). Our largest
exposure is to the Nigerian naira, for which a 1% devaluation would
have a negative impact of $20m on revenues, $11m on EBITDA and $9m
on finance costs (excluding derivatives).
Refer to the Risk Factors section for detailed disclosure on the
currency devaluation risk posed to the Group.
Tax
The effective tax rate was 39.4%, compared to 39.2% in the prior
period, largely due to profit mix changes amongst the OpCos. The
effective tax rate is higher than the weighted average statutory
corporate tax rate of approximately 33%, largely due to the profit
mix between various OpCos and withholding taxes on dividends by
subsidiaries.
Exceptional items
Non-operating exceptional items in the previous period relate to
a gain of $4m from the profit on the sale of towers in Rwanda.
H1'23 tax exceptional items related to the initial recognition of a
deferred tax credit of $42m in Kenya.
EPS before exceptional items
EPS before exceptional items was 6.8 cents (lower by 0.7 cents
from 7.5 cents in the prior period) which was impacted by higher
foreign exchange and derivative losses of $160m.
Operating free cash flow
Operating free cash flow increased by 10.7% to $945m, as higher
EBITDA more than offset increased capital expenditure. Capital
expenditure during the period was $65m higher relating mainly to
planned network expansion and investment into the PSB opportunity
in Nigeria.
Leverage
Leverage (net debt to EBITDA) improved to 1.3x at 30 September
2022, from 1.5x at 30 September 2021, largely driven by increased
cash generation, EBITDA expansion, receipt of $175m from mobile
money minority investments and proceeds of $243m from Tower sales
in Tanzania, Malawi and Madagascar during the period. Our balance
sheet has continued to be de-risked through a reduction of HoldCo
debt to $0.5bn, from $1.5bn in the prior period; and the increased
localisation of our debt into the OpCos.
Other significant updates
Launch of inaugural Sustainability Report
The publication of Airtel Africa's inaugural Sustainability
Report on the 27th of October follows the launch of the Group's
sustainability strategy in October 2021. The report reflects the
Group's firm commitment to sustainability and details the business'
progress against the goals outlined in the sustainability strategy.
The report adheres to international best-practice ESG Reporting
standards, including the Global Reporting Initiative (GRI)
Standards and TCFD recommendations.
The publication of the report constitutes an important step
forward in enhancing the non-financial information transparency of
the Group. The report provides accurate and verified baselines for
scope 1, 2 and 3 emissions and total energy consumption.
In October 2021, the Group committed to publishing a 'pathway to
net zero' report, outlining the Group's strategy and timeline for
achieving net zero greenhouse gas emissions targets, ahead of the
publication of its first sustainability report. While significant
progress has been made on this important project, due to its
ambitious scale, additional time is required to comprehensively
incorporate the many variables affecting our decarbonisation
strategy in all 14 markets, and to consult with stakeholders. The
Group is now confident of publishing a robust pathway to net zero
by the end of the 2023 financial year.
NIN - SIM linkage implementation in Nigeria
Following a directive issued by the Nigerian Communications
Commission (NCC) on 7 December 2020 to all Nigerian telecom
operators, all our customers were required to provide their valid
National Identification Numbers (NINs) to update SIM registration
records, with a final deadline of 31 March 2022.
In April 2022, the voice services for 13.6 million customers
were barred due to non-submission of NIN information. As of
September 2022, 5.7 million customers (42%) have subsequently
submitted their NINs and 2.7 million customers (20%) have been
fully verified and unbarred. Revenue growth for the first half of
the year was impacted by the effect of barring outgoing voice calls
in Nigeria for those customers who had not submitted their NINs. We
estimate that this resulted in the loss of approximately $60m of
revenues in H1'23, providing a drag on revenue growth of almost 3%
at Group level (impact of 6.8% in Nigeria).
We continue to work closely with the regulator and impacted
customers to help them to comply with the registration
requirements, making every effort to minimise disruption and ensure
affected customers can continue to benefit from full-service
connectivity as soon as possible; in line with our aim to drive
increased connectivity and digital inclusion across Nigeria.
Nigeria mobile money operationalisation
On 29 April 2022, we announced that the Central Bank of Nigeria
('CBN') had confirmed that Smartcash Payment Service Bank limited
('Smartcash'), had received final approval for a full Payment
Service Bank ('PSB') licence, affording the Group the opportunity
to deliver a full suite of mobile money services in Nigeria. This
news followed our announcement of 26 April that the CBN had also
awarded our subsidiary, Airtel Mobile Commerce Nigeria Ltd, with a
full super-agent licence, allowing the business to create an agency
network that can service the customers of licenced Nigerian banks,
payment service banks and licenced mobile money operators in
Nigeria.
During the period we launched Smartcash, our Nigerian mobile
money offering, initially in Lagos, before rolling out further
across the country. One of our key commitments is to guarantee data
privacy and security controls across the business to build trust
and confidence in the brand. In that light, we have focussed our
investments on the IT infrastructure and business systems and
processes to ensure we meet this commitment. This investment,
combined with our continued focus on the expansion of the
distribution network, will drive increased access to financial
services for underserved communities in Nigeria.
Tanzania spectrum acquisition
On 13 October 2022, we announced that Airtel Tanzania plc
('Airtel Tanzania') had purchased 140 MHz of additional spectrum
spread across the 2600 MHz (2 blocks of 2x15MHz) and 3500 MHz bands
from the Tanzania Communications Regulatory Authority (TCRA) for a
gross consideration of $60m. This additional spectrum will support
our network expansion in the market for both mobile data and fixed
wireless home broadband capability, including 5G rollout, providing
significant capacity to accommodate our continued strong data
growth in the country. This investment reflects our continued
confidence in the opportunity inherent in the Tanzanian market,
supporting the local communities and economy through furthering
digital inclusion and connectivity.
Zambia spectrum acquisition
On 14 October 2022, we announced that Airtel Networks Zambia plc
('Airtel Zambia'), had purchased 60 MHz of additional spectrum
spread across the 800 MHz and 2600 MHz bands from the Zambia
Information and Communications Technology Authority (ZICTA), for a
gross consideration of $29m, payable in local currency. This
additional spectrum will support our network expansion in the
market for both mobile data and fixed wireless home broadband
capability, including 5G rollout, providing significant capacity to
accommodate our continued strong data growth in the country. Zambia
is one of our largest markets by revenue. This investment reflects
our continued confidence in the opportunity inherent in the Zambian
market, supporting the local communities and economies through
furthering digital inclusion and connectivity.
DRC spectrum acquisition
On 6 June 2022, we announced the purchase of 58 MHz of
additional spectrum in the DRC, spread across 900, 1800, 2100 and
2600 MHz bands, for a gross consideration of $42m. The licence for
paired spectrum in the 2100 band comes up for renewal in September
2032. All the other licences continue until July 2036. This
additional spectrum will support our 4G expansion in the DRC for
both mobile data and fixed wireless home broadband capability,
providing significant capacity to accommodate our continued strong
data growth in the country. DRC is the largest country by area in
our portfolio and our second largest market by population. This
investment reflects our continued confidence in the tremendous
opportunity inherent in the DRC, supporting the local communities
and economies through furthering digital inclusion and
connectivity.
Kenya spectrum acquisition
On 15 July 2022, we announced that Airtel Kenya Networks Limited
('Airtel Kenya'), had purchased 60 MHz of additional spectrum in
the 2600 MHz band from the Communications Authority of Kenya, for a
gross consideration of $40m. The licence is valid from July 2022
for a period of 15 years. This additional spectrum will support our
4G expansion in the market for both mobile data and fixed wireless
home broadband capability and will allow for future 5G rollout,
providing significant capacity to accommodate our continued strong
data growth in the country. Airtel Kenya is one of our largest
markets by revenue. This investment reflects our continued
confidence in the tremendous opportunity inherent in the Kenyan
market, supporting the local communities and economies through
furthering digital inclusion and connectivity.
$450m early bond redemption
On 8 July 2022 the Group announced the settlement of a cash
tender offer, redeeming $450m of the $1 billion of 5.35% guaranteed
senior notes due 2024 ('Notes'). An aggregate principal amount of
$450m of Notes was accepted for purchase for a total of $463m. All
Notes accepted for purchase were cancelled ahead of their maturity
in May 2024. This early redemption was made out of the Group's cash
reserves and is in line with our strategy of reducing external
foreign currency debt at a Group level.
First sustainability-linked loan facility
On 10 August 2022, the group announced the signing of a $125m
revolving credit facility with Citi through its branch
offices/subsidiaries in sub-Saharan Africa. This facility is in
line with our strategy to raise debt in our local operating
companies and will include both local currency and US dollar
denominated debt. The facility has a tenor up to September 2024 and
will be used to support Airtel Africa's operations and investments
in four of its subsidiaries. The facility provides potential
interest rate savings in exchange for achieving social impact
milestones relating to digital inclusion and gender diversity, with
a focus on rural areas and women, and aligning with the Group's
sustainability strategy , launched in October 2021. The facility
further strengthens the Group's commitment to transforming lives
across the communities in which we operate.
Information on additional KPIs
An investor relations pack with information on the additional
KPIs and balance sheet is available to download on our website at
airtel.africa/investors .
Strategic overview
The Group provides telecoms and mobile money services in 14
emerging markets of sub-Saharan Africa. Our markets are
characterised by huge geographies with relatively sparse
populations, high population growth rates, high proportions of
youth in the population, low smartphone penetration, low data
penetration and relatively unbanked populations. Unique mobile user
penetration across the Group's footprint is around 47%, and banking
penetration remains under 50%. These indicators illustrate the
significant opportunity still available to Airtel Africa to enhance
both digital and financial inclusion in the communities we serve,
enriching and transforming their lives through digitalisation at
the same time as growing our revenues profitably, across each of
our key services of voice, data and mobile money.
The Group continues to invest in its network and distribution
infrastructure to enhance both mobile connectivity and financial
inclusion across our countries of operation. In particular, we
continued to invest in expanding our 4G network footprint to
increase data capacity in our networks to support future business
growth, as well as deploying new sites, especially in rural areas,
to enhance coverage and connectivity.
We describe our 'Win with' strategy through six strategic
pillars. Our customers lie at the core of our strategy, through our
fundamental purpose around transforming lives.
Our focus on digitalisation, of both our products and services
and our internal systems and processes, increasingly functions as a
catalyst, or an 'accelerator', for each of our strategic
pillars.
Underpinning our Group strategy is our sustainability platform,
framing our continued commitment to both driving sustainable
development and acting as a responsible business. We launched our
sustainability strategy earlier this year, setting out our
commitment to developing the infrastructure and services that will
drive both digital and financial inclusion for people across Africa
and which provides a framework to describe our contribution to the
United Nations' Sustainable Development Goals ('SDGs'). We have
four key pillars within our sustainability framework: 'Our
business', 'Our people', 'Our communities' and 'Our environment';
and we have nine summary goals and commitments, along with
corresponding programmes that address each of the 'material'
identified topics of the business, covering data security, service
quality, supply chain, people commitments, digital inclusion,
financial inclusion, access to education, greenhouse gas emissions
reduction and environmental stewardship.
This year, we continued to make strong progress across each of
our core strategic pillars: 'Win with network', 'Win with
distribution', 'Win with data', 'Win with mobile money', 'Win with
cost' and 'Win with people'.
Win with network
The Group aims to continually provide a best-in-class network
experience, including internet experience, to customers. We
continued to invest in our network by expanding 4G coverage and
building capacity to cater for the future needs of our customers
and to continue providing them with high-speed data. Our expansion
of 4G network capability across our footprint and connecting rural
areas through deployment of new sites continued to be our two key
focus areas. Our investment in the 4G network through single RAN
technology has resulted in both expansion of our 4G coverage and
enhanced network capacity. Currently, 88.9% of our total sites are
now on 4G, compared to 81.8% in the prior period. We are building a
leading, modernised network that can provide the data capacity to
meet rapidly growing demand, and enhanced connectivity and
digitalisation needs of our markets. Our network data capacity has
increased by 38.2% year on year, reaching 19,000+ TB per day, with
additional capacity being added at only very marginal cost. We have
added almost 8,500 km of additional fibre in the last one year,
with total fibre now more than 68,500km.
The Group has also added additional spectrum in a few of our
markets. We have added 110 MHz in the 2600 band (60 MHz in Kenya
and 50 MHz in Zambia), 10 MHz in 800 band in Zambia, 58 MHz in DRC
spread across various bands, 10 MHz in 2100 band and 100 MHz in
3500 in Seychelles. These allocations will help us to maximise
network capacity and coverage.
Capital expenditure related to investment activities during the
period was $310m, excluding spectrum acquisitions and licence
renewals.
Win with distribution
Sub-Saharan Africa is characterised by low penetrated markets,
with unique subscriber penetration at 47%. The Group's strategy is
to build assured availability of service through deployment of
exclusive retail footprint and ensuring sufficient resourcing to
drive revenue generation at each distribution site.
We continue to strengthen our exclusive channel of
kiosks/mini-shops and Airtel Money branches along with multi-brand
outlets in both urban and rural markets. We provide a simplified
and enhanced KYC app to provide a seamless customer onboarding
experience. These have enabled us to add customers, resulting in
customer base growth of 9.7%. This has also helped us to grow voice
revenue by 12.0% in constant currency.
The Group continued its investment in strengthening our
distribution network infrastructure, with a focus on rural
distribution networks. During the period, the Group expanded its
exclusive franchise stores, adding more than 19,000+ kiosks and
mini-shops (taking the total to almost 62,000) across our
footprint. The Group also added more than 58,600 activating
entities, up by 27.6%.
Win with data
The Group continued to invest in the expansion of our 4G
network, adding significant data capacity to the network at only
marginal cost, expanding both home broadband and enterprise
business services to greater leverage the 4G network capacity;
growing data ARPU and data revenue. We continue to focus on
increasing smartphone sales through the expansion of our network of
smartphone device selling outlets.
Our improved 4G network supported our drive to increase
smartphone penetration, data customer penetration and the uptake of
larger data volumes, resulting in greater data consumption per
customer. Smartphone penetration was up by 1.5 percentage point to
35.1% and our data customer base grew by 10.6%, now representing
36.1% of our total customer base.
Data usage per customer reached 4.3 GB per month (from 3.3 GB)
led by an increase in smartphone penetration and expansion of our
home broadband and enterprise customers. This helped us to grow
data revenue by 22.1% in constant currency. Growing 4G penetration
and the data usage of customers helped us to grow data ARPU by
8.7%. 4G data usage constituted 73.4% of total data usage on the
network in Q2'23 with 4G data usage per customer reaching 7.3 GB
per month, up by 36.0% in Q2'22.
Win with mobile money
The Group has continued to drive financial inclusion. The low
penetration of traditional banking services across our footprint
leaves a large number of unbanked customers whose needs can be
largely fulfilled through mobile money services. We aim to drive
the uptake of Airtel Money services in all our markets, harnessing
the ability of our profitable mobile money business model to
enhance financial inclusion in some of the most 'unbanked'
populations in the world.
During the period, we launched Smartcash in Nigeria. Services
were initially made available at selected retail touchpoints, and
operations are now being expanded gradually across the country.
We continued to expand our exclusive distribution channel of
Airtel Money branches and Kiosks to ensure availability of services
to customers even in the rural areas. The number of kiosks and
mini-shops increased by 45% and Airtel money branches by almost
27%. Further, non-exclusive channel of mobile money agents expanded
by 49.7%. Our distribution expansion and enhanced offerings helped
drive 24.0% growth in our mobile money customer base, now serving
over 29.7 million customers which represents 22.0% of our total
customer base.
Along with Data, Mobile money continues to be one of our fastest
growing services, delivering revenue growth of 29.5% in H1'23. It
is an increasingly important part of our business, delivering $86bn
of Q2'23 annual transaction value and accounting for 13.2% of total
revenue in Q2'23.
