Airtel Africa Regulatory News (AAF)

Airtel Africa plc

Results for the year ended 31 March 2023

11 May 2023

Continuing to unlock growth, delivering double digit revenue growth and a resilient margin.

Highlights

Operating key performance indicators (KPIs)

· Total customer base grew by 9.0% to 140.0 million, as the penetration of mobile data and mobile money services continued to rise, driving a 16.9% increase in data customers to 54.6 million and a 20.4% increase in mobile money customers to 31.5 million.

· Constant currency ARPU growth of 7.4% was largely driven by increased usage across voice, data and mobile money.

· Mobile money transaction value increased by 41.3%, with Q4'23 annualised transaction value exceeding $102bn in constant currency.

Financial performance

· Revenue in constant currency grew by 17.6%, with revenues growing by 11.5% to $5,255m in reported currency.

· While each segment's reported currency revenue growth was impacted by currency devaluation, they all delivered double-digit constant currency revenue growth. Across the Group mobile service revenue grew by 16.2% in constant currency, driven by voice revenue growth of 11.8% and data revenue growth of 23.8%. Mobile money revenue grew by 29.6% in constant currency.

· Underlying EBITDA increased by 17.3% in constant currency, and 11.4% in reported currency to $2,575m, with an underlying EBITDA margin of 49.0%, reflecting the resilience of our operating model despite inflationary cost pressures.

· Profit after tax was $750m, a decrease of only $5m, after including a higher foreign exchange and derivative losses of $245m.

· Basic EPS at 17.7 cents was up by 5.2% due to higher operating profits and exceptional items gain on deferred tax credit recognition in Kenya, the DRC and Tanzania partially offset by higher foreign exchange and derivative losses. EPS before exceptional items was 13.6 cents, a reduction of 15.0%, largely due to higher foreign exchange and derivative losses of $245m. EPS before exceptional items and excluding foreign exchange and derivative losses was 20.6 cents, up by 13.4%.

Capital allocation

· Capex increased by 14.0% to $748m, in line with our guidance, as we continue to invest for future growth. Additionally, we acquired spectrum in Nigeria, the DRC, Tanzania, Zambia and Kenya during the year.

· 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. Cash at the holding companies was $398m. Leverage was at 1.4x in March 2023, broadly stable despite $500m of spectrum investment during the year.

· The Board has recommended a final dividend of 3.27 cents per share, making the total dividend for FY'23 5.45 cents per share, an increase of 9% in line with our progressive dividend policy.

Sustainability strategy

· The Group's inaugural Sustainability Report was published in October 2022, reflecting commitment to sustainability and detailing progress against the long-term goals as outlined in the sustainability strategy.

· UNICEF partnership launched across 6 of our markets providing educational resources, free of charge, to more than 250,000 children this year on our way to reaching one million children by 2027. 

· The Group's ambition to achieve net zero by 2050 has progressed. We published our Scope 1, 2 and 3 baseline GHG footprint in October 2022 and in May 2023 announced our detailed plans to achieve over 60% reduction in Scope 1 and 2 emissions intensity by 2032.

Olusegun Ogunsanya, chief executive officer, on the trading update:

"Over the last year, the operating environment has been challenging in many ways, yet our strategic focus on providing reliable, affordable and accessible services across our markets has enabled us to sustain our top-line growth momentum. The resilience of our underlying EBITDA margins has shown the effectiveness of our operating model, despite significant inflationary and foreign exchange pressures. Strong customer and ARPU growth over the year demonstrates that demand for our services remains very strong and gives us the confidence to continue investing to support our future growth potential. Over the year, we invested $500m on additional spectrum, including 5G, across many of our OpCos which, combined with our capex, will underpin our growth ambitions. Despite this investment, and driven by a disciplined capital allocation policy, our balance sheet remains strong and has been further de-risked over the last year by the prepayment of $450m HoldCo debt in July last year. Currencies across our footprint have been under pressure, and the impact from the revaluation of our foreign currency denominated liabilities provided some headwinds in the last financial year. While currency devaluation is not in our control, we have plans to continue to mitigate its impact by growing our revenues at a faster pace than devaluation, with double-digit revenue growth in reported currency delivered this year and as we continue to reduce our foreign currency exposure across our balance sheet.

Our six-pillar strategy continues to provide the basis for stakeholder value creation by facilitating continued expansion of our services to enhance both digital and financial inclusion across Africa. This strategy will continue and will be underpinned by our sustainability strategy as articulated in our Sustainability Report published in October 2022.

I am pleased with this year's performance and wish to thank all our customers, business partners, governments and regulators for their support and our employees for their consistent contribution to the business' success. The macro-economic outlook remains volatile, but we are well positioned to deliver against the growth opportunities these markets offer, with a continued focus on margin resilience."

(1) Alternative performance measures (APM) are described on page 51.

Airtel Africa plc ("Airtel Africa" or "Group") annual financial information contained in this report is drawn from Airtel Africa plc's audited annual consolidated financial statements for the years ended 31 March 2023 and 31 March 2022, prepared in accordance with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and approved for use in the United Kingdom (UK) by the UK Accounting Standards Endorsement Board (UKEB). Quarterly information is drawn from unaudited IAS 34 financials of respective periods. Comparative period figures have been regrouped/reclassified to conform with current year grouping/classification.

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

Conference call

Management will host an analyst and investor conference call at 12:00pm UK time (GMT) on Thursday 11 May 2023, including a Q&A session.

