Airtel Africa Regulatory News (AAF)

Airtel Africa plc

Results for half year ended 30 September 2021

28 October 2021

Strong growth across the Group, doubling profit after tax, increased cash generation, lower leverage and dividend upgrade

Highlights

· H1'22 reported revenue grew by 25.2% to $2,272m with double digit growth across all regions. Q2 reported revenue growth of 20.3%.

· Revenue in constant currency grew by 27.6%.

· Strong double-digit constant currency revenue growth across all regions: Nigeria up 32.4%, East Africa up 25.8% and Francophone Africa up 22.1%; and across all key services, Voice up 19.7%, Data up 36.9% and Mobile Money up 42.0%.

· Underlying EBITDA grew by 35.2% to $1,098m in reported currency and underlying EBITDA margin improved to 48.3%, an increase of 360 basis points led by both revenue growth and improved operational efficiencies.

· Operating profit up 55.1% to $732m in reported currency.

· Profit after tax more than doubled to $335m, largely due to higher profit before tax which more than offset the associated increase in tax charges.

· Basic EPS was 7.6 cents, an increase of 155.9%, as a result of higher profit. EPS before exceptional items increased to 7.5 cents from 3.0 cents in previous period.

· Operating free cash flow was $853m, up 43.1%, and over the last 18 months we have up streamed more than $570m across our operating entities.

· Leverage ratio reduced to 1.5x from 2.2x.

· Customer base grew by 5.4% to 122.7 million, with increased penetration across mobile data (customer base up 10.9%) and mobile money services (customer base up 19.0%). Customer base growth was affected by the new NIN/SIM registration regulations in Nigeria; excluding Nigeria the customer base grew by 13.7%.

· The board has declared an interim dividend of 2 cents per share (1.5 cents in H1'21) in line with an upgraded dividend policy. The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a new base of 5 cents per share for FY 2022, with a continued focus to further strengthen the balance sheet.  

 (1) Alternative performance measures (APM) are described on page 45.

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

"Our first half financial performance has been strong. The first half of last year, and especially Q1, was impacted by the start of Covid, but even after adjusting for these effects, our revenue growth rates for the half year for the Group and all our service segments are ahead of our FY'21 revenue growth trends, and in reported terms these are all in strong double digits.

The risks from Covid still remain, with sub-Saharan Africa continuing to experience a third wave of the pandemic. Governments continue to implement balanced measures of lockdowns and restrictions accordingly. But vaccination levels remain low, and we continue to monitor the situation for potential impacts on economies and consumers.

Operationally we have continued our network modernisation and expansion, aligned with an extension of our distribution capabilities, which have together contributed towards continued strong growth in ARPUs across voice, data and mobile money. We have seen an improvement in our customer growth trends for the Group as we approach stability of net monthly movements in Nigeria.

Alongside our results we have today launched our sustainability strategy. Airtel Africa has always been a business with a sustainable premise at the heart of our purpose to transform lives across Africa through our promotion of both digital and financial inclusion. Our sustainability strategy builds upon this, extending and more comprehensively articulating our sustainability goals and credentials. I am excited by the new initiatives we have launched and I look forward to reporting back on our developments in this area with our first sustainability report next year.

As incoming Group CEO, I have inherited the responsibility to build upon a business with solid foundations and as I look ahead, I continue to see huge potential across voice, data and mobile money from low penetration levels across Africa. The continent continues to be a growth story for us despite the pandemic. We will continue to invest in mobile and digital technologies to drive digital and financial inclusion sustainably in Africa. I am pleased with the progress we have made in the last couple of years on delivering value to everyone touched by our network."