Mobile money ARPU increased by 7.2% in constant currency over
the period, driven by increased transaction values and higher
contributions from cash transactions, P2P transfers and mobile
services recharges through Airtel Money.
Win with cost
The telecom industry continues to get impacted by macro-economic
factors in our key markets. Despite the impact of the various
headwinds through our core strategic pillars, our 'Win with Cost'
initiatives have supported continued margin expansion.
Our operating cost model is focused on enhancing cost efficiency
through changes in the operating design and digitalisation
initiatives. We embrace robust cost discipline and continuously
seek to improve our processes to reduce operating costs, delivering
one of the highest EBITDA margin in the industry. We also use the
latest technology to optimally design our networks and improve our
capital expenditure efficiency; enabling us to build large
incremental capacities at lower marginal cost.
We are taking various cost efficiency initiatives to mitigate
the headwinds, relating mainly to:
(i) working with Tower companies to invest more in energy
efficient equipment (invest in lithium batteries & solar
equipment) (ii) enhance grid connectivity (iii) transmission
re-routing to optimise leaseline capacity; and (iv) shift towards
digital recharges specially through Airtel Money to reduce
commission pay-outs and to curtail or delay non-essential
spend.
Win with people
As we continue to build our business, our values continue to
anchor how we work. Being alive, Inclusive, and respectful is
demonstrated in the way we work and how we build sustainable
engagement.
This year we conducted our engagement survey to unceasingly
measure our employee sentiment. During our last survey (2020), we
had an overall employee participation rate of 87%. This has
increased to 91%, an overall good show of employees being willing
to share their voices in a safe environment. More importantly our
Engagement score has also increased upwards by 2 percentage points
to 81%. We are working in each market to look at overall engagement
opportunity areas while building further on our strong areas. We
remain committed to listening and consulting our employees and this
through the different forums such as townhalls, union engagements
and open-door policy where our employees can relay the most
pertinent matters affecting them.
We recognize the importance of having diverse and inclusive
teams. This is mapped to the diverse communities we serve and
provide financial and digital inclusion for.
We strive to create an environment that is all inclusive,
accessible, and supportive to provide a workplace where all our
employees have access to opportunities. This is created through
fair and accessible recruitment, and our extensive range of
policies and engagement activities/ programs. Our total number of
female employees currently stand at 28% across 14 markets. Our
focus remains on accelerating diversity in the second half through
internal promotions and external appointments.
Through the learning and development initiatives, we assess
internal capability and prepare our workforce for current and
future business needs. Over the last half year, we have invested in
both functional and leadership training programs. This includes
training our customer experience, network, and engineering teams in
addition to investing in our female colleagues and bringing women
in technology to the forefront through our women-4-tech program.
This program allows us to coach and mentor our women in the
technology functions to support their growth and career
development.
Our reward metrics continue to be based on our pay for
performance philosophy. Employees have received their individual
key result areas which allows all of us to focus on the same
organizational objectives to unlock business growth. Together we
transform the lives of the communities in which we serve.
Financial review for half year ended 30 September 2022
Nigeria - Mobile services
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of
Operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 1,040 896 16.1% 19.7% 523 450 16.1% 21.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue
(1) $m 512 471 8.7% 11.9% 253 233 8.5% 13.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 431 351 22.9% 26.7% 221 179 23.4% 28.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other revenue
(1) $m 97 74 31.6% 35.6% 49 38 28.8% 34.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 531 492 7.9% 11.1% 259 246 5.3% 9.8%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(391) (393) (510) (509)
EBITDA margin % 51.0% 54.9% bps bps 49.5% 54.6% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (156) (128) 21.9% 25.7% (81) (65) 24.8% 30.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating exceptional
items $m - - 0.0% 0.0% - - 0.0% 0.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit $m 358 364 (1.6%) 1.3% 169 181 (6.6%) (2.6%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 134 104 28.0% 28.0% 77 56 39.5% 39.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 397 388 2.5% 6.5% 182 190 (4.7%) 1.0%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.8 3.6 3.7% 6.8% 3.8 3.7 2.4% 6.8%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 46.3 40.4 14.5% 46.3 40.4 14.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 20.6 18.2 13.5% 20.6 18.2 13.5%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Voice revenue and other revenue includes inter-segment
revenue of $1m in half year ended 30 September 2022. Excluding
inter-segment revenue, voice revenue was $511m and other revenue
was $96m in half year ended 30 September 2022.
Revenue in Nigeria grew by 16.1% in reported currency to $1,040m
and by 19.7% in constant currency. Revenue growth for the first
half of the year was impacted by the effect of barring outgoing
calls in Nigeria for those customers who had not submitted their
National Identity Numbers ('NINs'). Revenue growth was driven
mainly by customer base growth of 14.5% supported by ARPU growth of
6.8%, largely driven by higher data and other revenue. Q2'23
revenue growth accelerated to 21.0% from 18.3% in Q1'23.
Voice revenue grew by 11.9% in constant currency, driven by
customer base growth of 14.5% partially offset by a slight drop in
voice ARPU impacted by the barring of outgoing calls for customers
who had not submitted their NINs. A total of 13.6 million customers
were originally barred, out of which 5.7 million customers (42%)
have subsequently submitted their NINs and 2.7 million customers
(20%) have been fully verified and unbarred. We estimate that this
resulted in the loss of approximately $60m of revenues in H1'23,
providing a drag on revenue growth of 6.8% in Nigeria.
Data revenue increased by 26.7% in constant currency, driven by
data customer base growth of 13.5% and data ARPU growth of 9.1%.
The enhanced 4G network and ample data network capacity to provide
high speed data has helped us to grow data customer base. As we
continued our 4G network rollout, nearly all our sites in Nigeria
(99%) now deliver 4G. The 4G data customer base increased by 20.3%
with 45% of our total data customer base being 4G users, compared
with 42.4% in prior period. Data usage per customer increased to
4.8 GB per month (from 3.9 GB in the prior period). In Q2'23, 4G
data usage per customer reached 8.3 GB per month as compared with
5.4 GB in prior period with 4G data usage contributing to 79.5% of
total data usage.
Other revenues grew by 35.6% in constant currency, with the main
contribution coming from the growth in value added services
revenue, led by airtime credit services.
Nigeria EBITDA was $531m, up by 11.1% in constant currency. The
EBITDA margin declined to 51.0% from 54.9% due to an increase in
operating costs arising from inflationary pressure.
Operating free cash flow was $397m, up by 6.5%, due to the
expansion of EBITDA, partially offset by higher capex.
East Africa - Mobile services (1)
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of
operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 740 674 9.9% 12.4% 381 351 8.6% 13.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue $m 417 377 10.8% 13.6% 213 199 7.5% 13.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 257 217 18.4% 20.3% 134 112 20.0% 24.4%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other revenue
(2) $m 66 79 (17.0%) (14.2%) 33 41 (18.5%) (13.9%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 359 317 13.5% 15.8% 193 172 12.7% 17.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
157 141 184 168
EBITDA margin % 48.6% 47.0% bps bps 50.7% 48.9% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (123) (113) 9.3% 11.8% (63) (57) 10.4% 15.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating exceptional
items $m - - 0.0% 0.0% - - 0.0% 0.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit $m 219 192 13.8% 15.8% 121 108 11.4% 16.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 90 76 18.8% 18.8% 47 46 2.9% 2.9%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 269 241 11.9% 15.0% 146 126 16.2% 23.0%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 2.1 2.0 3.0% 5.4% 2.1 2.1 1.9% 6.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 61.4 56.8 8.0% 61.4 56.8 8.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 20.1 18.2 10.5% 20.1 18.2 10.5%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) The East Africa business region includes Kenya, Malawi,
Rwanda, Tanzania, Uganda and Zambia.
(2) Other revenue includes inter-segment revenue of $5m in half
year ended 30 September 2022. Excluding inter-segment revenue,
other revenue was $61m in half year ended 30 September 2022.
Mobile services revenue in East Africa grew by 9.9% in reported
currency, and by 12.4% in constant currency. The differential in
growth rates was due to a devaluation of the Kenyan shilling,
Ugandan shilling and Malawian kwacha, offset by an appreciation in
the Zambian kwacha. H1'23 was impacted by the loss of tower sharing
revenues (c.$13m) following the sales of towers in Tanzania and
Malawi which is reflected in the 14.2% decline in other revenues
over the period. Revenue growth, excluding the site sharing revenue
impact of tower sales, was 14.6% for the period.
Voice revenue grew by 13.6% in constant currency, driven by both
customer base growth of 8.0% and voice ARPU growth of 6.5%. The
increase in network coverage and distribution infrastructure drove
the increase in the customer base. Voice ARPU growth was supported
by growth in voice usage per customer which increased 11.3% to 383
minutes per customer per month, lifting voice ARPU by 6.5% in the
period. Total minutes on the network increased by 18.7% to 135.5
billion minutes.
Data revenue grew by 20.3% in constant currency, largely driven
by both data customer base growth of 10.5% and data ARPU growth of
9.5%. We continue to invest in expansion of our 4G network which
helped us to grow both the data customer base and usage levels. In
East Africa, 87.7% of our network sites are now on 4G, compared
with 83.5% in the prior period. Data usage per customer increased
to 4.1 GB per customer per month from 3.1 GB per customer per month
in prior period. As of Q2'23, 4G customers accounted for 43.1% of
our total data customer base and contributed to 67.3% of total data
usage. 4G data usage per customer increased to 6.9 GB per customer
per month from 5.7 GB per customer per month in the prior
period.
EBITDA increased to $359m, up by 15.8% in constant currency. The
EBITDA margin improved to 48.6%, an improvement of 141 basis points
in constant currency, as a result of revenue growth and improved
operating efficiencies.
Operating free cash flow was $269m, up by 15.0%, due largely to
the expansion of EBITDA, partially offset by increased capex.
Francophone Africa - Mobile services (1)
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of
operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 532 512 4.0% 12.1% 271 259 4.4% 13.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue
(2) $m 299 294 1.9% 10.3% 151 148 2.3% 11.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 176 165 6.3% 14.7% 90 85 5.8% 15.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other revenue
(2) $m 57 53 8.6% 14.2% 30 26 12.2% 18.9%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 241 208 15.8% 24.0% 131 106 23.2% 33.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
462 434 733 706
EBITDA margin % 45.2% 40.6% bps bps 48.2% 40.9% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (92) (102) (9.8%) (2.2%) (46) (50) (9.5%) (0.8%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating exceptional
items $m - - 0.0% 0.0% - - 0.0% 0.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit $m 131 90 46.4% 54.6% 75 47 60.1% 70.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 59 48 21.7% 21.7% 32 28 12.4% 12.4%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 182 160 14.0% 24.8% 99 78 27.0% 40.8%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.3 3.5 (5.2%) 2.2% 3.4 3.5 (2.2%) 6.3%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 26.9 25.4 6.0% 26.9 25.4 6.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 7.8 7.5 4.2% 7.8 7.5 4.2%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) The Francophone Africa business region includes Chad,
Democratic Republic of the Congo, Gabon, Madagascar, Niger,
Republic of the Congo, and Seychelles.
(2) Voice revenue and other revenue includes inter-segment
revenue of $1m in half year ended 30 September 2022. Excluding
inter-segment revenue, voice revenue was $298m and other revenue
was $56m in half year ended 30 September 2022.
Mobile services revenue in Francophone Africa grew by 4.0% in
reported currency, and by 12.1% in constant currency. The
differential in growth rates was driven primarily by the 15.1%
devaluation of the Central African franc. Revenue growth of 12.1%
was mainly contributed by DRC, Niger, Chad and Gabon. Revenue
growth in Q2'23 accelerated to 13.5% from 10.6% in Q1'23.
Voice revenue grew by 10.3% in constant currency, led by
customer base growth of 6.0% and supported by voice ARPU growth of
0.5%. Our network coverage expansion and distribution
infrastructure helped us drive customer base growth. Voice usage
per customer grew by 8.4% to 147 minutes per customer per month
thereby resulting in an 18.9% growth in voice traffic carried over
the network. Q2'23 voice revenue growth was 11.7% supported by
voice ARPU growth of 4.6%.
Data revenue increased by 14.7% in constant currency, supported
by both customer base growth of 4.2% and data ARPU growth of 5.4%.
We continue to expand our 4G network, with 68.5% of our sites in
Francophone Africa on 4G (up from 61.5% in prior period). Data
usage per customer increased by 38.4% to 3.2 GB per customer per
month compared with 2.3 GB per customer per month in prior period
(total data usage increased by 50.7%). As of Q2'23, 4G data users
constituted 51.5% of total data users, compared with 42.0% in the
prior period. 4G Data usage per customer increased to 5.5 GB per
month compared with 4.5 GB per customer per month.
EBITDA at $241m, increased by 24.0% in constant currency. EBITDA
margin improved to 45.2%, an improvement of 434 basis points in
constant currency. H1'23 had a one-time Opex benefit of $19m and
normalized EBITDA margin was 41.7%, an improvement of 91 basis
points in constant currency.
Operating free cash flow was $182m, increased by 24.8%, largely
driven by the expansion in EBITDA.
Mobile services
Description Unit Half year ended Quarter ended
of measure
------------------- ------------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised
statement
of operations
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue (1) $m 2,309 2,076 11.2% 15.6% 1,174 1,058 10.9% 17.0%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice Revenue $m 1,226 1,140 7.5% 12.0% 616 578 6.5% 12.7%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data Revenue $m 864 733 17.9% 22.1% 446 377 18.4% 24.3%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other Revenue $m 219 203 7.9% 12.2% 112 103 8.3% 13.6%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 1,131 1,017 11.2% 15.1% 582 524 11.1% 16.7%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) (23) (10)
EBITDA Margin % 49.0% 49.0% bps bps 49.6% 49.5% 6 bps bps
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
& Amortization $m (372) (343) 8.3% 12.9% (190) (172) 10.0% 16.3%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
Exceptional
Items $m - - 0.0% 0.0% - - 0% 0%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating Profit $m 708 646 9.5% 12.8% 364 336 8.2% 13.2%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 283 229 23.4% 23.4% 156 129 20.7% 20.7%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating Free
Cash Flow $m 848 788 7.7% 12.6% 426 395 7.9% 15.5%
------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile voice
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Customer base million 134.7 122.7 9.7% 134.7 122.7 9.7%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice ARPU $ 1.6 1.6 (1.4%) 2.7% 1.5 1.6 (2.1%) 3.6%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile data
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 48.6 43.9 10.6% 48.6 43.9 10.6%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data ARPU $ 3.0 2.9 4.9% 8.7% 3.1 2.9 7.0% 12.4%
------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Mobile service revenue after inter-segment eliminations was
$2,306m in half year ended 30 September 2022 and $2,073m in the
prior period.
Mobile services revenue grew by 11.2% to $2,309m in reported
currency and 15.6% in constant currency. The growth was recorded
across all regions and key services: Nigeria up by 19.7%, East
Africa by 12.4% and Francophone Africa by 12.1%.
Voice revenue was up by 12.0% in constant currency, led by
customer base growth of 9.7% and voice ARPU growth of 2.7%. Our
continued expansion of network and distribution infrastructure
helped drive customer additions. Revenue growth for the first half
of the year was slightly impacted by the effect of barring outgoing
calls in Nigeria for those customers who had not submitted their
National Identity Numbers ('NINs'). Voice ARPU growth of 2.7% was
driven by an increase in voice usage per customer by 6.4%, reaching
269 minutes per customer per month and total minutes on the network
increased by 16.1%. Q2'23 voice revenue growth improved to 12.7%
with an ARPU growth of 3.6%.
Data revenue increased by 22.1% in constant currency, driven by
both customer base growth of 10.6% and data ARPU growth of 8.7%.