To receive an invitation with the dial in numbers to participate in the event, please register beforehand using the following link:

Conference call registration link

Key consolidated financial information

(1) Revenue includes inter-segment eliminations of $152m for year ended 31 March 2023 and $129m for the prior period.

(2) Mobile money revenue post inter-segment eliminations with mobile services was $540m for year ended 31 March 2023, and $424m for the prior period.

(3) Underlying EBITDA includes other income of $13m for year ended 31 March 2023, and $10m for the prior period.

(4) Operating exceptional items of $32m in the year ended 31 March 2022 consists of a $12m provision for expected settlement of a contractual dispute in which one of the Group's subsidiaries is a party and $20m costs of agreeing historical spectrum fees in one of the Group's subsidiaries.

(5) Net finance costs of $723m, has increased $320m from the prior period largely due to higher foreign exchange and derivative losses of $245m mainly comprised of a $67m loss on derivatives and higher foreign exchange losses arising from the revaluation of balance sheet liabilities (a loss of $82m on devaluation of the Nigerian Naira, and other devaluation losses of $96m mainly arising from the Kenyan and Ugandan Shilling and Malawian and Zambian Kwacha).

(6) Non-operating exceptional items in the previous period include a gain of $111m on the sale of telecommunication tower assets in the Group's subsidiaries in Madagascar, Malawi, Rwanda and Tanzania, partially offset by costs of $19m on prepayment of $505m of bonds.

(7) Tax exceptional items in the year ended 31 March 2023 reflect the recognition of a deferred tax credit of $117m in Kenya, $25m in the Democratic Republic of the Congo and $19m in Tanzania, respectively.

(8) 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.

Financial review for year ended 31 March 2023

Revenue in reported currency grew by 11.5%, with constant currency revenue growth of 17.6% partially offset by currency devaluation. The slowdown in revenue growth from the previous year was due to a loss of tower sharing revenues following the sale of towers in Madagascar, Malawi and Tanzania in the second half of the year and NIN-related[1] barring of voice services in Nigeria. Excluding these, the growth would have been approx. 21% in constant currency. Total revenue for mobile services and mobile money services combined grew in Nigeria by 20.3%, East Africa by 17.4% and Francophone Africa by 12.7%, respectively.

Revenue growth was recorded across all reporting segments, with mobile services revenue for the Group up by 16.2%, reflecting Nigeria growing by 20.3%, East Africa by 13.4% and Francophone Africa by 11.9%, respectively. Double digit revenue growth was recorded in both key services: voice revenue grew by 11.8% and data revenue by 23.8%. Mobile money revenue grew by 29.6% in constant currency, driven by 32.6% growth in East Africa and 20.3% growth in Francophone Africa.

Net finance costs increased by $320m, largely due to higher foreign exchange and derivative losses of $245m. This increase mainly comprised a $67m loss on derivatives and higher foreign exchange losses arising from the revaluation of balance sheet liabilities (a loss of $82m on devaluation of the Nigerian naira, and other devaluation losses of $96m mainly arising from the Kenyan and Ugandan shilling, Malawian and Zambian kwacha).

Total tax charges were lower by $185m mainly due to the recognition of a deferred tax credit of $117m in Kenya, $25m in the DRC and $19m in Tanzania. Non-controlling interests was down $37m due to the buy-back of minorities in Nigeria and lower minority allocation charges in Tanzania, partially offset by the increase in Airtel Money minority shareholdings.

EPS before exceptional items was 13.6 cents, a reduction of 15.0% largely because of higher foreign exchange and derivative losses of $245m. Basic EPS at 17.7 cents was up by 5.2% due to higher operating profits and exceptional items gain on deferred tax credit recognition in Kenya, the DRC and Tanzania partially offset by higher foreign exchange and derivative losses. EPS before exceptional items and excluding foreign exchange and derivative losses increased by 13.4%.

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. Leverage at 1.4x in March 2023 was broadly stable despite $500m spectrum investment during the year.

In terms of outlook, long-term opportunities remain attractive for us. Whilst mindful of currency devaluation and repatriation risks, we continue to work actively to mitigate all our material risks and deliver value for all our stakeholders.

GAAP measures

Revenue

Revenue grew by 11.5% to $5,255m in reported currency and by 17.6% in constant currency. The differential in growth rates was due to an average currency devaluation between the periods, mainly in the Central African franc (11.7%), which is largely pegged to the Euro, the Nigerian naira (6.1%), the Kenyan shilling (9.4%), the Ugandan shilling (4.9%) and the Malawian kwacha (22.6%), in turn partially offset by appreciation in the Zambian kwacha (8.8%). The revenue growth of 17.6% in constant currency growth was driven by both customer base growth of 9.0% and ARPU growth of 7.4%.

Mobile services revenue grew by 16.2% in constant currency supported by growth across the regions: Nigeria up by 20.3%, East Africa by 13.4% and Francophone Africa by 11.9%, respectively. Mobile services revenue growth was driven by both voice and data services, voice revenue grew by 11.8% and data revenue by 23.8%. Mobile money revenue grew by 29.6%, driven by 32.6% growth in East Africa and 20.3% in Francophone Africa.

The slowdown in revenue growth from the previous year was due to a loss of tower sharing revenues following the sale of towers in Madagascar, Malawi and Tanzania in second half of the year and NIN-related barring of voice services in Nigeria. Excluding these, the growth would have been around 21% in constant currency.

Operating profit

Operating profit increased by 14.5% in reported currency to $1,757m as a result of strong revenue growth and continued improvements in operating efficiency in East Africa and Francophone Africa.