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Airtel Africa plc ("Airtel Africa" or "Group") results for half year ended 30 September 2021 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 has been 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 2021 except to the extent required/ prescribed by IAS 34. This report should be read in conjunction with audited consolidated financial statements and related notes for the year ended 31 March 2021. Comparative annual information has been drawn based on Airtel Africa plc's Audited Consolidated Financial Statements for the year ended 31 March 2021; with quarterly and half yearly information drawn from the unaudited IAS 34 financials of the respective periods. 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 2020 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

Conference call

The management team will host an analyst and investor presentation and conference call at 12:00pm UK time (BST), on Thursday 28 October 2021, 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:

https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=1696896&linkSecurityString=2eb584280

Key financial information

(1) Revenue includes intra-segment eliminations of $59.5m for the half year ended 30 September 2021 and $50.3m for the prior period.

(2) Mobile money revenue post intra-segment eliminations with mobile services was $199m for the half year ended 30 September 2021, and $131m for the prior period.

(3) Underlying EBITDA includes other income of $6.4m for the half year ended 30 September 2021, and $8.4m for the prior period.

(4) Operating profit includes $4.7m CSR (Corporate Social Responsibility) expense in the prior period.

(5) Non-operating exceptional items in the half year ended 30 September 2021 include a gain of $4.0m on sale of telecommunication tower assets in one of the Group's subsidiaries in Rwanda.

(6) Profit after tax increase was largely due to higher operating profit more than offsetting the associated increase in tax charges.

Financial review for half year ended 30 September 2021

We have recorded another strong set of results that demonstrate the effective execution of our strategy, with strong performance across our regional segments and key services. Reported revenue grew by 25.2%, with constant currency growth of 27.6%. Regionally, revenue in Nigeria grew by 32.4%, in East Africa by 25.8% and in Francophone Africa by 22.1% in constant currency. We were able to deliver strong double-digit growth across all key services; our voice revenue grew by 19.7%, data revenue by 36.9%, mobile money revenue by 42.0% and other revenue by 24.1%. As a result, mobile services revenue grew by 25.5% in constant currency (22.9% in reported currency) and mobile money services revenue grew by 42.0% (42.7% in reported currency). The year-on-year constant currency revenue growth rate for Q2'22 of 22.7% was lower than the 33.1% of Q1'22 primarily due to a weakened performance in the first quarter of the prior year during the peak period of Covid-19 related restrictions across the region.

Net finance costs were lower compared with the previous period due to higher derivatives and forex loss of $11m in the prior period. Tax charges increased by $96m due to higher operating profit, a one-time tax settlement charge of $9m and higher withholding tax on dividends by subsidiaries, with the prior period also benefitting from $10m deferred tax credit recognition.

Basic EPS and EPS before exceptional items significantly improved to 7.6 cents and 7.5 cents respectively, with higher profits more than offsetting the associated increased tax.

Leverage improved to 1.5x at 30 September 2021 from 2.2x in the previous period, largely driven by increased cash generation, expansion in underlying EBITDA and $375m of receipts from the first closings of the mobile money minority investments, and despite investing $247m of intangible capex renewing licences in two of our largest markets, Nigeria and Uganda, and acquiring additional spectrum. Our balance sheet has also been further de-risked by continued localisation of our debt into the OpCos.

GAAP measures

Revenue

Revenue in reported currency grew by 25.2% to $2,272m. The constant currency growth rate of 27.6% was partially offset by currency devaluations, mainly in Nigerian naira (6.1%) and Zambian kwacha (10.8%), in turn partially offset by appreciation in the Central African franc (4.9%) and Ugandan shilling (4.7%). Revenue growth for the half year partially benefitted from a weakened performance in the first quarter of the prior year during the peak period of Covid-19 related restrictions across the region. Even after adjusting for this, revenue growth rates for the half year were ahead of FY'21 growth trends for the Group, and across all reported service segments.

Operating profit

Operating profit increased by 55.1% to $732m in reported currency, due to a combination of strong revenue growth and improvements in operating efficiency.

Net finance costs

Net finance costs were lower by $22m as a result of stable net interest costs, lower foreign exchange losses of $11m (mainly driven by appreciation of the Zambian kwacha) and a one-time $11.9m gain in other finance charges as a result of the reversal of an interest provision in one of our operating entities.