Revenue growth was recorded across all regions: Nigeria grew by
26.7%, East Africa by 20.3% and Francophone Africa by 14.7%.
Expansion of our 4G network infrastructure helped us to grow data
customer base by 10.6%, almost 89% of our total sites are now on
4G, compared to 81.8% in the prior period. Our total data customer
base reached 48.6 million, 45.2% of total data customers are 4G
users (up from 39.7%) contributing to 73.4% of total data usage.
Data ARPU growth of 8.7% was due to increase in data usage per
customer to 4.3 GB per customer per month (from 3.3 GB per customer
per month in prior period). Q2'23 data revenue growth improved to
24.3% with an ARPU growth of 12.4%. Q2'23 data usage per customer
increased to 4.5 GB per customer per month (from 3.4 GB in the
prior period) while 4G data usage per customer reached 7.3 GB per
month (from 5.4 GB in the prior period). In the quarter, data
revenue contributed to 38.0% of total mobile services revenue, up
from 35.6% in the prior period.
EBITDA for mobile services was $1,131m, grew by 15.1% in
constant currency. The EBITDA margin was 49.0%, declined by 23
basis points in constant currency. The reduction in EBITDA margin
was due to an increase in operating costs in Nigeria reflecting
energy price inflation.
Operating free cash flow was $848m, up by 12.6%, due to the
expansion of EBITDA partially offset by higher capex.
Mobile money(1)
Description Unit Half year ended Quarter ended
of measure
------------------- ------------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised
statement of
operations
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue (2) $m 332 259 28.4% 29.5% 173 135 28.1% 32.3%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Nigeria (3) $m 0 0 - - 0 0 - -
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
East Africa $m 253 190 33.4% 31.5% 132 99 33.9% 35.9%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Francophone
Africa $m 79 69 14.6% 23.6% 41 36 12.3% 22.0%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 165 132 24.3% 24.7% 84 69 21.8% 24.7%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(162) (189) (255) (295)
EBITDA Margin % 49.6% 51.2% bps bps 48.6% 51.2% bps bps
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
& Amortization $m (8) (6) 22.1% 24.7% (4) (3) 20.2% 21.6%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating Profit $m 153 120 27.8% 28.3% 78 62 25.2% 28.3%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 20 11 86.1% 86.1% 11 7 54.4% 54.4%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating Free
Cash Flow $m 145 121 19.0% 19.0% 73 62 17.4% 21.2%
------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Transaction
value $m 40,114 30,462 31.7% 31.7% 21,228 15,811 34.3% 37.0%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Active customers million 29.7 23.9 24.0% 29.7 23.9 24.0%
------------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
ARPU $ 2.0 1.9 6.3% 7.2% 2.0 1.9 5.0% 8.4%
------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Mobile money consolidates the results of mobile money
operations from all operating entities within the Group. Airtel
Money Commerce BV (AMC BV) is the holding company for all mobile
money services for the Group, and as of 30 September 2022, it
consolidates mobile money operations from 10 OpCos, currently
excluding operations in Nigeria, Tanzania, Congo Brazzaville, and
Chad. It is management's intention to continue work to transfer all
these remaining mobile money services operations into AMC BV,
subject to local regulatory requirements.
(2) Mobile money service revenue post inter-segment eliminations
with mobile services was $259m in half year ended 30 September 2022
and $199m in the prior period.
(3) On 19 May 2022, we announced that Smartcash had commenced
operations in Nigeria. Services were initially made available at
selected retail touchpoints, and operations are now being expanded
gradually across the country.
Mobile money revenue grew by 28.4% to $332m in reported currency
and 29.5% in constant currency. The constant currency growth was
partially offset by average currency devaluations mainly in the
Central African franc (15.1%), the Ugandan shilling (4.8%) and the
Malawian kwacha (18.9%), in turn partially offset by the
appreciation in the Zambian kwacha (19.4%). Revenue growth of 29.5%
was driven by both East Africa and Francophone Africa, of 31.5% and
23.6% respectively. Q2'23 growth accelerated to 32.3%, driven by
35.9% in East Africa as a result of lapping the mobile money levies
that were raised on mobile money services in the prior year. In
Nigeria, mobile money services (Smartcash) were launched in June
2022. Our initial focus in the period has been to invest in the
platform technology, as well as the business systems and processes
to ensure confidence and reliability in the platform.
Mobile money revenue growth of 29.5% was led by customer base
growth of 24.0% and supported by mobile money ARPU growth of 7.2%.
We continue to expand our distribution network of mobile money
agents and exclusive channels of Airtel Money branches and kiosks.
The expansion of our distribution network helped us in adding more
customers and enhancing mobile money ARPU through an increase in
transaction value per customer by 9.1%.
Q2'23 annualised transaction value reached $86.1bn in constant
currency and mobile money revenue accounted for 13.2% of total
Group revenue in the quarter. Q2'23 transaction value per customer
reached $247 per month, an increase of 12.3% in constant
currency.
Our mobile money customer base increased by 24.0% to 29.7
million and mobile money customer base penetration reached 22.0%,
an increase of 2.5 percentage points. Mobile money ARPU growth of
7.2% was largely driven by an increase in transaction values and
higher contributions from cash transactions, merchant payments and
mobile service recharges through Airtel Money.
Mobile money EBITDA increased to $165m, up by 24.7% in constant
currency. The drop in mobile money EBITDA margin was due to
additional spend in Nigeria PSB related to the launch of
Smartcash.
Regional Performance (mobile services and mobile money services
combined)
Nigeria
Description Unit Half year ended Quarter ended
of measure
---------------- ------------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 1,040 896 16.1% 19.7% 523 450 16.1% 21.0%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice Revenue $m 512 471 8.7% 11.9% 253 233 8.5% 13.1%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data Revenue $m 431 351 22.9% 26.7% 221 179 23.4% 28.6%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money
Revenue $m 0 0 - - 0 0 - -
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other Revenue $m 97 74 31.6% 35.6% 49 38 28.8% 34.2%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 527 492 7.3% 10.5% 257 246 4.4% 8.9%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(420) (422) (551) (549)
EBITDA Margin % 50.7% 54.9% bps bps 49.1% 54.6% bps bps
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.8 3.6 3.7% 6.8% 3.8 3.7 2.4% 6.8%
---------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
East Africa
Description Unit Half year ended Quarter ended
of measure
---------------- ------------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 942 822 14.5% 16.2% 487 428 13.7% 18.2%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice Revenue $m 417 377 10.8% 13.6% 213 199 7.5% 13.2%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data Revenue $m 257 217 18.4% 20.3% 134 112 20.0% 24.4%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money
Revenue $m 253 190 33.4% 31.5% 132 99 33.9% 35.9%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other Revenue $m 64 78 (17.8%) (15.0%) 32 40 (19.4%) (14.9%)
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 491 413 18.9% 20.1% 261 222 18.0% 22.0%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
194 168 193 165
EBITDA Margin % 52.1% 50.2% bps bps 53.7% 51.8% bps bps
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 2.7 2.5 7.3% 9.0% 2.7 2.5 6.7% 11.0%
---------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Francophone Africa
Description Unit Half year ended Quarter ended
of measure
---------------- ------------- ---------------------------------------- ----------------------------------------
Sep-22 Sep-21 Reported Constant Sep-22 Sep-21 Reported Constant
currency currency currency currency
change change change change
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 587 560 4.9% 13.0% 299 285 5.1% 14.3%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice Revenue $m 299 294 1.9% 10.3% 151 148 2.3% 11.7%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data Revenue $m 176 165 6.3% 14.7% 90 85 5.7% 15.1%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money
Revenue $m 79 69 14.6% 23.6% 41 36 12.3% 22.0%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other Revenue $m 57 53 8.3% 14.0% 29 26 11.9% 18.7%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
EBITDA $m 281 244 15.1% 23.3% 151 125 20.8% 30.4%
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
428 397 655 621
EBITDA Margin % 47.9% 43.6% bps bps 50.4% 43.9% bps bps
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
---------------- ------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.7 3.8 (4.4%) 3.0% 3.7 3.8 (1.6%) 7.0%
---------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Consolidated performance
Description UoM Half year ended- September Half year ended- September
2022 2021
-------------- ----- ------------------------------------------------------- -------------------------------------------------------
Mobile Mobile Unallocated Eliminations Total Mobile Mobile Unallocated Eliminations Total
services money services money
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Revenue $m 2,309 332 (0) (76) 2,565 2,076 259 (0) (63) 2,272
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Voice
revenue $m 1,226 (0) (1) 1,226 1,141 (0) (1) 1,140
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Data revenue $m 864 - (0) 864 733 - (0) 733
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Other
revenue $m 219 - (3) 216 202 - (2) 200
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
EBITDA $m 1,131 165 (41) 0 1,255 1,017 132 (51) (0) 1,098
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
EBITDA
margin % 49.0% 49.6% 48.9% 49.0% 51.2% 48.3%
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Depreciation
and
amortization $m (372) (8) (4) - (383) (343) (6) (16) - (366)
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Operating $m - - - - - - - -
exceptional
items
-------------- ----- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Operating
profit $m 708 153 11 (0) 872 646 120 (34) (0) 732
-------------- --------- ------- ------------ ------------- ------ --------- ------- ------------ ------------- ------
Risk Factors
The Group's business and the industry in which it operates,
together with all other information contained in this document,
including, in particular, the risk factors summarised below.
Additional risks and uncertainties relating to the Group that are
not currently known to the Group, or that the Group currently deem
immaterial, may individually or cumulatively also have a material
adverse effect on the Group's business, results of operations and
financial condition.
Principal risks summarised
1. We operate in a competitive environment with the potential
for aggressive competition by existing players, or the entry of new
players, which could both put a downward pressure on prices,
adversely affecting our revenue and profitability.
2. Failure to innovate through simplifying the customer
experience, developing adequate digital touchpoints in line with
changing customer needs and competitive landscape could lead to
loss of customers and market share.
3. An inability to invest and upgrade our network and IT
infrastructure could affect our ability to compete effectively in
the market.
4. Cybersecurity threats through internal or external sabotage
or system vulnerabilities could potentially result in customer data
breaches and/or service downtimes.
5. Adverse changes in our external business environment and
macro-economic conditions such as supply chain disruptions and
inflationary pressures could lead to a significant increase in our
operating cost structure and negatively impact profitability.
6. Shortages of skilled telecommunications professionals in some
markets and the inability to identify and develop successors for
key leadership positions could both lead to disruptions in the
execution of our corporate strategy.
7. Our internal control environment is subject to the risk that
controls may become inadequate due to changes in internal or
external conditions, new accounting requirements, delays, or
inaccuracies in reporting.
8. Our telecommunications networks are subject to the risks of
technical failures, aging infrastructure, human error, wilful acts
of destruction or natural disasters.
9. We operate in a diverse and dynamic legal, tax and regulatory
environment. A failure to comply with relevant laws and regulations
could lead to penalties, sanctions, and reputational damage.
10. Our multinational footprint means we are constantly exposed
to the risk of adverse currency fluctuations and the macroeconomic
conditions in the markets where we operate. We derive revenue and
incur costs in local currencies where we operate, but we also incur
costs in foreign currencies, mainly from buying equipment and
services from manufacturers and technology service providers. That
means adverse movements in exchange rates between the currencies in
our OpCos and the US dollar could have a negative effect on our
liquidity and financial condition. In some markets, we face
instances of limited supply of foreign currency within the local
monetary system. This constrains our ability to fully benefit at
Group level from strong cash generation by those OpCos.
Given the severity of this risk, specifically in some OpCos,
Group management, continuously monitors the impact of the risk of
exchange rate fluctuations based on the following methodology:
a) Comparing the average devaluation of each currency of the
markets in which the Group operates against USD on a 3-year and
5-year historic basis and onshore forward exchange rates over a
1-year period.
b) If either of the above devaluation is higher than 5% p.a.
Management selects the highest of these exchange rates
c) We then use this exchange rate to monitor the impact of using
such a rate on the Group's income statement, so that the Group can
actively monitor and assess the impact on the Group's financials of
exchange rate risk.
Based on the above-mentioned methodology, the weighted average
yearly potential devaluation of the basket of currencies to which
the Group is exposed is estimated to be in the range of 6% to
7%.
With respect to currency devaluation sensitivity, on a 12-month
basis, a 1% currency devaluation across all currencies in our OpCos
would have a negative impact of $47m on revenues, $28m on EBITDA
and $23m on finance costs, on account of restatement of foreign
currency liabilities. Our largest exposure is to the Nigerian
naira, for which a 1% devaluation would have a negative impact of
$20m on revenues, $11m on EBITDA and $9m on finance costs, on
account of restatement of foreign currency liabilities.
This does not represent any guidance and is being used solely to
illustrate the impact of further currency devaluation on the Group
for the purpose of exchange rate risk management. The accounting
under IFRS is based on closing exchange rates in line with the
requirements of IAS 21 'The Effect of Changes in Foreign Exchange'
and does not factor in the above-mentioned devaluation.
Based on above-mentioned specific methodology, for the
identified OpCos, management evaluates specific mitigation actions
based on available mechanisms in each of the geographies. For
further details on such mitigation action refer to the risk section
of the Annual Report.
Forward looking statements
This document contains certain forward-looking statements
regarding our intentions, beliefs or current expectations
concerning, amongst other things, our results of operations,
financial condition, liquidity, prospects, growth, strategies and
the economic and business circumstances occurring from time to time
in the countries and markets in which the Group operates.
These statements are often, but not always, made through the use
of words or phrases such as "believe," "anticipate," "could,"
"may," "would," "should," "intend," "plan," "potential," "predict,"
"will," "expect," "estimate," "project," "positioned," "strategy,"
"outlook", "target" and similar expressions.
It is believed that the expectations reflected in this document
are reasonable, but they may be affected by a wide range of
variables that could cause actual results to differ materially from
those currently anticipated.
All such forward-looking statements involve estimates and
assumptions that are subject to risks, uncertainties and other
factors that could cause actual future financial condition,
performance and results to differ materially from the plans, goals,
expectations and results expressed in the forward-looking
statements and other financial and/or statistical data within this
communication.
Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking statements
are uncertainties related to the following: the impact of
competition from illicit trade; the impact of adverse domestic or
international legislation and regulation; changes in domestic or
international tax laws and rates; adverse litigation and dispute
outcomes and the effect of such outcomes on Airtel Africa's
financial condition; changes or differences in domestic or
international economic or political conditions; the ability to
obtain price increases and the impact of price increases on
consumer affordability thresholds; adverse decisions by domestic or
international regulatory bodies; the impact of market size
reduction and consumer down-trading; translational and
transactional foreign exchange rate exposure; the impact of serious
injury, illness or death in the workplace; the ability to maintain
credit ratings; the ability to develop, produce or market new
alternative products and to do so profitably; the ability to
effectively implement strategic initiatives and actions taken to
increase sales growth; the ability to enhance cash generation and
pay dividends and changes in the market position, businesses,
financial condition, results of operations or prospects of Airtel
Africa.
Past performance is no guide to future performance and persons
needing advice should consult an independent financial adviser. The
forward-looking statements contained in this document reflect the
knowledge and information available to Airtel Africa at the date of
preparation of this document and Airtel Africa undertakes no
obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise.
Readers are cautioned not to place undue reliance on such
forward-looking statements.
No statement in this communication is intended to be, nor should
be construed as, a profit forecast or a profit estimate and no
statement in this communication should be interpreted to mean that
earnings per share of Airtel Africa plc for the current or any
future financial periods would necessarily match, exceed or be
lower than the historical published earnings per share of Airtel
Africa plc.