Net finance costs

Net finance costs were $723m, an increase of $320m largely due to higher foreign exchange losses of $178m and higher derivative losses of $67m as a result of foreign exchange movements. The higher foreign exchange losses arose from the revaluation of balance sheet liabilities (including current and non-current borrowings and lease liabilities) following certain currency devaluations across most of our OpCos, including a loss of $82m on the devaluation of the Nigerian naira, and other devaluation losses of $96m mainly arising from the Kenyan and Ugandan shilling and Malawian and Zambian kwacha. Net finance costs (excl. foreign exchange and derivative losses) were $385m, an increase of $75m, largely driven by higher interest on lease liabilities. Interest costs on market debt were broadly flat.

The Group's effective interest rate increased to 7.7% from 5.6% in the prior period, largely driven by an increase in base rates, increase in local currency OpCo debt and the repayment of HoldCo bond, which had lower rate.

Taxation

Total tax charges were lower by $185m mainly due to the recognition of a deferred tax credit of $117m in Kenya, $25m in the DRC and $19m in Tanzania. Excluding exceptional items, tax was lower by $26m mainly due to the lower profit before tax on account of higher foreign exchange and derivative losses.

Profit after tax

Profit after tax was $750m, down by 0.6%, as growth in operating profit was offset by higher foreign exchange and derivative losses of $245m. Profit after tax excluding foreign exchange and derivative losses was up by 21.2%.

Basic EPS

Basic EPS was 17.7 cents, up by 5.2% from 16.8 cents in prior period. This increase was mainly due to higher operating profits and exceptional items gain on deferred tax credit recognition in Kenya, the DRC and Tanzania partially offset by higher foreign exchange and derivative losses.

Net cash generated from operating activities

Net cash generated from operating activities was $2,208m, up by 9.8% largely driven by higher operating profit which was partially offset by higher tax payments on the increased local profits and withholding tax on dividends by subsidiaries. While in some markets we faced instances of shortage of foreign currency within the local monetary system, we benefited from a broad geographical diversification which enables access to liquidity, with limited impact on the Group requirements.

Alternative performance measures[2]

Underlying EBITDA

Underlying EBITDA was $2,575m, an increase of 11.4% in reported currency and 17.3% in constant currency, driven by strong revenue growth. Underlying EBITDA margins were largely flat at 49.0% despite inflationary cost pressures, a drop of 3 basis points in reported currency and 14 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 $281m on revenue, and $133m on underlying EBITDA, as a result of currency devaluations. Average currency devaluations between the periods were mainly in the Central African franc (11.7%), the Nigerian naira (6.1%), the Kenyan shilling (9.4%), the Ugandan shilling (4.9%) and the Malawian kwacha (22.6%), in turn partially offset by appreciation in the Zambian kwacha (8.8%).

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 $51m on revenues, $31m on underlying 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 $22m on revenues, $12m on EBITDA and $7m on finance costs (excluding derivatives).

Refer to the risk factors section for detailed disclosure on the currency devaluation risk posed to the Group.

Effective tax rate

The effective tax rate was 38.8%, compared to 39.0% in the prior period, due to profit mix changes amongst the OpCos. The effective tax rate is higher than the weighted average statutory corporate tax rate of approx. 33%, largely due to the profit mix between various OpCos and withholding taxes on dividends by subsidiaries.

Exceptional items

No operating exceptional items were incurred in the current year. Operating exceptional items in the previous period consists of a $12m provision for expected settlement of a contractual dispute in which one of the Group's subsidiaries is a party and $20m costs of agreeing historical spectrum fees in one of the Group's subsidiaries.

Non-operating exceptional items in the previous period include a gain of $111m on the sale of telecommunications tower assets in the Group's subsidiaries in Tanzania, Malawi, Madagascar and Rwanda, partially offset by one off costs of $19m (including applicable premium paid) on the early repayment of $505m bonds in March 2022.

The tax exceptional item in current period related to the recognition of a deferred tax credit of $117m in Kenya, $25m in the DRC and $19m in Tanzania.

EPS before exceptional items

EPS before exceptional items was 13.6 cents, a reduction of 15.0% largely as a result of higher foreign exchange and derivative losses of $245m. Excluding foreign exchange and derivative losses, the EPS before exceptional item was 20.6 cents, an increase of 13.4%.

Operating free cash flow

Operating free cash flow was $1,827m, up by 10.4%, as higher underlying EBITDA more than offset increased capital expenditure. Capital expenditure during the period increased $92m due to planned network expansion and investments into the PSB and data center opportunity in Nigeria.

Leverage

Leverage at 1.4x net debt/underlying EBITDA, was broadly stable despite $500m of spectrum investment during the year. Our balance sheet has also been further de-risked by continued localisation of our debt into the OpCos - now almost 60% of our OpCos debt is in local currency - and continued debt reduction in HoldCo. In July 2022, the Group prepaid $450m of external debt at HoldCo. The remaining debt at HoldCo is now $550m, falling due in May 2024. Cash at the holding companies was $398m.

Other significant updates

Nigeria 2100MHZ license renewal

On 9th May 2023, we announced that our Nigerian subsidiary, Airtel Networks Limited ('Airtel Nigeria'), has made a payment of NGN58.7bn ($127.4m), payable to the Nigerian Communications Commission (NCC), to renew its 2x10MHz 2100 MHz spectrum licence. Once renewed, the licence will be valid for a period of 15 years following the expiry of the previous licence (30 April 2022).

