Airtel growth continues amid third wave of pandemic in Africa

(Sharecast News) - Airtel Africa reported revenue growth of 30.7% in its first quarter on Thursday, to $1.11bn (£0.8bn), with constant currency growth coming in at 33.1%.
The FTSE 250 company said revenue growth in the three months ended 30 June "partially benefitted" from a weakened quarter in the prior year during the peak of Covid-19 restrictions across the region.

Even after adjusting for those effects, however, it said revenue growth rates for the group, its service segments and reporting regions were all ahead of trends seen in the prior fourth quarter of 2021.

Strong revenue growth was recorded across all regions, with Nigeria up 38.2%, East Africa up 32.8% and Francophone Africa up 24.9%, as well as across key services, with revenues for voice up 26.0%, data up 37.4% and mobile money up 53.7%.

Underlying EBITDA grew 42.4% to $534m in reported currency, while constant currency growth was 46.2%.

Airtel said its underlying EBITDA margin came in at 48% for the quarter, making for an increase of 396 basis points or 428 basis points in constant currency, led by both revenue growth and improved operational efficiencies.

Operating profit was $352m, up 67.6% in reported currency and 73.9% in constant currency, while profit after tax "more than doubled" to $142m, up 148.7%, largely due to higher operating profits along with stable net finance costs, which more than offset the increase in tax charges due to increased profits.

Basic earnings per share totalled 3.3 cents, which was an increase of 200%, as a result of higher profits and stable finance costs and foreign exchange, while earnings per share before exceptional items totalled 3.2 cents.

Operating free cash flow totalled $428m for the period, which was up 38.7%.

Airtel's customer base grew by 8.4% to 120.8m by the end of the period, with increased penetration across mobile data where its customer base was up 14.8%, and mobile money services where it was ahead 24.6%.

The slowdown in customer base growth was due to new SIM registration regulations in Nigeria, and excluding Nigeria, the customer base grew by 15.9%.

"Sub-Saharan Africa is now experiencing a third wave of the pandemic," said chief executive officer Raghunath Mandava, who added that governments in the region were implementing "balanced measures" of lockdowns and restrictions, while vaccination levels remained very low.

"In these challenging times, our business model has so far proven resilient, but we continue to monitor the situation closely for the potential impact on local economies and consumers.

"Our total customer base has returned to growth with acceleration in our East Africa and Francophone regions and despite continuing negative net additions in Nigeria.

"With the easing of these restrictions in late April we have since been able to gradually increase locations for activations in line with regulatory compliance across Nigeria, and we have begun adding new customers."

Mandava said the company's continued focus on modernisation and the rollout of its network, along with simplifying its products and improving distribution, had helped to make "handsome gains" on average revenues per user (ARPU) across voice, data and mobile money.

"Our robust operating model and solid execution should enable us to continue our profitable growth.

"We continue to see huge potential across voice, data and mobile money due to the low penetration levels in Africa, as we continue to partner the nations in bridging the digital divide and enhancing financial inclusion.

"We remain committed to continue to efficiently and effectively deliver services that help to improve the lives, communities and economies we serve."

At 0912 BST, shares in Airtel Africa were up 3.22% at 85.15p.