Financial data included in this document are presented in US
dollars rounded to the nearest million. Therefore, discrepancies in
the tables between totals and the sums of the amounts listed may
occur due to such rounding. The percentages included in the tables
throughout the document are based on numbers calculated to the
nearest $1,000 and therefore minor rounding differences may result
in the tables. Growth metrics are provided on a constant currency
basis unless otherwise stated. The Group has presented certain
financial information on a constant currency basis. This is
calculated by translating the results for the current financial
year and prior financial year at a fixed 'constant currency'
exchange rate, which is done to measure the organic performance of
the Group. Growth rates for our reporting regions and service
segments are provided in constant currency as this better
represents the performance of the business.
Interim Condensed Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
(All amounts are in US Dollar millions unless stated
otherwise)
For the six months ended
--------------------------------------
Notes 30 September 2022 30 September 2021
------------------ ------------------
Income
Revenue 5 2,565 2,272
Other income 6 6
2,571 2,278
Expenses
Network operating expenses 489 398
Access charges 207 201
License fee and spectrum usage charges 114 110
Employee benefits expense 137 142
Sales and marketing expenses 118 104
Impairment loss on financial assets 6 5
Other operating expenses 245 220
Depreciation and amortisation 383 366
1,699 1,546
Operating profit 872 732
Finance costs 369 178
Finance income (11) (9)
Other non-operating income - (4)
Share of profit of associate (2) (0)
Profit before tax 516 567
Income tax expense 6 186 232
Profit for the period 330 335
Profit before tax (as presented above) 516 567
Less: Exceptional items (net) 7 - (4)
Underlying profit before tax 516 563
-------------------------------------------------------------------- ------ ------------------ ------------------
Profit after tax (as presented above) 330 335
Less: Exceptional items (net) 7 (42) (4)
Underlying profit after tax 288 331
-------------------------------------------------------------------- ------ ------------------ ------------------
For the six months ended
--------------------------------------
Notes 30 September 2022 30 September 2021
------------------ ------------------
Profit for the period (continued from previous page) 330 335
Other comprehensive income ('OCI')
Items to be reclassified subsequently to profit or loss:
(Loss)/gain due to foreign currency translation differences (244) 41
Tax expense on above (4) (1)
Share of OCI of associate (1) 1
Net loss on net investments hedge - (8)
(249) 33
------------------ ------------------
Items not to be reclassified subsequently to profit or loss:
Re-measurement loss on defined benefit plans (1) (1)
Tax credit on above 0 0
(1) (1)
------------------ ------------------
Other comprehensive (loss)/income for the period (250) 32
------------------ ------------------
Total comprehensive income for the period 80 367
================== ==================
Profit for the period attributable to: 330 335
Owners of the Company 296 285
Non-controlling interests 34 50
Other comprehensive (loss)/income for the period attributable to: (250) 32
Owners of the Company (239) 34
Non-controlling interests (11) (2)
Total comprehensive income for the period attributable to: 80 367
Owners of the Company 57 319
Non-controlling interests 23 48
Earnings per share
Basic 8 7.9 cents 7.6 cents
Diluted 8 7.9 cents 7.6 cents
Consolidated Statement of Financial Position
(All amounts are in US Dollar millions unless stated otherwise) As of
----------------------------------
Notes 30 September 2022 31 March 2022
------------------ --------------
Assets
Non-current assets
Property, plant and equipment 9 2,191 2,214
Capital work-in-progress 9 188 189
Right of use assets 1,399 1,109
Goodwill 10 3,576 3,827
Other intangible assets 582 632
Intangible assets under development 67 2
Investment in associate 5 6
Financial assets
- Investments 0 0
- Derivative instruments 7 3
- Others 31 7
Income tax assets (net) 21 22
Deferred tax assets (net) 227 222
Other non-current assets 135 134
------------------ --------------
8,429 8,367
Current assets
Inventories 6 3
Financial assets
- Derivative instruments 5 3
- Trade receivables 136 123
- Cash and cash equivalents 655 638
- Other bank balances 26 378
- Balance held under mobile money trust 596 513
- Others 122 124
Other current assets 210 215
1,756 1,997
Total assets 10,185 10,364
================== ==============
Notes As of
-----------------------------------------------------
30 September 2022 31 March 2022
------------------ ---------------------------------
Current liabilities
Financial liabilities
- Borrowings 13 907 786
- Lease liabilities 342 323
- Derivative instruments 11 9
- Trade payables 396 404
- Mobile money wallet balance 567 496
- Others 345 428
Provisions 42 69
Deferred revenue 168 162
Current tax liabilities (net) 164 220
Other current liabilities 170 176
3,112 3,073
Net current liabilities (1,356) (1,076)
Non-current liabilities
Financial liabilities
- Borrowings 13 1,085 1,486
- Lease liabilities 1,606 1,337
- Put option liability 574 579
- Derivative instruments 17 -
- Others 89 88
Provisions 20 20
Deferred tax liabilities (net) 74 114
Other non-current liabilities 16 18
------------------ ---------------------------------
3,481 3,642
Total liabilities 6,593 6,715
================== =================================
Net Assets 3,592 3,649
================== =================================
Equity
Share capital 12 3,420 3,420
Reserves and surplus 24 82
Equity attributable to owners of the company 3,444 3,502
Non-controlling interests ('NCI') 148 147
------------------ ---------------------------------
Total equity 3,592 3,649
================== =================================
The consolidated financial statements (company registration number: 11462215) were approved
by the Board of directors and authorised for issue on 26 October 2022 and were signed on its
behalf by:
Olusegun Ogunsanya
Chief Executive Officer
26 October 2022
Consolidated Statement of Changes in Equity (All amounts are in US Dollar millions unless
stated otherwise)
Equity attributable to owners of the company Non-controlling Total
interests (NCI) equity
---------------- -------
Share Capital Retained Transactions Other Equity
earnings with NCI components attributable to
reserve of equity owners of the
company
-------- ----------------- ---------------- -------
No of shares Amount Reserve
and
Surplus
-------------- -------- ----------------- ---------------- -------
As of 1 April
2021 6,839,896,081 3,420 2,975 (594) (2,396) (15) 3,405 (52) 3,353
Profit for the
period - - 285 - - 285 285 50 335
Other
comprehensive
income/(loss) - - (1) - 35 34 34 (2) 32
-------------- --------- ------------- ----------- -------- ----------------- ----------------
Total
comprehensive
income - - 284 - 35 319 319 48 367
Transaction with
owners of equity
Employee
share-based
payment reserve - - (0) - 2 2 2 - 2
Transactions
with NCI - - - (77) (1) (78) (78) 21 (57)
Dividend to
owners of the
company - - (94) - - (94) (94) - (94)
Dividend
(including tax)
to NCI - - - - - - - (19) (19)
------- ---------
As of 30
September 2021 6,839,896,081 3,420 3,165 (671) (2,360) 134 3,554 (2) 3,552
============== ======= ========= ============= =========== ======== ================= ================ =======
Profit for the
period - - 346 - - 346 346 74 420
Other
comprehensive
income/ (loss) - - 1 - (47) (46) (46) 0 (46)
-------------- --------- -----------
Total
comprehensive
income /(loss) - - 347 - (47) 300 300 74 374
Transaction with
owners of equity
Employee
share-based
payment reserve - - (0) - 1 1 1 - 1
Purchase of own
shares - - - - (6) (6) (6) - (6)
Transactions
with NCI - - - (271) - (271) (271) 132 (139)
Dividend to
owners of the
company - - (76) - - (76) (76) - (76)
Dividend
(including tax)
to NCI - - - - - - - (57) (57)
-------------- ------- --------- ------------- ----------- ----------------- ---------------- -------
As of 31 March
2022 6,839,896,081 3,420 3,436 (942) (2,412) 82 3,502 147 3,649
============== ======= ========= ============= =========== ======== ================= ================ =======
Profit for the
period - - 296 - - 296 296 34 330
Other
comprehensive
loss - - (1) - (238) (239) (239) (11) (250)
-------------- ------- --------- ------------- ----------- -------- ----------------- ---------------- -------
Total
comprehensive
income/(loss) - - 295 - (238) 57 57 23 80
Transaction with
owners of equity
Employee
share-based
payment reserve - - (0) - 4 4 4 - 4
Purchase of own
shares - - - - (11) (11) (11) - (11)
Transactions
with NCI (1)
(2) - - - 5 - 5 5 3 8
Dividend to
owners of the
company [Note
4(a)] - - (113) - - (113) (113) - (113)
Dividend
(including tax)
to NCI - - - - - - - (25) (25)
-------------- ------- --------- ------------- ----------- -------- ----------------- ---------------- -------
As of 30
September 2022 6,839,896,081 3,420 3,618 (937) (2,657) 24 3,444 148 3,592
============== ======= ========= ============= =========== ======== ================= ================ =======
(1) 'Transaction with NCI reserves' increased due to reversal of
put option liability by $8m for dividend distribution to put option
NCI holders. Any dividend paid to the put option NCI holders is
adjustable against the put option liability based on put option
arrangement.
(2) 'Transaction with NCI reserves' was reduced and NCI was
increased by $3m i.e. NCI's proportionate share of the
consideration for transfer of SMARTCASH Payment Service Bank
Limited from the control of AMC BV to Airtel Networks Limited. For
details, refer to note 4(e).
Consolidated Statement of Cash Flows (All amounts are in US Dollar millions unless stated
otherwise)
For the six months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Cash flows from operating activities
Profit before tax 516 567
Adjustments for -
Depreciation and amortization 383 366
Finance income (11) (9)
Finance cost 369 178
Share of profit of associate (2) (0)
Other non-operating income adjustment - (4)
Other non-cash adjustments (1) 5 7
Operating cash flow before changes in working capital 1,260 1,105
Changes in working capital
Increase in trade receivables (28) (22)
(Increase) / Decrease in inventories (3) 5
(Decrease) / Increase in trade payables (15) 7
Increase in mobile money wallet balance 71 56
Decrease in provisions (22) (18)
Increase in deferred revenue 16 22
Increase in other financial and non-financial liabilities 33 14
Increase in other financial and non-financial assets (16) (57)
Net cash generated from operations before tax 1,296 1,112
Income taxes paid (288) (190)
Net cash generated from operating activities (a) 1,008 922
------------------ ------------------
Cash flows from investing activities
Purchase of property, plant and equipment and capital work-in-progress (393) (308)
Purchase of intangible assets and intangible assets under development (88) (7)
Proceeds from sale of tower assets - 10
Maturity of deposits with bank 343 261
Investment in deposits with bank (7) (163)
Dividend received from associate 2 -
Interest received 11 8
Net cash used in investing activities (b) (132) (199)
------------------ ------------------
Cash flows from financing activities
Proceeds from sale of shares to non-controlling interests - 375
Acquisition of non-controlling interests 0 (1)
Purchase of own shares by ESOP trust (9) -
Proceeds from borrowings 563 620
Repayment of borrowings (789) (1,396)
Repayment of lease liabilities (142) (113)
Dividend paid to non-controlling interests (43) (17)
Dividend paid to owners of the Company (113) (94)
Interest on borrowings and lease liabilities and other finance charges (180) (179)
(Outflow)/proceeds on maturity of derivatives (net) (28) 8
Net cash used in financing activities (c) (741) (797)
------------------ ------------------
Increase/(decrease) in cash and cash equivalents during the period (a+b+c) 135 (74)
Currency translation differences relating to cash and cash equivalents (19) (6)
Cash and cash equivalent as at beginning of the period 847 1,003
Cash and cash equivalents as at end of the period (Note 11) (2) 963 923
================== ==================
(1) For the six months ended 30 September 2022 and 30 September
2021, other non-cash adjustments mainly includes movements in trade
receivables impairments and other provisions.
(2) Includes balance held under mobile money trust of $596m
(September 2021: $505m) on behalf of mobile money customers which
are not available for use by the Group.
Notes to Consolidated Financial Statements
(All amounts are in US Dollar millions unless stated
otherwise)
1. Corporate information
Airtel Africa plc ('the company') is a public company limited by
shares incorporated in the United Kingdom under the Companies Act
2006 and is registered in England and Wales (registration number
11462215). The registered address of the company is First Floor,
53/54 Grosvenor Street, London, W1K 3HU, United Kingdom. The
company is listed on the London Stock Exchange (LSE) and on the
Nigerian Stock Exchange (NGX). The company is a subsidiary of
Airtel Africa Mauritius Limited ('the parent'), a company
registered in Mauritius. The registered address of the parent is
c/o IQ EQ Corporate Services (Mauritius) Ltd., 33, Edith Cavell
Street, Port Louis, 11324, Mauritius.
The company, together with its subsidiary undertakings
(hereinafter referred to as 'the Group') has operations in Africa.
The principal activities of the Group and its associate consist of
the provision of telecommunications and mobile money services.
2. Basis of preparation
These interim financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as issued by
the International Accounting Standards Board (IASB) and approved
for use in the UK by the UK Accounting Standards Endorsement Board
(UKEB). Accordingly, the interim financial statements do not
include all the information required for a complete set of
financial statements and should be read in conjunction with the
Group's annual consolidated financial statements for the year ended
31 March 2022. Further, selected explanatory notes have been
included to explain events and transactions that are significant
for the understanding of the changes in the Group's financial
position and performance since the latest annual consolidated
financial statements.
These interim financial statements for the six months ended 30
September 2022 do not constitute statutory accounts as defined in
section 434 of the UK Companies Act 2006 and are unaudited.
The information relating to the year ended 31 March 2022 is an
extract from the Group's published annual report for that year,
which has been delivered to the Companies House, and on which the
auditors' report was unqualified and did not contain any emphasis
of matter or statements under section 498(2) or 498(3) of the UK
Companies Act 2006.
These interim financial statements apply the same accounting
policies, presentation and methods of calculation as those followed
in the preparation of the Group's annual consolidated financial
statements for the year ended 31 March 2022. Further, there have
been no changes in critical accounting estimates, assumptions and
judgements.
These interim financial statements of the Group for the six
months ended 30 September 2022 were authorised by the Board of
Directors on 26 October 2022.
3. Going concern
These consolidated financial statements have been prepared on a
going concern basis. In making this going concern assessment, the
Group has considered cash flow projections to December 2023 (going
concern assessment period) under both base and reasonable
worst-case scenarios taking into considerations its principal risks
and uncertainties (as disclosed on page 17) including a reduction
in revenue and EBITDA and a significant devaluation of the various
currencies in the countries in which the Group operates including
the Nigerian Naira. As part of this evaluation, the Group has
considered available ways to mitigate these risks and uncertainties
and has also considered committed undrawn facilities of $429m
expiring beyond the going concern assessment period, which will
fulfil the Group's cash flow requirement under both the base and
reasonable worst-case scenarios.
Having considered all the factors above impacting the Group's
businesses, the impact of downside sensitivities, and the
mitigating actions available including a reduction and deferral of
capital expenditure, the directors are satisfied that the Group has
adequate resources to continue its operational existence for the
foreseeable future. Accordingly, the directors continue to adopt
the going concern basis of accounting in preparing the consolidated
financial statements.
4. Significant transactions/new developments
a) The directors recommended and shareholders approved a final
dividend of 3 cents per ordinary share for the year ended 31 March
2022, which was paid on 22 July 2022 to the holders of ordinary
shares on the register of members at the close of business on 24
June 2022.
b) During the six months ended 30 September 2022, Airtel Congo
RDC S.A, a subsidiary of the Group purchased 58 MHz of additional
spectrum spread across the 900, 1800, 2100, and 2600 MHz bands for
a gross consideration of $42m. An amount of $20m pertaining to the
900, 1800 and 2100 MHz bands has been capitalised as Intangible
Assets and $22m pertaining to the 2600 MHz bands is carried as
Intangible under development since these bands are not yet
available for use (expected to be available for use by November
2022).
c) On 25 July 2022, the Group announced the acquisition by
Airtel Kenya, a subsidiary of the Group, of 60 MHz of additional
spectrum in the 2600 MHz band from the Communications Authority of
Kenya, for a gross consideration of $40m. The spectrum is valid
from July 2022 for a period of 15 years. The spectrum is carried as
Intangible under development since it is not available for use yet
(expected to be available for use by January 2023).
d) On 21 June 2022, BAIN (one of the Group's subsidiaries)
launched a cash tender offer to redeem up to $300m of its $ 1
Billion of 5.35% Guaranteed Senior Notes due in 2024 ('Notes').