This investment to renew the licence reflects our continued confidence in the opportunity inherent across the Nigerian market, supporting the local communities and economies through furthering digital inclusion and connectivity.

IFC loan facility

On 6 December 2022, we announced the signing of a new $194m facility with International Finance Corporation ('IFC'), a sister organisation of the World Bank and a member of the World Bank Group. The new financing facility is in line with Airtel Africa's strategy to increase debt within its operating companies.

The facility has a tenor of eight years, it is largely in local currency, and will be used to support our operations and investments in the Democratic Republic of Congo, Kenya, Madagascar, Niger, Republic of the Congo and Zambia, providing a more diversified access to local funding.

As part of IFC's loan facility, we committed to comply with the applicable requirements of IFC performance standards on social and environmental sustainability and has put in place a dedicated environmental and social action plan. This will further underpin the Group's commitment to transforming lives across the communities in which we operate and provide clarity on how the Group can help address inequality and support economic growth in these communities.

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 our operations and investments in four 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 which we serve.

Nigeria 4G and 5G spectrum acquisition

On 9 January 2023, we announced that Airtel Networks Limited ('Airtel Nigeria') had purchased 100 MHz of spectrum in the 3500 MHz band and 2x5 MHz of 2600 MHz from the Nigerian Communications Commission (NCC) for a gross consideration of $317m, paid in local currency. This additional spectrum will support our investments in network expansion 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 and exceptional customer experience.

Airtel Nigeria is Airtel Africa's largest market, with significant growth potential. The company led the industry in providing affordable 4G services across the country following the deployment of a fully modernised network which facilitated a four-fold increase in data traffic over the last three years. The penetration of data customers in Nigeria remains low, providing significant opportunity for future growth.

The acquisition of 5G spectrum will underpin our growth strategy by enabling the launch of higher speed connectivity to enhance customer service and accelerate digitalisation for consumers, enterprises and the public sector. The key benefits of 5G will include higher speeds, lower latency, significant network capacity as well as an improved user experience. Furthermore, the deployment of 5G will accelerate the availability and efficiency of fixed wireless access products across the country, contributing towards Airtel Nigeria's progress in meeting the National Broadband Plan targets. The acquisition of 2600 MHz spectrum will complement our already strong spectrum position in the market to enhance network capacity and future-proof our growth opportunity.

Other spectrum acquisitions

During the year, we acquired the following additional spectrum across our OpCos:

In October 2022, Airtel Tanzania plc purchased 110 MHz 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.

Airtel Zambia purchased 60 MHz of additional spectrum in October 2022 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. Further, we acquired an additional 40 MHz of spectrum in the 2600 band for $12m in November 2022.

In July 2022, Airtel Kenya Networks Limited purchased 60 MHz of additional spectrum in the 2600 MHz band from the Communications Authority of Kenya, for a gross consideration of $40m, for a period of 15 years.

Airtel DRC purchased 58 MHz of additional spectrum, spread across 900 MHz, 1800 MHz, 2100 MHz and 2600 MHz bands, for a gross consideration of $42m in June 2022. The licence for paired spectrum in the 2100 MHz band comes up for renewal in September 2032. All the other licences continue until July 2036.

Launch of inaugural Sustainability Report

The publication of Airtel Africa's inaugural Sustainability Report on 27 October 2022 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 Scope 1, 2 and 3 baseline emissions and total energy consumption.

Reducing our Scope 1 and 2 emissions in the near-term and commit to net zero by 2050

Airtel Africa is committed to achieving net zero GHG emissions by 2050. Following publication of our Scope 1, 2 and 3 emissions in the Sustainability Report in October 2022, the Group has identified a detailed range of initiatives that will enable the reduction of Scope 1 and 2 emissions intensity by over 60% by 2032 and enable a net zero ambition by 2050. We are undertaking a detailed technical and feasibility study to accurately define the optimal deployment schedule for Scope 1 and 2 decarbonisation initiatives. This work is led by a cross-functional taskforce which reports into the Sustainability Committee and is advised by the Carbon Trust, the leading environmental agency.

We have published details of our baseline calculations, our plans to reduce of Scope 1 and 2 emissions intensity and our management of this important goal on our corporate website www.airtel.africa. 

In addition, we disclosed that Scope 3 emissions account for over 80% of our total GHG emissions. We will establish our Scope 3 decarbonisation strategy by working together with our partners and suppliers in the coming years to reduce emissions across our value chain. This follows a detailed consultation with our tier one partners who account for 78% of our Scope 3 emissions in Q4'23. We also undertook a detailed analysis of the of the results from an ESG self-assessment questionnaire (ESG SAQ) which was sent to our top 100 suppliers and vendors (by procurement spend) in September 2022 to gather information on their ESG standards, processes and policies. With the response rate of 79%, we are confident that we will establish a robust decarbonisation strategy for Scope 3 emissions.

Uganda listing obligation

Under Article 16 of Uganda's National Telecom Operator ('NTO') licence, Airtel Uganda limited is obliged to comply with the sector policy, regulations and guidelines requiring the listing of part of its shares on the Uganda Stock Exchange. The current Uganda Communications (Fees & Fines) (Amendment) Regulations 2020, creates a public listing obligation for all NTO licensees, and specifies that 20% of the shares of the operator must be listed within two years of the date of the effective date of the licence. This imposed a listing requirement by 15 December 2022 on Airtel Uganda. In April 2022, the company applied for an extension of time to list the shares, which was granted by the Regulator thereby extending the deadline to 16 December 2023. Preparatory steps are underway by Airtel Uganda and its advisors to comply with this deadline.