There was an early tender deadline of 5 July 2022. Per the terms of
the cash tender offer, BAIN reserved the right at its sole
discretion to amend or waive any of the terms of the tender offer.
The original cap on the redemption of $300m, was increased to $450m
on 6 July 2022 as BAIN, at its sole discretion, decided to achieve
a larger debt reduction through the use of cash resources. The
redemption of $450m of notes completed on 7 July 2022 for
consideration of $463m. The consideration included accrued interest
up to the date of redemption and early redemption cost.
e) In April 2022, one of the AMC BV's subsidiaries, SMARTCASH
Payment Service Bank Limited ('SMARTCASH'), received the final
approval from the Central Bank of Nigeria for a full Payment
Service Bank licence affording it the opportunity to deliver a full
suite of mobile money services in Nigeria.
Later in August 2022, in line with the directions of Central
Bank of Nigeria, SMARTCASH was transferred to Airtel Networks
Limited (a subsidiary of Airtel Africa Group, outside the perimeter
of AMC BV Group). Airtel Africa Group in discussion with the
non-controlling investors has agreed with some non-controlling
investors/is in the process of agreeing a proposal with other
investors to compensate them for their respective potential value
loss by way of AMC BV shares equivalent to the value of SMARTCASH
on the prescribed trigger event date (subject to a cap of 5% of the
value of AMC BV Group), which will only be payable in the event
that SMARTCASH does not again form part of the AMC BV Group
perimeter or the non-controlling investors do not own direct
shareholding in SMARTCASH based on regulatory approvals, by the
prescribed trigger event date.
Given that the proposal to compensate the non-controlling
investors is agreed, for their economic value loss due to exclusion
of SMARTCASH (which they were entitled to before transfer of
SMARTCASH to Airtel Nigeria Limited) based on the future fair
valuation of SMARTCASH on the prescribed trigger event date, Airtel
Africa Group continues to recognize non-controlling interest w.r.t.
net assets of SMARTCASH.
f) Finance costs (net of finance income) increased by $189m
during the six months ending 30 September 2022, mainly due to
higher foreign exchange and derivative losses of $160m, as a result
of a $31m loss on derivatives, a loss of $30m on devaluation of the
Nigerian Naira, $45m on the CFA (Central African Franc) and further
losses on the devaluation of the Malawian Kwacha, Ugandan shilling
& Kenyan shilling. Also refer to risk factors on page 17.
g) The proposed interim dividend of 2.18 cents per share was
approved by the Board on 26 October 2022 and has not been included
as a liability as at 30 September 2022.
5. Segmental Information
The Group's segment information is provided on the basis of
geographical clusters and products to the Group's chief executive
officer (chief operating decision maker - 'CODM') for the purposes
of resource allocation and assessment of performance.
The Group's reporting segments till 31 March 2022 were as
follows:
Nigeria - Comprising operations in Nigeria;
East Africa - Comprising operations in Kenya, Uganda, Rwanda,
Tanzania, Malawi and Zambia;
Francophone Africa - Comprising operations in Niger, Gabon,
Chad, Congo B, DRC, Madagascar and Seychelles.
Owing to significant growth in the Group's Mobile Money business
and a corresponding change in the organisation structure combined
with changes in information provided to the CODM for the allocation
of resources and the assessment of performance, with effect from
April 2022, the Group has identified Mobile Money as a new
operating and reportable segment. Thus, the segments for the Group
are now:
Nigeria Mobile Services - Comprising of mobile service
operations in Nigeria;
East Africa Mobile Services - Comprising of mobile service
operations in Kenya, Uganda, Rwanda, Tanzania, Malawi and
Zambia;
Francophone Africa Mobile Services - Comprising of mobile
service operations in Niger, Gabon, Chad, Congo B, DRC, Madagascar
and Seychelles;
Mobile money services* - Comprising of mobile money services
across the Group including recently launched payment service bank
in Nigeria.
*Mobile money services segment consolidates the results of
mobile money operations from all operating entities within the
Group. Airtel Money Commerce BV (AMC BV) is the holding company for
all mobile money services for the Group, and as of 30 September
2022, it consolidates mobile money operations from ten OPCOs,
currently excluding operations in Nigeria, Tanzania, Congo
Brazzaville, and Chad. It is management's intention to continue
work to transfer all these remaining mobile money services
operations into AMC BV, subject to local regulatory
requirements.
Each segment derives revenue from the respective services housed
within each segment, as described above. Expenses, assets and
liabilities primarily related to the corporate headquarters of the
Group are presented as Unallocated Items.
The amounts reported to CODM are based on the accounting
principles used in the preparation of the financial statements.
Each segment's performance is evaluated based on segment revenue
and segment result.
The segment result is Underlying EBITDA (i.e. earnings before
interest, tax, depreciation and amortization before exceptional
items). This is the measure reported to the CODM for the purpose of
resource allocation and assessment of segment performance. During
the six months ended 30 September 2022, EBITDA is equal to
underlying EBITDA since there are no exceptional items pertaining
to EBITDA.
Consequent to the change in reportable segments during the
period, comparative information has also been restated in line with
the revised segments.
Inter-segment pricing and terms are reviewed and changed by the
management to reflect changes in market conditions and changes to
such terms are reflected in the period in which the changes
occur.
The 'Eliminations' column comprises inter-segment revenues
eliminated upon consolidation.
Segment assets and segment liabilities comprise those assets and
liabilities directly managed by each segment. Segment assets
primarily include receivables, property, plant and equipment,
capital work in progress, right-to-use assets, intangibles assets,
inventories and cash and cash equivalents. Segment liabilities
primarily include operating liabilities. Segment capital
expenditure comprises investment in property, plant and equipment,
capital work in progress, intangible assets (excluding licenses)
and capital advances.
Investment elimination upon consolidation and resulting goodwill
impacts are reflected in the 'Elimination' column.
Summary of the segmental information and disaggregation of
revenue for the six months ended and as of 30 September 2022 is as
follows:
Francophone Mobile Others Eliminations
Nigeria East Africa Africa Money (Unallocated)
Mobile Mobile Mobile Services
Services Services Services Total
------------ ------------ ------------ ------------ -------------- ------------- -------
Revenue from external
customers
Voice revenue 511 417 298 - - - 1,226
Data revenue 431 257 176 - - - 864
Mobile money
revenue (1) - - - 259 - - 259
Other revenue (2) 96 61 56 - 3 - 216
1,038 735 530 259 3 - 2,565
Inter-segment revenue 2 6 2 73 - (83) -
Total revenue 1,040 741 532 332 3 (83) 2,565
EBITDA 531 359 241 165 (41) - 1,255
Less:
Depreciation and
amortisation 156 123 92 8 4 - 383
Finance costs 369
Finance income (11)
Share of profit of
associate (2)
Profit before tax 516
Other segment items
Capital expenditure 134 90 59 20 7 - 310
---------------------- ------------ ------------ ------------ ------------ -------------- ------------- -------
As of 30 September
2022
Segment assets 2,390 1,999 1,345 879 26,642 (23,070) 10,185
Segment liabilities 2,055 2,237 2,175 689 13,465 (14,028) 6,593
Investment in
associate (included
in segment assets
above) - - 5 - - - 5
(1) Mobile money revenue is net of inter-segment elimination of
$73m mainly for commission on sale of airtime. It includes $49m
pertaining to East Africa mobile services and the balance $24m
pertaining to Francophone Africa mobile services.
(2) This includes messaging, value added services, enterprise,
site sharing and handset sale revenue.
Summary of the segmental information and disaggregation of
revenue for the six months ended 30 September 2021 and as of 31
March 2022 is as follows:
Francophone Mobile Others Eliminations
Nigeria East Africa Africa Money (Unallocated)
Mobile Mobile Mobile Services
Services Services Services Total
------------ ------------ ------------ ------------ -------------- ------------- -------
Revenue from external
customers
Voice revenue 471 376 293 - - - 1,140
Data revenue 351 217 165 - - - 733
Mobile money
revenue (1) - - - 199 - - 199
Other revenue (2) 72 75 53 - - - 200
894 668 511 199 - - 2,272
Inter-segment revenue 2 5 1 60 - (68) -
Total revenue 896 673 512 259 - (68) 2,272
EBITDA 492 317 208 132 322 (373) 1,098
Less:
Depreciation and
amortisation 128 113 102 6 16 - 366
Finance costs 178
Finance income (9)
Other non-operating
Income, (net) (4)
Share of profit of
associate (0)
Profit before tax 567
Other segment items
Capital expenditure 104 76 48 11 5 - 245
---------------------- ------------ ------------ ------------ ------------ -------------- ------------- -------
As of 31 March 2022
Segment assets 2,247 1,886 1,485 776 27,396 (23,426) 10,364
Segment liabilities 1,438 2,450 2,358 588 14,458 (14,577) 6,715
Investment in
associate (included
in segment assets
above) - - 6 - - - 6
(1) Mobile money revenue is net of inter-segment elimination of
$60m mainly for commission on sale of airtime. It includes $40m
pertaining to East Africa mobile services and balance $20m
pertaining to Francophone Africa mobile services.
(2) This includes messaging, value added services, enterprise,
site sharing and handset sale revenue.
6. Income tax expense
For the six months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Current tax 235 167
Deferred tax (49) 65
------------------ ------------------
Income tax expense 186 232
------------------ ------------------
The tax charge for the six months ended 30 September 2022 has
been calculated for each operating country by applying an estimated
effective rate of tax expected to apply for the period ending 31
March 23 on the pre-tax profits using rates substantively enacted
by 30 September 2022. The charge is adjusted for discrete items (if
any) occurring in the interim period as required by IAS 34 'Interim
Financial Reporting'.
Tax charge for the six months ended 30 September 2022 also
includes the related tax impacts arising out of withholding tax
('WHT') on unremitted earnings and cross charge to Group entities
and deferred tax asset recognition based on the projected
profitability in operating countries, wherever applicable.
7. Exceptional items
Underlying profit before tax excludes the following exceptional
items:
For the six months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Profit before tax 516 567
Add: Exceptional items
- Gain on sale of tower assets (1) - (4)
- (4)
------------------ ------------------
Underlying profit before tax 516 563
------------------ ------------------
(1) For the six months ended 30 September 2021, it represents a
gain recognised in other non-operating income on sale of
telecommunication tower assets in one of the Group's subsidiaries
in Rwanda, as part of the Group's strategic asset monetisation
programme.
Underlying profit after tax excludes the following exceptional
items:
For the six months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Profit after tax 330 335
-Exceptional items (as above) - (4)
- Deferred tax asset recognition (1) (42) -
(42) (4)
------------------ ------------------
Underlying profit after tax 288 331
================== ==================
(1) During the six months ended 30 September 2022, the Group has
recognised deferred tax assets in Airtel Kenya. Airtel Kenya had
carried forward losses and temporary differences on which deferred
tax was not previously recognised. Considering Airtel Kenya's
profitability trends, that tax losses have recently been utilised
and on the basis of forecast future taxable profits, the Group has
determined that it is now probable that taxable profits will be
available against which the tax losses and temporary differences
can be utilised. Consequently, the deferred tax asset recognition
criteria are met, leading to the recognition of an additional
deferred tax asset of $ 42 m during the six months ended 30
September 2022.
Profit attributable to non-controlling interests include benefit
of nil and nil during the six months ended 30 September 2022 and
2021 respectively, relating to the above exceptional items.
8. Earnings per share ('EPS')
For the six months ended
30 September 2022 30 September 2021
------------------ ------------------------------
Profit for the period attributable to owners of the Company 296 285
Weighted average ordinary shares outstanding for basic EPS 3,753,179,654 3,754,974,316
Basic EPS 7.9 cents 7.6 cents
------------------ ------------------------------
The details used in the computation of diluted EPS: For the six months ended
--------------------------------------------------
30 September 2022 30 September 2021
------------------ ------------------------------
Profit for the period attributable to owners of the Company 296 285
Weighted average ordinary shares outstanding for diluted
EPS(1)(2) 3,759,599,604 3,758,202,848
Diluted EPS 7.9 cents 7.6 cents
------------------ ------------------------------
(1) The difference between the basic and diluted number of shares at the end of September
2022 being 6,419,950 shares (September 2021: 3,228,532) relates to awards committed but not
yet issued under the Group's share-based payment schemes.
(2) Deferred shares have not been considered for EPS computation as they do not have right
to participate in profits.
9. Property, plant and equipment ('PPE')
The following table presents the reconciliation of changes in
the carrying value of PPE for the period ended 30 September 2022
and 30 September 2021:
Leasehold Improvements Building Land Plant and Furniture Vehicles Office Computer Total Capital work in
Equipment & Fixture Equipment progress (2)
------------------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- -------- -----------------
Gross carrying value
Balance as of 1 April 2021 50 46 27 2,858 37 24 45 676 3,763 166
Additions / capitalisation 0 0 0 188 12 - 5 13 218 238
Disposals / adjustments (1) (0) (0) - (61) 0 0 (2) 0 (63) (218)
Transferred to assets held for sale - - - (141) - - - - (141) (0)
Foreign currency translation impact (0) 1 (0) 30 1 0 2 6 40 (1)
Balance as of 30 September 2021 50 47 27 2,874 50 24 50 695 3,817 185
Balance as of 1 April 2022 49 47 26 3,045 62 22 55 703 4,009 189
Additions / capitalisation 2 - 0 249 12 0 6 31 300 306
Disposals / adjustments (1) (0) - - (12) (3) (0) (1) (1) (17) (299)
Foreign currency translation impact (4) (3) (3) (302) (5) (1) (4) (45) (367) (8)
Balance as of 30 September 2022 47 44 23 2,980 66 21 56 688 3,925 188
Accumulated Depreciation
Balance as of 1 April 2021 44 17 1 936 15 22 27 635 1,697 -
Charge 1 1 - 182 5 0 4 15 208 -
Disposals / adjustments (1) 0 - - (60) (1) 0 (1) (0) (62) -
Transferred to assets held for sale - - - (129) - - - - (129)
Foreign currency translation impact (0) 0 (0) 12 1 0 0 5 19 -
Balance as of 30 September 2021 45 18 1 942 20 22 30 655 1,733 -
Balance as of 1 April 2022 44 20 - 1,003 23 20 32 653 1,795 -
Charge 1 1 - 184 5 0 6 15 212 -
Disposals / adjustments (1) (0) - - (12) (3) (0) 1 (3) (17) -
Foreign currency translation impact (4) (2) - (201) (3) (1) (3) (42) (256) -
Balance as of 30 September 2022 41 19 - 974 22 19 36 623 1,734 -
Net carrying value
As of 1 April 2021 6 29 26 1,922 22 2 18 41 2,066 166
As at 30 September 2021 5 29 26 1,932 30 2 20 40 2,084 185
As at 1 April 2022 5 27 26 2,042 39 2 23 50 2,214 189
As at 30 September 2022 6 25 23 2,006 44 2 20 65 2,191 188
(1) Related to the reversal of gross carrying value and
accumulated depreciation on retirement of PPE and reclassification
from one category of asset to another.
(2) The carrying value of capital work-in-progress as at 30
September 2022 and 2021 mainly pertains to plant and equipment.
10. Goodwill
The following table presents the reconciliation of changes in
the carrying value of Goodwill for the six months
ended 30 September 2022 and 30 September 2021:
Goodwill
---------
Balance as of 1 April 2021 3,835
Foreign currency translation impact 43
---------
Balance as of 30 Sep 2021 3,878
Balance as of 1 April 2022 3,827
Foreign currency translation impact (251)
---------
Balance as of 30 Sep 2022 3,576
---------
11. Cash and bank balances
For the purpose of the statement of cash flows, cash and cash
equivalents are as follows:
As of
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Cash and cash equivalents as per balance sheet 655 698
Balance held under mobile money trust 596 505
Bank overdraft (288) (280)
Cash and cash equivalents classified as held for sale - 0
963 923
================== ==================
12. Share capital
As of
------------------------------------
30 September 2022 31 March 2022
------------------ ----------------
Authorised shares
3,758,151,504 Ordinary shares of USD 0.5 each
(March 2022: 3,758,151,504) 1,879 1,879
3,081,744,577 Deferred shares of USD 0.5 each
(March 2022:3,081,744,577) 1,541 1,541
3,420 3,420
================== ================
Issued, Subscribed and fully paid-up shares
3,758,151,504 Ordinary shares of USD 0.5 each
(March 2022: 3,758,151,504) 1,879 1,879
3,081,744,577 Deferred shares of USD 0.5 each
(March 2022: 3,081,744,577) 1,541 1,541
3,420 3,420
================== ================
Terms/rights attached to equity shares
The Company has followings two classes of ordinary shares:
-- Ordinary shares having par value of USD 0.5 per share. Each
holder of equity shares is entitled to cast one vote per share and
carries a right to dividends.
-- Deferred shares of USD 0.5 each. These deferred shares are
not listed and are intended to be cancelled in due course. No share
certificates are to be issued in respect of the deferred shares.
These are not freely transferable and would not affect the net
assets of the Company. The deferred shareholders shall have no
right to receive any dividend or other distribution or return
whether of capital or income. On a return of capital in a
liquidation, the deferred shareholders shall have the right to
receive the nominal amount of each deferred share held, but only
after the holder of each Other share (i.e. shares other than the
deferred shares) in the capital of the Company shall have received
the amount paid up on each such Other share held and the payment in
cash or in specie of GBP 100,000 (or its equivalent in any other
currency) on each such Other shares held. The Company shall have an
irrevocable authority from each holder of the deferred shares at
any time to purchase all or any of the deferred shares without
obtaining the consent of the deferred shareholders in consideration
of the payment of an amount not exceeding one US cent in respect of
all the deferred shares then being purchased.
13. Borrowings
Non-current
As of
----------------------------------
30 September 2022 31 March 2022
------------------ --------------
Secured
Term loans 20 50
Less: Current portion (A) (20) (50)
------------------ --------------
- -
Unsecured
Term loans(2) 973 655
Non- convertible bonds (1) (2) 556 1,015
------------------ --------------
1,529 1,670
Less: Current portion (B) (444) (184)
------------------ --------------
1,085 1,486
1,085 1,486
------------------ --------------
C urrent
As of
30 September 2022 31 March 2022
------------------ --------------
Unsecured
Term loans(2) 155 248
Bank overdraft 288 304
------------------ --------------
443 552
Current maturities of long-term borrowings (A+B) 464 234
------------------ --------------
907 786
------------------ --------------
(1) This includes impact of fair value hedges
(2) Includes debt origination costs
Additional amounts of $563m were drawn down under the Group's
loan and overdraft facilities during the period ended 30 September
2022.
Repayments of bonds and term loans amounting to $450m and $339m
respectively were made during the period ended 30 September 2022,
in line with their stated repayment terms.
14. Contingent liabilities and commitments
Contingent liabilities As of
----------------------------------
30 September 2022 31 March 2022
------------------ --------------
(a) Taxes, Duties and Other demands (under adjudication / appeal / dispute)
-Income tax 17 18
- Value added tax 19 30
-Customs duty & Excise duty 8 9
-Other miscellaneous demands 5 6
( b) Claims under legal and regulatory cases including
arbitration matters (1)(2) 75 82
------------------ --------------
124 145
================== ==============
(1) One of the subsidiaries of the Group is involved in a
dispute with one of its vendors, with respect to invoices for
services provided to a subsidiary under a service contract. The
original order under the contract was issued by the subsidiary for
a total amount of Central African franc (CFA) 473,800,000
(approximately $0.7m). In 2014, the vendor-initiated arbitration
proceedings claiming a sum of approximately CFA 1.9 billion
(approximately $3m). In mid-May 2019, lower courts imposed a
penalty of CFA 35 billion (approximately $53m), based on which
certain banks of the subsidiary were summoned to release the funds.
The subsidiary immediately lodged an appeal in the Supreme Court
for a stay of execution which was granted. Subsequently, the vendor
filed an appeal before the Common Court of Justice and Arbitration
(CCJA). Quite unexpectedly, in April 2020, the CCJA lifted the
Supreme Court stay of execution. In May 2021, the Commercial
Division of the High Court maintained new seizures carried out by
the Vendor. The subsidiary appealed and the Court of Appeal
determination on the seizures is pending as of April 2022. In March
2022 the CCJA interpreted its judgment of March 2019 to indicate
that the daily penalty could not be maintained after its ruling
dated 18 November 2018.
Separately, in December 2020 the subsidiary initiated criminal
proceedings against the vendor for fraud and deceitful conduct. In
February 2021, the investigating judge issued an order to cease the
investigation which was appealed by the Subsidiary. In March 2022,
the Court Appeal quashed the investigative judge order and allowed
the investigation into the Vendor to resume. Testimony in the
criminal investigation case happened on 26 April 2022 in front of
the criminal court of appeal where the honorable judge has further
re-examined the facts from the representatives of the subsidiary
against this case. The court will provide a further update on the
upcoming proceedings in due course.
As per the law no civil action can be initiated against the
subsidiary while criminal proceedings are ongoing. The Group still
awaits the Supreme court ruling on the merits of the case, and
until that time has disclosed this matter as a Contingent Liability
for $53m (included in the closing contingent liability). No
provision has been made against this claim.
(2) One of the subsidiaries of the Group is involved in a
dispute with one of its distributors, with respect to alleged
unpaid commissions, bonuses and benefits, totaling approximately
$11m, over a period of around 11 years of its business relationship
with the subsidiary. In March 2012, the distributor filed a claim
against the subsidiary in the High Court. On 4 October 2016, the
High Court ruled against the subsidiary and ordered to pay the
claimed amount of approximately $11m to the distributor. On 5
October 2016, the subsidiary filed an appeal in the Court of Appeal
against the order of the High Court, which on 24 July 2020 was
ruled against the subsidiary. On 7 August 2020, the subsidiary
filed an appeal against the decision of the Court of Appeal, in the
Supreme Court. Record of appeal has been transmitted to the Supreme
Court and briefs of argument are currently being prepared.
Despite the strength of the subsidiary's line of defense, as
both the High Court and Court of Appeal have ruled against the
subsidiary, it is appropriate to disclose this matter as contingent
liability for $11m, pending the decision of the Supreme Court. No
provision has been made against this claim.
In addition to the individual matters disclosed above, in the
ordinary course of business, the Group is a defendant or
co-defendant in various litigations and claims which are immaterial
individually.
There are uncertainties in the legal, regulatory and tax
environments in the countries in which the Group operates, and
there is a risk of demands, which may be raised based on current or
past business operations. Such demands have in past been challenged
and contested on merits with appropriate authorities and
appropriate settlements agreed. Other than amounts provided where
the Group believes there is a probable settlement and contingent
liabilities where the Group has assessed the additional possible
amounts, there are no other legal, tax or regulatory obligations
which may be expected to be material to the financial
statements.
(ii) Guarantees:
Guarantees outstanding as of 30 September 2022 and 31 March 2022
amounting to $9m and $8m respectively have been issued by banks and
financial institutions on behalf of the Group. These guarantees
include certain financial bank guarantees which have been given for
sub-judice matters and the amounts with respect to these have been
disclosed under capital commitments, contingencies and liabilities,
as applicable, in compliance with the applicable accounting
standards.
(iii) Commitments
The Group has contractual commitments towards capital
expenditure (net of related advances paid) of $301m and $295m as of
30 September 2022 and 31 March 2022 respectively.
15. Related Party disclosure
a) List of related parties
i) Parent company
Airtel Africa Mauritius Limited
ii) Intermediate parent entity
Network i2i Limited
Bharti Airtel Limited
Bharti Telecom Limited
iii) Ultimate controlling entity
Bharti Enterprises (Holding) Private Limited. It is held by
private trusts of Bharti family, with Mr. Sunil Bharti Mittal's
family trust effectively controlling the company.
iv) Associate:
Seychelles Cable Systems Company Limited
v) Other entities with whom transactions have taken place during the reporting period
a. Fellow subsidiaries
Nxtra Data Limited
Bharti Airtel (Services) Limited
Bharti International (Singapore) Pte Ltd
Bharti Airtel (UK) Limited
Bharti Airtel (France) SAS
Bharti Airtel Lanka (Private) Limited
Bharti Hexacom Limited
b. Other related parties
Airtel Ghana Limited (till 12 October 2021)
Singapore Telecommunication Limited
vi) Key Management Personnel ('KMP')
a. Executive directors
Olusegun Ogunsanya (since October 2021)
Raghunath Venkateswarlu Mandava (till September 2021)
Jaideep Paul (since June 2021)
b. Non-Executive directors
Sunil Bharti Mittal
Awuneba Ajumogobia
Douglas Baillie
John Danilovich
Andrew Green
Akhil Gupta
Shravin Bharti Mittal
Annika Poutiainen
Ravi Rajagopal
Kelly Bayer Rosmarin
Tsega Gebreyes (since October 2021)
c. Others
Olusegun Ogunsanya (till September 2021)
Jaideep Paul (till May 2021)
Ian Ferrao
Michael Foley
Razvan Ungureanu
Luc Serviant
Daddy Mukadi
Neelesh Singh
Ramakrishna Lella
Olivier Pognon (till 15 October 2021)
Edgard Maidou (since 16 October 2021)
Rogany Ramiah
Stephen Nthenge
Vimal Kumar Ambat
Ashish Malhotra (till June 2022)
Vinny Puri
C Surendran (since August 2021)
Olubayo Adekanmbi (since December 2021)
Anthony Shiner (since May 2022)
(b) The details of significant transactions with the related
parties for the six months ended 30 September 2022
and 2021 respectively, are provided below:
For the six months ended
--------------------------------------------
30 September 2022 30 September 2021
--------------------- ---------------------
Sale / rendering of services
Bharti Airtel (UK) Limited 36 30
Bharti Airtel Limited 5 3
Purchase / receiving of services
8
Bharti Airtel (France) SAS 10 4
Bharti Airtel (UK) Limited 19 16
Bharti Airtel Limited 4 7
Network i2i Ltd. 6 3
Guarantee fees
Bharti Airtel Limited 2 3
Dividend Paid
Airtel Africa Mauritius Limited 63 53
(c) Key management compensation ('KMP')
KMP are those persons having authority and responsibility for
planning, directing and controlling the activities of the Group,
directly or indirectly, including any director, whether executive
or otherwise. For the Group, these include executive committee
members. Remuneration to KMP were as follows:
For the six months ended
--------------------------------------------
30 September 2022 30 September 2021
--------------------- ---------------------
Short-term employee benefits 5 5
Performance linked incentive 2 2
Share-based payment 0 1
Other long-term benefits 1 1
Other benefits 1 0
9 9
===================== =====================
16. Fair Value of financial assets and liabilities
The details as to the carrying value, fair value and the level
of fair value measurement hierarchy of the group's financial
instruments are as follows:
Carrying value as of Fair value as of
----------------------------------- ------------------------------------
30 31 March 30 September 31 March
September 2022 2022 2022
2022
---------------- ----------------- ----------------- -----------------
Financial assets
FVTPL
Derivatives
- Forward and option
contracts Level 2 4 2 4 2
- Currency swaps and
interest rate swaps Level 2 7 3 7 3
- Cross currency
swaps Level 3 1 1 1 1
Other bank balances Level 2 13 16 13 16
Investments Level 2 0 0 0 0
Amortised cost
Trade receivables 136 123 136 123
Cash and cash equivalents 655 638 655 638
Other bank balances 13 362 13 362
Balance held under mobile money trust 596 513 596 513
Other financial assets 153 131 153 131
1,578 1,789 1,578 1,789
================ ================= ================= =================
Financial liabilities
FVTPL
Derivatives
- Forward and option
contracts Level 2 26 4 26 4
- Currency swaps and
interest rate swaps Level 2 0 0 0 0
- Cross currency
swaps Level 3 2 4 2 4
- Embedded
derivatives Level 2 0 1 0 1
Amortised cost
Borrowings - fixed
rate Level 1 556 1,015 539 1,016
Borrowings - fixed
rate Level 2 228 267 217 264
Put option liability Level 3 574 579 574 579
Borrowings 1,208 990 1,208 990
Trade payables 396 404 396 404
Mobile money wallet balance 567 496 567 496
Other financial liabilities 434 516 434 516
3,991 4,276 3,963 4,274
================ ================= ================= =================
The following methods/assumptions were used to estimate the fair
values:
-- The carrying value of bank deposits, trade receivables, trade
payables, short-term borrowings, other current financial assets and
liabilities approximate their fair value mainly due to the
short-term maturities of these instruments.
-- Fair value of quoted financial instruments is based on quoted
market price at the reporting date.
-- The fair value of non-current financial assets, long-term
borrowings and other financial liabilities is estimated by
discounting future cash flows using current rates applicable to
instruments with similar terms, currency, credit risk and remaining
maturities.
-- The fair values of derivatives and other bank balances
(measured at FVTPL) are estimated by using pricing models, wherein
the inputs to those models are based on readily observable market
parameters. The valuation models used by the Group reflect the
contractual terms of the derivatives (including the period to
maturity), and market-based parameters such as interest rates,
foreign exchange rates, volatility etc. These models do not contain
a high level of subjectivity as the valuation techniques used do
not require significant judgement and inputs thereto are readily
observable.
-- The fair value of the put option liability (included in other
financial liability) to buy back the stake held by non-controlling
interest in AMC BV is measured at the present value of the
redemption amount (i.e. expected cash outflows). Since, the
liability will be based on fair value of the equity shares of AMC
BV (subject to a cap) at the end of 48 months (from the first close
date), the expected cash flows are estimated by determining the
projected equity valuation of the AMC BV at the end of 48 months
(from the first close date) and applying cap thereon.
During the six months ended 30 September 2022 and 31 March 2022
there were no transfers between Level 1 and Level 2 fair value
measurements, and no transfer into and out of Level 3 fair value
measurements.
The following table describes the key inputs used in the
valuation (basis discounted cash flow technique) of the Level 2 and
Level 3 financial assets/liabilities as of 30 September 2022 and 31
March 2022:
Financial assets / liabilities Inputs used
-------------------------------------------------- ------------------------------------------------
- Currency swaps, forward and option contracts and Forward foreign currency exchange rates, Interest rate
other bank balances
- Interest rate swaps Prevailing / forward interest rates in market, Interest
rate
- Embedded derivatives Prevailing interest rates in market, inflation rates
- Other financial assets / fixed rate borrowing / other Prevailing interest rates in market, Future payouts,
financial Interest rates
liabilities
Reconciliation of fair value measurements categorised within
level 3 of the fair value hierarchy - Financial
Assets/(Liabilities) (net)
-- Cross Currency Swaps ('CCS')
For the six months ended
----------------------------------------
30 September 2022 30 September 2021
------------------- -------------------
Opening Balance (3) (3)
Recognised in finance costs in profit and loss(unrealized)(1) 2 3
Closing Balance (1) 0
=================== ===================
(1) The Group during the year ended 31 March 2021 had entered
into a Cross Currency Swap (CCS) in one of its subsidiaries, which
was accounted for as FVTPL. The fair value of CCS was estimated
based on the contractual terms of the CCS and parameters such as
interest rates, foreign exchange rates etc. Since, the data from
any observable markets in respect of interest rates was not
available, the interest rates were considered to be significant
unobservable inputs to the valuation of this CCS.