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 March 2023, 6.4 million customers (47%) have subsequently submitted their NINs and 3.5 million customers (26%) have been fully verified and unbarred. Revenue growth for the year ended 31 March 2023 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 approx. $110m of revenues in the period, providing a drag on revenue growth of almost 2.4% at Group level (impact of 6% 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 2022 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 licensed 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.

$450m early bond redemption

On 8 July 2022, the Group announced the settlement of a cash tender offer, redeeming $450m of the $1bn 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.

Dividend payment timetable

The board has recommended a final dividend of 3.27 cents per share for the financial year ended 31 March 2023, payable on 26 July 2023 to shareholders recorded in the register at the close of business on 23 June 2023.

Last day to trade shares cum dividend 21 June 2023

Shares commence trading ex-dividend 22 June 2023

Record date 23 June 2023

Currency election date 10 July 2023

Payment date 26 July 2023

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 www.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, whilst at the same time 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 the Group's business strategy for growth is our sustainability strategy which supports our well‑established corporate purpose of transforming lives and our continued commitment to driving sustainable development and acting as a responsible business. We launched our sustainability strategy in October 2021, setting out our goals and commitments to foster financial inclusion, bridge the digital divide, and serve more customers in some of the least penetrated telecommunication markets in the world. Our sustainability strategy is at the heart of everything we do, shaping how we reduce our environmental impact, drive equitable digital and financial inclusion, create rewarding jobs, and help build the vital education services that are critical for lifting millions of families out of poverty. It is also aligned with UN Sustainable Development Goals (UN SDGs), and we developed our long-term goals and the targets to demonstrate how we plan to achieve these goals. This structure ensures we have absolute clarity around the contribution we can make to the UN SDGs and how we can help to address inequality and support economic growth across Africa. We reported against progress we have made in our inaugural Sustainability Report 2022.

This year, we continued to make strong progress across each of our core strategic pillars: 'Win with technology' (to reflect the importance of IT capabilities and technology in reaching our customers, this year we renamed this pillar from 'Win with network' to 'Win with technology'), 'Win with distribution', 'Win with data', 'Win with mobile money', 'Win with cost' and 'Win with people'.

Win with technology

The Group remains focused on delivering a best-in-class service, expanding 4G networks and preparing for future 5G demand by investing in 5G spectrum in its key markets. Reaching underserved communities is a key priority for us, and we continue to increase rural coverage through new site rollouts, additional spectrum and new technology investments across our markets - despite inflationary challenges during the year.

As part of ensuring we are ready for 5G demand, in addition to purchasing spectrum, we grew our fibre infrastructure and tested our 5G capabilities. After exploring the potential for additional third-party revenue streams, we have invested in data centres to further support digital inclusion across our markets. We continued to strengthen our fibre business, which is now delivering encouraging revenue growth. During the period we have added a further 6k km of fibre, with a total of 70.5k km of fibre now deployed and we continued to improve our fibre provision in metro, intercity, and international networks, including through cost-effective partnerships and co-investment programmes. Additionally, we expanded our international data capacity via submarine cables by 36% to 1,297Gbps through a combination of adding additional routes and capacity.

Overall, the capacity investment has resulted in a 41.2% increase in data capacity - reaching 23,900+ terabytes (TB) per day, with peak hour data utilisation at 47.4% allowing for increased network resilience and an enriched service continuity.

The Group has continued to invest in spectrum across a number of markets which will underpin its growth ambitions. In Nigeria, we acquired 5G spectrum in the 3500 MHz band, and also added to our 2600 MHz spectrum. In our other OpCos, we acquired spectrum in Tanzania, Zambia, Kenya, the DRC and the Seychelles. These allocations will help us to maximise network capacity and coverage.

Capital expenditure related to investment activities during the period was $748m, 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 the 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 Know Your Customer (KYC) app to provide a seamless customer onboarding experience. These have enabled us to add customers, resulting in customer base growth of 9.0 %, and helped us grow voice revenue by 11.8% 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 around 9,000 kiosks and mini shops (taking the total to almost 62,000 kiosks) across our footprint. The Group also added more than 52,700 activating outlets, up by 21%.

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 2.1 percentage points to 36.3% and our data customer base grew by 16.9%, now representing 39.0% of our total customer base.

Data usage per customer reached 4.4 GB per month (from 3.4 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 23.8% in constant currency. Growing 4G penetration and the data usage of customers helped us to grow data ARPU by 9.3%. 4G data usage constituted 76.9% of total data usage on the network in Q4'23 with 4G data usage per customer reaching 7.6 GB per month, up by 29.6% in Q4'23.

 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 (AMBs) and kiosks to ensure availability of services to customers even in the rural areas. The number of kiosks and mini shops increased by 17% and Airtel Money branches by almost 12%. Further, non-exclusive channel of mobile money agents expanded by 44%. Our distribution expansion and enhanced offerings helped drive 20.4% growth in our mobile money customer base, now serving 31.5 million customers, which represents 22.5% of our total customer base.

Along with data, mobile money continues to be one of our fastest growing services, delivering revenue growth of 29.6% in FY'23. It is an increasingly important part of our business, delivering $102bn of Q4'23 annualized transaction value and accounting for 13.1% of total revenue in Q4'23.

Mobile money ARPU increased by 6.8% 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 inflationary pressure across the Group and significant fuel price increase in Nigeria, our 'Win with cost' initiatives have supported the resilience of our profitability.

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 margins 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 undertaking various cost efficiency initiatives to mitigate the headwinds, relating mainly to: (i) working with towercos to invest more in energy efficient equipment (including in lithium batteries and solar equipment), (ii) enhance grid connectivity, (iii) transmission re-routing to optimise lease line capacity and (iv) shift towards digital recharges, especially through Airtel Money to reduce commission pay-outs.

Win with people

Our values and culture continue to be critical to our ability to deliver on our business strategy and this is underpinned by a strong governance culture. Airtel Africa ways of working help us work together to build sustainable people engagement.

We measure employee engagement and sentiment through an engagement survey. Our engagement score increased upwards to 81% (up by 2 percentage points). Overall, our teams were positive and aligned to our values/ ethics, collaboration with cross functional teams and customer focus. We have commenced work to focus on key opportunity areas and remain committed to listening to what is important to our people, including having an open door policy, quarterly townhalls at the Group and OpCo level, and one-on-one engagements with our employees.

Over the last years, our talented and diverse people continue to demonstrate incredible adaptability, dedication, and resilience to deliver business results. We recognise the importance of having diverse teams in light of the diverse communities we serve across our 14 OpCos. Gender diversity and inclusion remains a key focus area and we are continuously striving to make further progress on this important agenda. Gender diversity within our organisation is currently as 26% and we had an increase of different nationalities to 39. We have placed additional focus on accelerating the recruitment and promotion by merit of female talent within the business.

Assessing our current capabilities and how we are equipped to prepare our workforce for the future is at the focus of our learning and development plans. Building leadership capability and strong functional expertise guided by our way of working framework is a key driver of our performance and how we do business. Examples of our capability development programmes include Airtel Africa mobility programme and 'Women in tech' programme which will help us accelerate leadership and functional expertise.

At Airtel Africa, we have a have a high performance culture that is based on simple and consistent metrics that drive business priorities. This is aligned to our reward philosophy where individual employees implement business strategy through key results areas and where reward is based on a 'pay for performance' philosophy.

We continue to act in ways to improve people's lives: from our employees to those in the communities we serve.

Financial review for the year ended 31 March 2023

Nigeria - Mobile services

(1) Voice revenue includes inter-segment revenue of $1m in the year ended 31 March 2023 and $1m in the prior period. Excluding inter-segment revenue, voice revenue was $1,052m in year ended 31 March 2023 and $984m in the prior period.

(2) Other revenue includes inter-segment revenue of $2m in the year ended 31 March 2023 and $2m in the prior period. Excluding inter-segment revenue, other revenue was $189m in year ended 31 March 2023 and $157m in the prior period.

In reported currency, Nigeria revenue grew by 13.3% to $2,128m and 20.3% in constant currency. Strong growth in both voice and data contributed to revenue growth, driven mainly by overall customer base growth of 9.0% and data customer base growth of 17.3%. ARPU grew by 7.0%, largely driven by higher data and other revenue. Q4'23 revenue growth at 18.7% was lower compared to 23.1% in Q3'23 mainly due to a shortage of cash in the country as a result of the demonetisation initiative, which impacted our cash recharges (50% of total recharges are cash based).

Voice revenue increased by 13.4% in constant currency, largely driven by customer base growth of 9.0% supported by voice ARPU growth of 0.9%. The barring of outgoing calls for customers who had not submitted their NINs had an adverse impact on voice revenue. A total of 13.6 million customers were originally barred, out of which 6.4 million customers (47%) have subsequently submitted their NINs and 3.5 million customers (26%) have been fully verified and unbarred. We estimate that this resulted in the loss of approx. $110m of revenues in year ended 31 March 2023, providing a drag on revenue growth of 6% in Nigeria.

Data revenue increased by 27.8% in constant currency, driven by both data customer base growth of 17.3% and data ARPU growth of 9.9%. Over the last year, we have enhanced our 4G network with ample data network capacity to provide high speed data to our customers with almost 100% of our sites now on 4G and data capacity increase of 27.5%. This has contributed to 4G data customer growth of 27.6%. Data usage per customer increased by 24.8% facilitating continued data ARPU growth. Data usage per customer reached 5 GB per customer per month from 4 GB per customer per month in the previous period. In Q4'23, 4G data usage per customer increased to 9.5 GB per month (up by 46.5%) from 6.5 GB per customer per month in prior period. 4G data usage now contributes to 80.4% of total data usage on our network.

Other revenues grew by 27.5% in constant currency, with the main contribution coming from the growth in value added services revenue, led by airtime credit services.

Nigeria mobile services EBITDA was $1,099m, up by 11.8% in constant currency. The EBITDA margin declined to 51.6% from 55.5% due to an increase in operating costs arising from inflationary pressures, particularly related to the fuel costs. The EBITDA margin in Q4'23 stabilised at 52.3% from 52.1% in Q3'23.

Operating free cash flow was $806m, up by 10.0%, due to the expansion of EBITDA partially offset by higher capex spend in current period.

East Africa - Mobile services 1

(1) The East Africa business region includes Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia.

(2) Voice revenue includes inter-segment revenue of $1m in the year ended 31 March 2023 and $1m in the prior period. Excluding inter-segment revenue, voice revenue was $835m in year ended 31 March 2023 and $782m in the prior period.

(3) Other revenue includes inter-segment revenue of $11m in the year ended 31 March 2023 and $9m in the prior period. Excluding inter-segment revenue, other revenue was $124m in year ended 31 March 2023 and $146m in the prior period.