-- Put option liability
For the six months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Opening Balance 579 -
Liability recognised by debiting transaction with NCI reserve - 431
Liability de-recognised by crediting transaction with NCI reserve(1) (8)
Recognized in finance costs in profit and loss (unrealized) 3 1
Closing Balance 574 432
================== ==================
(1) Put option liability was reduced by $8m for dividend
distribution to put option NCI holders. Any dividend paid to the
put option NCI holders is adjustable against the put option
liability based on put option arrangement.
17. Events after the balance sheet date
No material subsequent events or transactions have occurred
since the date of statement of financial position except as
disclosed below:
-- On 13 October 2022, the Group announced the acquisition by
Airtel Tanzania, a subsidiary of the Group, of 140 MHz of
additional spectrum spread across the 2600 MHz (2 blocks of
2x15MHz) and 3500 MHz bands from the Tanzania Communications
Regulatory Authority (TCRA) for a gross consideration of $60m.
-- On 14 October 2022, the Group announced the acquisition by
Airtel Zambia, a subsidiary of the Group, of 60 MHz of additional
spectrum spread across the 800 MHz and 2600 MHz bands from the
Zambia Information and Communications Technology Authority (ZICTA),
for a gross consideration of $29m.
Appendix
Additional information pertaining to three months ended 30
September 2022
Consolidated Statement of Comprehensive Income (unaudited)
(All amounts are in US Dollar millions unless stated
otherwise)
For the three months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Income
Revenue 1,308 1160
Other income 5 3
1,313 1,163
Expenses
Network operating expenses 259 203
Access charges 100 99
License fee and spectrum usage charges 58 57
Employee benefits expense 70 73
Sales and marketing expenses 57 54
Impairment loss/(reversal) on financial assets 1 (1)
Other expenses 127 114
Depreciation and amortisation 195 184
867 783
Operating profit 446 380
Finance costs 212 77
Finance income (6) (5)
Other non-operating income - -
Share of profit for associate (0) (0)
Profit before tax 240 308
Tax expense 88 116
Profit for the period 152 192
Profit before tax (as presented above) 240 308
Add: Exceptional items (net) - -
Underlying profit before tax 240 308
------------------------------------------------------------------- ------------------ ------------------
Profit after tax (as presented above) 152 192
Add: Exceptional items (net) (21) -
Underlying profit after tax 131 192
------------------------------------------------------------------- ------------------ ------------------
Other comprehensive income ('OCI')
Items to be reclassified subsequently to profit or loss:
Net (loss)/gain due to foreign currency translation differences (91) 21
Tax expense on above (2) (0)
Share of OCI of associate 0 0
(93) 21
------------------ ------------------
Items not to be reclassified subsequently to profit or loss:
Re-measurement loss on defined benefit plans (1) (1)
Tax credit on above 0 0
(1) (1)
------------------ ------------------
Other comprehensive (loss)/ gain for the period (94) 20
------------------ ------------------
For the three months ended
--------------------------------------
30 September 2022 30 September 2021
------------------ ------------------
Total comprehensive income for the period 58 212
------------------ ------------------
Profit for the period attributable to: 152 192
Owners of the Company 133 160
Non-controlling interests 19 32
Other comprehensive (loss)/gain for the period attributable to: (94) 20
Owners of the Company (95) 21
Non-controlling interests 1 (1)
Total comprehensive income for the period attributable to: 58 212
Owners of the Company 38 181
Non-controlling interests 20 31
Alternative performance measures (APMs)
Introduction
In the reporting of financial information, the directors have
adopted various APMs. These measures are not defined by
International Financial Reporting Standards (IFRS) and therefore
may not be directly comparable with other companies APMs, including
those in the Group's industry.
APMs should be considered in addition to, and are not intended
to be a substitute for, or superior to, IFRS measurements.
Purpose
The directors believe that these APMs assist in providing
additional useful information on the trends, performance and
position of the Group.
APMs are also used to enhance the comparability of information
between reporting periods and geographical units (such as
like-for-like sales), by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the Group's performance. Consequently, APMs are used
by the directors and management for performance analysis, planning,
reporting and incentive-setting purposes.
The directors believe the following metrics to be the APMs used
by the Group to help evaluate growth trends, establish budgets and
assess operational performance and efficiencies. These measures
provide an enhanced understanding of the Group's results and
related trends, therefore increasing transparency and clarity into
the core results of the business.
The following metrics are useful in evaluating the Group's
operating performance:
APM Closest Adjustments to reconcile to IFRS measure Table Definition and purpose
equivalent reference(1)
IFRS measure
--------------------------
EBITDA and Operating Table A The Group defines EBITDA
margin profit * Depreciation and amortisation as operating
profit/(loss) for the
period before
* Exceptional items depreciation and
amortisation and adjusted
for exceptional items.
The Group defines EBITDA
margin as EBITDA divided
by revenue.
EBITDA and margin are
measures used by the
directors to assess the
trading performance of
the business and are
therefore the measure of
segment profit that the
Group presents under
IFRS. EBITDA and margin
are also presented on a
consolidated basis
because the directors
believe
it is important to
consider profitability on
a basis consistent with
that of the Group's
operating
segments. When presented
on a consolidated basis,
EBITDA and margin are
APMs.
Depreciation and
amortisation is a
non-cash item which
fluctuates depending on
the timing
of capital investment and
useful economic life.
Directors believe that a
measure which removes
this volatility improves
comparability of the
Group's results period on
period and hence is
adjusted to arrive at
EBITDA and margin.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
EBITDA and margin.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Underlying Profit / Table B The Group defines
profit / (loss) before * Exceptional items underlying profit/(loss)
(loss) before tax before tax as
tax profit/(loss) before tax
adjusted
for exceptional items.
The directors view
underlying profit/(loss)
before tax to be a
meaningful measure to
analyse
the Group's
profitability.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
underlying profit/(loss)
before tax.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Effective tax Reported tax Table C The Group defines
rate rate * Exceptional items effective tax rate as
reported tax rate
(reported tax charge
* Foreign exchange rate movements divided by
reported profit before
tax) adjusted for
* One-off tax impact of prior period, tax litigation exceptional items,
settlement and impact of tax on permanent differences foreign exchange rate
movements
and one-off tax items of
prior period adjustment,
tax settlements and
impact of permanent
differences on tax.
This provides an
indication of the current
on-going tax rate across
the Group.
Exceptional tax items or
any tax arising on
exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison
of the Group's
performance on a
period-to-period basis
and could distort the
understanding
of our performance for
the period and the
comparability between
periods and hence are
adjusted
to arrive at effective
tax rate.
Foreign exchange rate
movements are specific
items that are non-tax
deductible in a few of
the entities which are
loss making and/or where
DTA is not yet triggered
and hence are considered
to hinder comparison of
the Group's effective tax
rate on a
period-to-period basis
and therefore
excluded to arrive at
effective tax rate.
One-off tax impact on
account of prior period
adjustment, any tax
litigation settlement and
tax impact on permanent
differences are
additional specific items
that because of their
size
and frequency in the
results, are considered
to hinder comparison of
the Group's effective
tax rate on a
period-to-period basis.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Underlying Profit/(loss) Table D The Group defines
profit/(loss) for the * Exceptional items underlying profit/(loss)
after tax period after tax as
profit/(loss) for the
period adjusted
for exceptional items.
The directors view
underlying profit/(loss)
after tax to be a
meaningful measure to
analyse
the Group's
profitability.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
underlying profit/(loss)
after tax.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Earnings per EPS Table E The Group defines
share before * Exceptional items earnings per share before
exceptional exceptional items as
items profit/(loss) for the
period
before exceptional items
attributable to owners of
the company divided by
the weighted average
number of ordinary shares
in issue during the
financial period.
This measure reflects the
earnings per share before
exceptional items for
each share unit
of the company.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
earnings for the purpose
of earnings per
share before exceptional
items.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Operating Cash Table F The Group defines
free cash generated * Income tax paid operating free cash flow
flow from as net cash generated
operating from operating activities
activities * Changes in working capital before income tax paid,
changes in working
capital, other non-cash
* Other non-cash items items, non-operating
income,
exceptional items, and
* Non-operating income after capital
expenditures. The Group
views operating free cash
* Exceptional items flow
as a key liquidity
measure, as it indicates
* Capital expenditures the cash available to pay
dividends, repay debt
or make further
investments in the Group.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Net debt and Borrowings Table G The Group defines net
leverage * Lease liabilities debt as borrowings
ratio including lease
liabilities less cash and
* Cash and cash equivalent cash equivalents,
term deposits with banks,
deposits given against
* Term deposits with banks borrowings/non-derivative
financial instruments,
processing costs related
* Deposits given against borrowings/ non-derivative to borrowings and fair
financial instruments value hedge adjustments.
The Group defines
leverage ratio as net
* Fair value hedges debt divided by EBITDA
for the preceding 12
months.
The directors view net
debt and the leverage
ratio to be meaningful
measures to monitor the
Group's ability to cover
its debt through its
earnings.
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
Return on No direct Table H The Group defines return
capital equivalent * Exceptional items to arrive at EBIT on capital employed
employed ('ROCE') as EBIT divided
by average capital
employed.
The directors view ROCE
as a financial ratio that
measures the Group's
profitability and the
efficiency with which its
capital is being
utilised.
The Group defines EBIT as
operating profit/(loss)
for the period adjusted
for exceptional
items.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
EBIT.
Capital employed is
defined as sum of equity
attributable to owners of
the company (grossed
up for put option
provided to minority
shareholders to provide
them liquidity as part of
the
sale agreements executed
with them during year
ended 31 March 2022),
non-controlling interests
and net debt. Average
capital employed is
average of capital
employed at the closing
and beginning
of the relevant period.
For quarterly
computations, ROCE is
calculated by dividing
EBIT for the preceding 12
months
by the average capital
employed (being the
average of the capital
employed averages for the
preceding four quarters).
-------------- -------------- ------------------------------------------------------------ ------------ --------------------------
(1 Refer "Reconciliation between GAAP and Alternative
Performance Measures" for respective table.)
Some of the Group's IFRS measures and APMs are translated at
constant currency exchange rates to measure the organic performance
of the Group. In determining the percentage change in constant
currency terms, both current and previous financial reporting
period's results have been converted using exchange rates
prevailing as on 31 March 2022. Reported currency percentage change
is derived on the basis of the average actual periodic exchange
rates for that financial period. Variances between constant
currency and reported currency percentages are due to exchange rate
movements between the previous financial reporting period and the
current period.
Changes to APMs
-- Underlying revenue: The underlying revenue has not been
defined as an APM due to the absence of any exceptional items
during the period.
-- Return on capital employed (ROCE): The Group has revised the
computation of ROCE by grossing up the 'equity attributable to
owners of the Company' for put option provided to minority
shareholders. The previous period ROCE has also been restated for
this change.
Reconciliation between GAAP and Alternative Performance
Measures
Table A: EBITDA and margin
Description Unit Half year ended
of measure
-------------------------------- ------------- --------------------------------
September 2022 September 2021
-------------------------------- ------------- --------------- ---------------
Operating profit $m 872 732
Add:
Depreciation and amortisation $m 383 366
Exceptional items $m - -
EBITDA $m 1,255 1,098
Revenue $m 2,565 2,272
-------------------------------- ------------- --------------- ---------------
EBITDA margin (%) % 48.9% 48.3%
-------------------------------- ------------- --------------- ---------------
Table B: Underlying profit / (loss) before tax
Description Unit Half year ended
of measure
---------------------------- ------------- --------------------------------
September 2022 September 2021
---------------------------- ------------- --------------- ---------------
Profit / (loss) before tax $m 516 567
Exceptional items (net) $m - (4)
Underlying profit / (loss)
before tax $m 516 563
---------------
Table C: Effective tax rate
Description Unit Half year ended
of measure
------------------------------- -------------
September 2022 September 2021
------------------------------- ------------- --------------------------------- ---------------------------------
Profit Income Tax Profit Income Tax
before tax expense rate before tax expense rate
taxation % taxation %
------------------------------- ------------- ---------- ------------- ------ ---------- ------------- ------
Reported effective
tax rate $m 516 186 36.0% 567 232 41.0%
Adjusted for:
Exceptional items (provided
below) $m - 42 (4)
Foreign exchange rate
movements for non-DTA
operating companies
& holding companies $m 47 - 24
One-off adjustment and
tax on permanent differences $m 5 (3) (12) (7)
Effective tax rate $m 568 224 39.4% 575 225 39.2%
------
Exceptional items
1. Deferred tax asset $m 42 -
recognition
2. Gain on sale of tower
assets $m - (4)
Total $m - 42 (4)
------
Table D: Underlying profit / (loss) after tax
Description Unit Half year ended
of measure
---------------------------------- ------------- ----------------------
September September
2022 2021
---------------------------------- ------------- ---------- ----------
Profit / (loss) after tax $m 330 335
Exceptional items $m (42) (4)
Underlying profit / (loss) after
tax $m 288 331
----------
Table E: Earnings per share before exceptional items
Description Unit Half year ended
of
measure
------------------------------------------ ---------- ----------------------
September September
2022 2021
------------------------------------------ ---------- ---------- ----------
Profit for the period attributable
to owners of the company $m 296 285
Operating and Non-operating exceptional
items $m - (4)
Tax exceptional items $m (42) -
Non-controlling interest exceptional $m - -
items
------------------------------------------ ---------- ---------- ----------
Profit for the period attributable
to owners of the company-
before exceptional items $m 254 281
Weighted average number of ordinary
shares in issue during the period. Million 3,753 3,755
Earnings per share before exceptional
items Cents 6.8 7.5
----------
Table F: Operating free cash flow
Description Unit Half year ended
of measure
----------------------------------------- ------------- ----------------------
September September
2022 2021
----------------------------------------- ------------- ---------- ----------
Net cash generated from operating
activities $m 1,008 922
Add: Income tax paid $m 288 190
Net cash generation from operation
before tax $m 1,296 1,112
Less: Changes in working capital
Increase in trade receivables $m 28 22
Increase/(Decrease) in inventories $m 3 (5)
Decrease/(Increase) in trade
payables $m 15 (7)
Increase in mobile money wallet
balance $m (71) (56)
Decrease in provisions $m 22 18
Increase in deferred revenue $m (16) (22)
Increase in other financial
and non-financial liabilities $m (33) (14)
Increase in other financial
and non-financial assets $m 16 57
Operating cash flow before changes
in working capital $m 1,260 1,105
Other non-cash adjustments $m (5) (7)
Operating exceptional items $m - -
EBITDA $m 1,255 1,098
Less: Capital expenditure $m (310) (245)
Operating free cash flow $m 945 853
----------
Table G: Net debt and leverage
Description Unit As at As at
of measure
------------------------------------------- -------------
September September
2022 2021
------------------------------------------- ------------- ---------- ----------
Long term borrowing, net of current
portion $m 1,085 1,866
Short-term borrowings and current
portion of long-term borrowing $m 907 766
Add: Processing costs related
to borrowings $m 5 3
Add/(less): Fair value hedge
adjustment $m (7) (18)
Less: Cash and cash equivalents $m (655) (698)
Less: Term deposits with banks $m (5) (15)
Less: Deposits given against
borrowings/ non-derivative financial
instruments $m - (143)
Add: Lease liabilities $m 1,947 1,366
Net debt $m 3,278 3,127
----------
EBITDA (LTM) $m 2,468 2,078
Leverage (LTM) times 1.3 1.5
------------------------------------------- ------------- ---------- ----------
Table H: Return on capital employed
Description Unit Half year ended
of
measure
------------------------------------- ---------- ----------------------
September September
2022 2021
------------------------------------- ---------- ---------- ----------
Operating profit (preceding 12
months) $m 1,675 1,379
Less:
Operating exceptional items $m 32 (21)
------------------------------------- ---------- ---------- ----------
EBIT (preceding 12 months) $m 1,707 1,358
------------------------------------- ---------- ---------- ----------
Equity attributable to owners of
the Company $m 3,444 3,554
Add: Put option given to minority
shareholders (1) $m 574 432
------------------------------------- ---------- ---------- ----------
Gross equity attributable to owners
of the Company (1) $m 4,018 3,986
------------------------------------- ---------- ---------- ----------
Non-controlling interests (NCI) $m 148 (2)
Net debt (refer Table G) $m 3,278 3,127
------------------------------------- ---------- ---------- ----------
Capital employed $m 7,444 7,111
------------------------------------- ---------- ---------- ----------
Average capital employed (2) $m 7,277 6,944
------------------------------------- ---------- ---------- ----------
Return on capital employed % 23.5% 19.6%
------------------------------------- ---------- ---------- ----------
(1) Refer changes to APMs in Alternative performance measure
(APMs) section.