In East Africa, mobile services revenue grew by 8.1% in reported currency, and 13.4% in constant currency. The differential in growth rates was due to average currency devaluation of the Kenyan shilling, Ugandan shilling and Malawian kwacha, partially offset by an appreciation in the Zambian kwacha. Current year was impacted by the loss of tower sharing revenues (c.$21m) following the sales of towers in Tanzania and Malawi which is reflected in the 7.8% decline in other revenues over the period. Revenue growth, excluding the site sharing revenue impact of tower sales, was 15.2% for the period.

Voice revenue grew by 12.2% in constant currency, driven by both customer base growth of 9.7% and voice ARPU growth of 4.1%. The customer base growth of 9.7% was supported by the expansion of our network, enhanced coverage, and distribution infrastructure. Site count increased by 9.2% and activating outlets increased by 22.3%. Voice usage per customer increased by 10.0% to 384 minutes per customer per month resulted in voice ARPU growth of 4.1%. Total minutes on the network increased by 18.5% to 279.0 billion minutes.

Data revenue grew by 22.8% in constant currency, largely driven by both data customer base growth of 19.9% and data ARPU growth of 9.2%. The expansion of our 4G network and ample data network capacity helped us to grow both the data customer base and data usage. 90.4% of our total sites in East Africa are on 4G as compared with 85.8% in prior period. 47.3% of our total data customer base is on 4G which contributes to 70.9% of total data usage (in Q4'23). Data usage per customer increased by 28.3%, resulting in data ARPU growth of 9.2%, and data usage per customer reached 4.2 GB per customer per month from 3.3 GB per customer per month. In Q4'23, 4G data usage per customer increased to 6.5 GB per month from 5.5 GB per customer per month (up by 18.4% from the prior period).

Mobile services underlying EBITDA increased to $753m, up 17.5% in constant currency. Underlying EBITDA margin improved to 49.9%, an improvement of 174 basis points in constant currency, as a result of revenue growth and improved operating efficiencies.

Operating free cash flow was $497m, up by 29.2% in constant currency, largely due to expansion of underlying EBITDA.

Francophone Africa - Mobile services 1

(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 includes inter-segment revenue of $3m in the year ended 31 March 2023 and $2m in the prior period. Excluding inter-segment revenue, voice revenue was $604m in year ended 31 March 2023 and $592m in the prior period.

(3) Other revenue includes inter-segment revenue of $3m in the year ended 31 March 2023 and $1m in the prior period. Excluding inter-segment revenue, other revenue was $114m in year ended 31 March 2023 and $104m in the prior period.

In Francophone Africa, mobile services revenue grew by 5.5% in reported currency and 11.9% in constant currency. The differential in growth rates was driven primarily by the 11.7% devaluation of the Central African franc.

Voice revenue increased by 8.8% in constant currency, mainly driven by customer base growth of 7.8%. With continued investments in network expansion and distribution infrastructure, total sites increased by 9.2% and activating outlets increased by 12% (exclusive outlets increased by 20%). Voice usage per customer grew by 10.1% to 150 minutes per customer per month thereby resulting in an 19.5% growth in total voice minutes on our network.

Data revenue increased by 16.2% in constant currency, driven by both customer base growth of 9.4% and data ARPU growth of 7.8%. We continue to expand our 4G network, with 69.0% of our sites in Francophone Africa on 4G (up from 65.3% in prior period) and data capacity on our network increased by 60.5%. Total data usage increased by 57.8% primarily driven by an increase in data usage per customer by 46.3% to 3.5 GB per customer per month compared with 2.4 GB in the prior period. As of Q4'23, 54% of the data customer base is on 4G, contributing to 72.4% of total data usage. Q4'23 4G data usage per customer increased to 5.6 GB per month (up by 18.4%) compared with 4.7 GB per customer per month.

Mobile services EBITDA at $476m, increased by 18.2% in constant currency. EBITDA margin improved to 43.7%, an improvement of 236 basis points in constant currency. However, the current year had a one-time opex benefit of approx. $19m in the first half, resulting in a normalized EBITDA margin for FY'23 of 42.0% - an improvement of 68 basis points in constant currency.

Operating free cash flow was $325m, increased by 12.7%, driven by the expansion in EBITDA and partially offset by higher capex.

Mobile services

(1) Mobile service revenue after inter-segment eliminations was $4,715m in year ended 31 March 2023 and $4,290m in the prior year.

Overall mobile services revenue increased to $4,721m, up by 9.9% in reported currency, while growth in constant currency was 16.2%. Revenue growth was recorded across all regions and key services: Nigeria up by 20.3%, East Africa by 13.4% and Francophone Africa by 11.9%.

Voice revenue grew by 11.8% in constant currency, driven by both customer base growth of 9.0% and voice ARPU growth of 2.1%. 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'). We continue to invest in our network to increase coverage, while also expanding our distribution infrastructure to drive further customer base growth.

Our continued expansion of network and distribution infrastructure helped drive customer additions. Voice usage per customer increased by 5.9%, resulting in Voice ARPU growth of 2.1%. Voice usage per customer increased to 272 minutes per customer per month from 257 minutes per customer per month and total minutes on the network increased by 16.0%.