(2) Average capital employed is calculated as average of capital
employed at closing and opening of relevant period.
INDEPENT REVIEW REPORT TO AIRTEL AFRICA PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2022 which comprises the interim
condensed consolidated statement of comprehensive income, the
interim condensed consolidated statement of financial position, the
interim condensed consolidated statement of cash flows, the interim
condensed consolidated statement of changes in equity and related
notes 1 to 17.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with United Kingdom adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
26 October 2022
Glossary
Technical and Industry Terms
4G data customer A customer having a 4G handset and who has used at least
1 MB on any of the Group's GPRS,
3G & 4G network in the last 30 days.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money (mobile money) Airtel Money is the brand name for Airtel Africa's mobile
money products and services. The
term is used interchangeably with 'mobile money' when
referring to our mobile money business,
finance, operations and activities.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money ARPU Mobile money average revenue per user per month. This is
derived by dividing total mobile
money revenue during the relevant period by the average
number of active mobile money customers
and dividing the result by the number of months in the
relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money customer base Total number of active subscribers who have enacted any
mobile money usage event in last 30
days.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money customer penetration The proportion of total Airtel Africa active mobile
customers who use mobile money services.
Calculated by dividing the mobile money customer base by
the Group's total customer base.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money transaction value Any financial transaction performed on Airtel Africa's
mobile money platform.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money transaction value per customer per month Calculated by dividing the total mobile money transaction
value on the Group's mobile money
platform during the relevant period by the average number
of active mobile money customers
and dividing the result by the number of months in the
relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Airtime credit service A value-added service where the customer can take an
airtime credit and continue to use our
voice and data services, with the credit recovered
through subsequent customer recharge. This
is classified as a Mobile Services product (not a Mobile
Money product).
---------------------------------------------------------- ----------------------------------------------------------
ARPU Average revenue per user per month. This is derived by
dividing total revenue during the relevant
period by the average number of customers during the
period and dividing the result by the
number of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Average customers The average number of active customers for a period.
Derived from the monthly averages during
the relevant period. Monthly averages are calculated
using the number of active customers
at the beginning and the end of each month.
---------------------------------------------------------- ----------------------------------------------------------
Capital expenditure An alternative performance measure (non-GAAP). Defined as
investment in gross fixed assets
(both tangible and intangible but excluding spectrum and
licences) plus capital work in progress
(CWIP), excluding provisions on CWIP for the period.
---------------------------------------------------------- ----------------------------------------------------------
Constant currency The Group has presented certain financial information
that is calculated by translating the
results for the current financial year and previous
financial years at a fixed 'constant currency'
exchange rate, which is done to measure the organic
performance of the Group. Growth rates
for reporting regions and service segments are in
constant currency as it better represents
the performance of the business. Constant currency growth
rates for prior periods are calculated
using closing exchange rates as at the end of prior
period.
---------------------------------------------------------- ----------------------------------------------------------
Customer Defined as a unique active subscriber with a unique
mobile telephone number who has used any
of Airtel's services in the last 30 days.
---------------------------------------------------------- ----------------------------------------------------------
Customer base The total number of active subscribers that have used any
of our services (voice calls, SMS,
data usage or mobile money transaction) in the last 30
days.
---------------------------------------------------------- ----------------------------------------------------------
Data ARPU Data average revenue per user per month. Data ARPU is
derived by dividing total data revenue
during the relevant period by the average number of data
customers and dividing the result
by the number of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Data customer base The total number of subscribers who have consumed at
least 1 MB on the Group's GPRS, 3G or
4G network in the last 30 days.
---------------------------------------------------------- ----------------------------------------------------------
Data customer penetration The proportion of customers using data services.
Calculated by dividing the data customer
base by the total customer base.
---------------------------------------------------------- ----------------------------------------------------------
Data usage per customer per month Calculated by dividing the total MBs consumed on the
Group's network during the relevant period
by the average data customer base over the same period
and dividing the result by the number
of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Digitalisation We use the term digitalisation in its broadest sense to
encompass both digitisation actions
and processes that convert analogue information into a
digital form and thereby bring customers
into the digital environment, and the broader
digitalisation processes of controlling, connecting
and planning processes digitally; the processes that
effect digital transformation of our
business, and of industry, economics and society as a
whole through bringing about new business
models, socio-economic structures and organisational
patterns.
---------------------------------------------------------- ----------------------------------------------------------
Diluted earnings per share Diluted EPS is calculated by adjusting the profit for the
year attributable to the shareholders
and the weighted average number of shares considered for
deriving basic EPS, for the effects
of all the shares that could have been issued upon
conversion of all dilutive potential shares.
The dilutive potential shares are adjusted for the
proceeds receivable had the shares actually
been issued at fair value. Further, the dilutive
potential shares are deemed converted as
at beginning of the period, unless issued at a later date
during the period.
---------------------------------------------------------- ----------------------------------------------------------
Earnings per share (EPS) EPS is calculated by dividing the profit for the period
attributable to the owners of the
company by the weighted average number of ordinary shares
outstanding during the period.
---------------------------------------------------------- ----------------------------------------------------------
Foreign exchange rate movements for non-DTA operating Foreign exchange rate movements are specific items that
companies are non-tax deductible in a few of
and holding companies our operating entities, hence these hinder a
like-for-like comparison of the Group's effective
tax rate on a period-to-period basis and are therefore
excluded when calculating the effective
tax rate.
---------------------------------------------------------- ----------------------------------------------------------
Indefeasible Rights of Use (IRU) A standard long-term leasehold contractual agreement that
confers upon the holder the exclusive
right to use a portion of the capacity of a fibre route
for a stated period.
---------------------------------------------------------- ----------------------------------------------------------
Information and communication technologies (ICT) ICT refers to all communication technologies, including
the internet, wireless networks, cell
phones, computers, software, middleware,
videoconferencing, social networking, and other media
applications and services.
---------------------------------------------------------- ----------------------------------------------------------
Interconnect user charges (IUC) Interconnect user charges are the charges paid to the
telecom operator on whose network a
call is terminated.
---------------------------------------------------------- ----------------------------------------------------------
Lease liability Lease liability represents the present value of future
lease payment obligations.
---------------------------------------------------------- ----------------------------------------------------------
Leverage An alternative performance measure (non-GAAP). Leverage
(or leverage ratio) is calculated
by dividing net debt at the end of the relevant period by
the EBITDA for the preceding 12
months.
---------------------------------------------------------- ----------------------------------------------------------
Minutes of usage Minutes of usage refer to the duration in minutes for
which customers use the Group's network
for making and receiving voice calls. It includes all
incoming and outgoing call minutes,
including roaming calls.
---------------------------------------------------------- ----------------------------------------------------------
Mobile services Mobile services are our core telecom services, mainly
voice and data services, but also including
revenue from tower operation services provided by the
Group and excluding mobile money services.
---------------------------------------------------------- ----------------------------------------------------------
Net debt An alternative performance measure (non-GAAP). The Group
defines net debt as borrowings including
lease liabilities less cash and cash equivalents, term
deposits with banks, processing costs
related to borrowings and fair value hedge adjustments.
---------------------------------------------------------- ----------------------------------------------------------
Net debt to EBITDA (LTM) An alternative performance measure (non-GAAP) Calculated
by dividing net debt as at the end
of the relevant period by EBITDA for the preceding 12
months (from the end of the relevant
period). This is also referred to as the leverage ratio.
---------------------------------------------------------- ----------------------------------------------------------
Network towers or 'sites' Physical network infrastructure comprising a base
transmission system (BTS) which holds the
radio transceivers (TRXs) that define a cell and
coordinates the radio link protocols with
the mobile device. It includes all ground-based, roof top
and in-building solutions.
---------------------------------------------------------- ----------------------------------------------------------
Operating company (OpCo) Operating company (or OpCo) is a defined corporate
business unit, providing telecoms services
and mobile money services in the Group's footprint.
---------------------------------------------------------- ----------------------------------------------------------
Operating free cash flow An alternative performance measure (non-GAAP). Calculated
by subtracting capital expenditure
from EBITDA.
---------------------------------------------------------- ----------------------------------------------------------
Operating leverage An alternative performance measure (non-GAAP). Operating
leverage is a measure of the operating
efficiency of the business. It is calculated by dividing
operating expenditure (excluding
regulatory charges) by total revenue.
---------------------------------------------------------- ----------------------------------------------------------
Operating profit Operating profit is a GAAP measure of profitability.
Calculated as revenue less operating
expenditure (including depreciation and amortisation and
operating exceptional items).
---------------------------------------------------------- ----------------------------------------------------------
Other revenue Other revenue includes revenues from messaging, value
added services (VAS), enterprise, site
sharing and handset sale revenue.
---------------------------------------------------------- ----------------------------------------------------------
Reported currency Our reported currency is US dollars. Accordingly, actual
periodic exchange rates are used
to translate the local currency financial statements of
OpCos into US dollars. Under reported
currency the assets and liabilities are translated into
US dollars at the exchange rates prevailing
at the reporting date whereas the statements of profit
and loss are translated into US dollars
at monthly average exchange rates.
---------------------------------------------------------- ----------------------------------------------------------
Smartphone A smartphone is defined as a mobile phone with an
interactive touch screen that allows the
user to access the internet and additional data
applications, providing additional functionality
to that of a basic feature phone which is used only for
making voice calls and sending and
receiving text messages.
---------------------------------------------------------- ----------------------------------------------------------
Smartphone penetration Calculated by dividing the number of smartphone devices
in use by the total number of customers.
---------------------------------------------------------- ----------------------------------------------------------
Total MBs on network Total MBs consumed (uploaded & downloaded) by customers
on the Group's GPRS, 3G and 4G network
during the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
EBIT Defined as operating profit/(loss) for the period
adjusted for exceptional items.
---------------------------------------------------------- ----------------------------------------------------------
EBITDA An alternative performance measure (non-GAAP). Defined as
operating profit before depreciation,
amortisation and exceptional items.
---------------------------------------------------------- ----------------------------------------------------------
EBITDA margin An alternative performance measure (non-GAAP). Calculated
by dividing EBITDA for the relevant
period by revenue for the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Revenue An alternative performance measure (non-GAAP). Defined as
revenue before exceptional items.
---------------------------------------------------------- ----------------------------------------------------------
Unstructured Supplementary Service Data Unstructured Supplementary Service Data (USSD), also
known as "quick codes" or "feature codes",
is a communications protocol for GSM mobile operators,
similar to SMS messaging. It has a
variety of uses such as WAP browsing, prepaid callback
services, mobile-money services, location-based
content services, menu-based information services, and
for configuring phones on the network.
---------------------------------------------------------- ----------------------------------------------------------
Voice minutes of usage per customer per month Calculated by dividing the total number of voice minutes
of usage on the Group's network during
the relevant period by the average number of customers
and dividing the result by the number
of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Weighted average number of shares The weighted average number of shares is calculated by
multiplying the number of outstanding
shares by the portion of the reporting period those
shares covered, doing this for each portion
and then summing the total.
---------------------------------------------------------- ----------------------------------------------------------
Abbreviations
2G Second-generation mobile technology
--------------- ------------------------------------------------
3G Third-generation mobile technology
--------------- ------------------------------------------------
4G Fourth-generation mobile technology
--------------- ------------------------------------------------
ARPU Average revenue per user
--------------- ------------------------------------------------
bn Billion
--------------- ------------------------------------------------
bps Basis points
--------------- ------------------------------------------------
CAGR Compound annual growth rate
--------------- ------------------------------------------------
Capex Capital expenditure
--------------- ------------------------------------------------
CSR Corporate social responsibility
--------------- ------------------------------------------------
DTA Deferred Tax Asset
--------------- ------------------------------------------------
EBIT Earnings before interest and tax
--------------- ------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and
amortisation
--------------- ------------------------------------------------
EPS Earnings per share
--------------- ------------------------------------------------
FPPP Financial position and prospects procedures
--------------- ------------------------------------------------
GAAP Generally accepted accounting principles
--------------- ------------------------------------------------
GB Gigabyte
--------------- ------------------------------------------------
HoldCo Holding company
--------------- ------------------------------------------------
IAS International accounting standards
--------------- ------------------------------------------------
ICT Information and communication technologies
--------------- ------------------------------------------------
ICT (Hub) Information communication technology (Hub) IFRS
--------------- ------------------------------------------------
IFRS International financial reporting standards
--------------- ------------------------------------------------
IMF International monetary fund
--------------- ------------------------------------------------
IPO Initial public offering
--------------- ------------------------------------------------
KPIs Key performance indicators
--------------- ------------------------------------------------
KYC Know your customer
--------------- ------------------------------------------------
LTE Long-term evolution (4G technology)
--------------- ------------------------------------------------
LTM Last 12 months
--------------- ------------------------------------------------
m Million
--------------- ------------------------------------------------
MB Megabyte
--------------- ------------------------------------------------
MI Minority interest (non-controlling interest)
--------------- ------------------------------------------------
NGO Non-governmental organisation
--------------- ------------------------------------------------
OpCo Operating company
--------------- ------------------------------------------------
P2P Person to person
--------------- ------------------------------------------------
PAYG Pay-as-you-go
--------------- ------------------------------------------------
QoS Quality of service
--------------- ------------------------------------------------
RAN Radio access network
--------------- ------------------------------------------------
ROCE Return on capital employed
--------------- ------------------------------------------------
SIM Subscriber identification module
--------------- ------------------------------------------------
Single RAN Single radio access network
--------------- ------------------------------------------------
SMS Short messaging service
--------------- ------------------------------------------------
TB Terabyte
--------------- ------------------------------------------------
Telecoms Telecommunications
--------------- ------------------------------------------------
Unit of measure Unit of measure
--------------- ------------------------------------------------
USSD Unstructured supplementary service data
--------------- ------------------------------------------------
Neither the Company nor the directors accept any liability to
any person in relation to the half-year financial report except to
the extent that such liability could arise under English law.
Accordingly, any liability to a person who has demonstrated
reliance on any untrue or misleading statement or omission shall be
determined in accordance with section 90A and schedule 10A of the
Financial Services and Markets Act 2000.
The Directors of Airtel Africa plc are listed on pages 90 to 93
of the Group's annual report for the year ended 31 March 2022. No
changes to the Directors have been made since the date of the
annual report.
Statement of Director's Responsibilities
We confirm that to the best of our knowledge:
a) the condensed set of interim financial statements has been
prepared in accordance with UK-adopted IAS 34 'Interim Financial
Reporting';
b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
and their impact during the first six months and description of
principal risks and uncertainties for the remaining six months of
the year); and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
This responsibility statement was approved by the board of
directors on 26 October 2022 and is signed on its behalf by:
Segun Ogunsanya
Chief Executive Officer
26 October 2022
[1] Alternative performance measures (APM) are described on page
42.
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END
IR FFFFIIDLRFIF
(END) Dow Jones Newswires
October 27, 2022 02:00 ET (06:00 GMT)
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