Data revenue grew by 23.8% in constant currency, driven by strong growth in customer base of 16.9% and data ARPU growth of 9.3%. Revenue growth was recorded across all regions: Nigeria grew by 27.8%, East Africa by 22.8% and Francophone Africa by 16.2%. Data customer base growth of 16.9% resulted from the further expansion of our 4G network with 90.3% of total sites on 4G, up from 87.6% (almost 100% of sites in 6 OpCos are now on 4G). Total customers reached 54.6 million with 4G customers of 26.5 million, contributing to 48.5% of the total data customer base. Data usage per customer increased 29.1% driving data ARPU growth of 9.3%. Data usage per customer reached 4.4 GB per customer per month up from 3.4 GB per customer per month in the prior period. Q4'23 data usage per customer increased to 4.6 GB per month (up by 26.6%) and 4G data usage per customer at 7.6 GB per month from 5.9 GB per customer per month (up by 29.6%).

Mobile services underlying EBITDA was $2,329m, and grew by 14.9% in constant currency with an underlying EBITDA margin of 49.3%, declining 57 basis points in constant currency. The reduction in underlying EBITDA margin was due to an increase in operating costs in Nigeria reflecting energy price inflation.

Operating free cash flow was $1,629m, up by 15.8%, due to the expansion of underlying EBITDA partially offset by higher capex.

Mobile money1

(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 31 March 2023, it consolidates mobile money operations from eleven OpCos, currently excluding operations in Nigeria, Tanzania and Republic of the Congo. It is our management's intention to continue work to transfer all these remaining mobile money operations into AMC BV, subject to local regulatory requirements.

 (2) Mobile money service revenue post inter-segment eliminations with mobile services was $540m in the year ended 31 March 2023 and $424m in the prior year.

Mobile money revenue of $692m increased 25.1% in reported currency and 29.6% in constant currency. The constant currency growth was partially offset by average currency devaluations, mainly in the Central African franc (11.7%), the Ugandan shilling (4.9%) and the Malawian kwacha (22.6%), in turn partially offset by the appreciation in the Zambian kwacha (8.8%). Revenue growth of 29.6% was driven by both East Africa (up 32.6%) and Francophone Africa (up 20.3%). In Nigeria, mobile money services (SmartCash) was launched in June 2022. Our 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. In addition, our continued investment into the agent network continues to gain traction, driving encouraging progress on customer acquisition over the last quarter.

Constant currency revenue growth of 29.6% was largely led by customer base growth of 20.4%. The continued investment in distribution infrastructure of exclusive channels of Airtel Money branches and kiosks, as well as the expansion of mobile money agents, helped us in driving strong customer growth.

The mobile money customer base reached 31.5 million, an increase of 20.4% and mobile money customer base penetration reached 22.5%, an increase of 2.1 percentage points. The expansion of distribution enhanced transaction value per customer by 16.4%, resulting in mobile money ARPU growth of 6.8%. Mobile money ARPU growth was largely driven by an increase in transaction values and higher contributions from cash transactions, merchant payments and mobile service recharges through Airtel Money.

Our mobile money transaction value grew by 41.3% and Q4'23 annualised transaction value crossed $102bn in constant currency. Q4'23 transaction value per customer reached $260 per month, an increase of 26.1% in constant currency. Mobile money revenue now accounts for 13.2% of total Group revenue for the year.

Mobile money EBITDA increased to $344m, up by 26.4% in constant currency. The drop in mobile money EBITDA margin was largely due to additional spend in Nigeria PSB related to the launch of SmartCash.

Regional Performance (mobile services and mobile money services combined)

Nigeria

East Africa

Francophone Africa

Consolidated performance

Risk factors

The Group's business and industry in which it operates together with all other information contained in this document, including, in particular, the risk factors are summarised below. Additional risks and uncertainties relating to the Group that are currently unknown to the Group, or those the Group currently deem immaterial may individually or cumulatively also have a material adverse impact on the Group's business, results of operations and financial position.

Summary of principal risks

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, increase in global commodity prices and inflationary pressures could lead to a significant increase in our operating cost structure while also negatively impacting the disposable income of consumers. These adverse economic conditions therefore not only put pressure on our profitability but also on customer usage for our services.

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 diverse and dynamic legal, tax and regulatory environment. The group makes every effort to comply with its legal and regulatory obligations in all its operating jurisdictions in line with the group's risk appetite. However, we are continually faced with uncertain and constantly evolving legal and regulatory requirements in some of the markets where we operate.

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 not only constrains our ability to fully benefit at Group level from strong cash generation by those OpCos but also impacts our ability to make timely foreign currency payments to our international suppliers.

Given the severity of this risk, specifically in some of our OpCos, Group management continuously monitors the potential impact of this risk of exchange rate fluctuations based on the following methodology:

a) Comparing the average devaluation of each currency in the markets in which the Group operates against US dollar on 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% per annum, management selects the highest of these exchange rates.

c) Management then uses this exchange rate to monitor the potential impact of using such rate on the Group's income statement so that the Group can actively monitor and assess the impact on the Group's financials due to exchange rate fluctuations.

Based on the above-mentioned methodology, the weighted average yearly potential devaluation of the basket of currencies in which the Group is exposed is estimated to be in the range of 7% to 8%.

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 $51m on revenues, $31m 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 $22m on revenues, $12m on EBITDA and $7m on finance costs (excluding derivatives).

This does not represent any guidance and is being used solely to illustrate the potential impact of further currency devaluation on the Group for the purpose of exchange rate risk management. The accounting under IFRS is based on 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.

Airtel Africa plc

Results for the year ended 31 March 2023

Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

(All amounts are in US$ millions; unless stated otherwise)