The Group effective interest rate increased from 4.8% to 5.5% largely driven by the repayment of the Eurobond in May 2021 which carried a lower than average coupon, and higher local currency debt at the OpCo level.

Taxation

Total tax charges were $232m, an increase of $96m, largely due to higher operating profit, a one-time tax charge and higher withholding tax on dividends by subsidiaries. The prior period also benefited from the recognition of a deferred tax credit of $10m in Tanzania.

Profit after tax 

Profit after tax was $335m, an increase of 131.6% on the prior period. This increase was largely due to higher operating profits along with lower net finance costs, which more than offset the increase in tax charges due to increased profits.

Basic EPS

Basic EPS improved to 7.6 cents, up from 3.0 cents in the prior period. This increase was mainly due to higher operating profits which more than offset the increased tax charges.

Net cash generated from operating activities

Net cash generated from operating activities increased by $178m, an increase of 23.9% to $922m (from $744m in the previous period), mainly driven by higher profit before tax of $286m partially offset by a higher tax pay out on the increased profits.

Alternative performance measures[1]

Revenue

Revenue grew by 27.6% in constant currency, driven by ARPU growth of 18.5% and customer base growth of 5.4% to 122.7 million. The slowdown in customer base growth was due to the introduction of new SIM registration regulations in Nigeria; excluding Nigeria, our customer base grew by 13.7%. ARPU growth of 18.5% was driven by all service segments; with voice contributing 6.0%, data 8.2%, mobile money 3.2%, and the balance coming from other revenue.

Revenue growth was recorded across all our regions. Revenue in Nigeria grew by 32.4%, in East Africa by 25.8% and in Francophone Africa by 22.1%.

Voice revenue grew by 19.7%, data by 36.9% and mobile money by 42.0% in constant currency.

Underlying EBITDA

Underlying EBITDA was $1,098m, an increase of 35.2% in reported currency and 38.5% in constant currency. The growth in underlying EBITDA was driven by revenue growth and improved operating efficiency. The underlying EBITDA margin expanded to 48.3%, an improvement of 360 basis points in reported currency and 381 basis points in constant currency.

Foreign exchange had an adverse impact of $31m on revenue and $17m on underlying EBITDA, as a result of the devaluation of the Nigerian naira and Malawian kwacha, partially offset by appreciation in the Central African franc and Ugandan shilling.

On a 12-month basis, 1% of currency devaluation across all currencies in our OpCos will have a negative impact of $39m on revenues, $24m on underlying EBITDA and $23m on finance costs. Our largest exposure is to the Nigerian Naira and 1% devaluation will have a negative impact of $16m on revenues, $9m on underlying EBITDA and $7m on finance costs.

Tax

The effective tax rate was 39.2% compared to 46.9% in the prior period, largely a result of 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 the withholding tax on dividends by subsidiaries.

Exceptional items

An exceptional gain of $4m was recorded in the half year ended 30 September 2021 on the sale of telecommunication tower assets in one of the Group's subsidiaries in Rwanda. The exceptional gain of $3m in the prior period related to a deferred tax credit recognition in Tanzania amounting to $10m which was partially offset by one-off cost of $6.7m in Francophone Africa.

EPS before exceptional items

EPS before exceptional items was 7.5 cents, up from 3.0 cent in the prior period. This increase was mainly due to higher operating profits which more than offset the increased tax charges from higher profits.

Operating free cash flow

Operating free cash flow was $853m, up 43.1% on the prior period, due to higher underlying EBITDA more than offsetting increased capital expenditure. Capital expenditure in the prior period was lower due to logistical challenges being faced during the pandemic.

Leverage

Leverage (net debt to underlying EBITDA) improved to 1.5x at 30 September 2021, from 2.2x at 30 September 2020, largely driven by increased cash generation, expansion in underlying EBITDA and $375m of receipts from the first closings of the mobile money minority investments, and despite investing $247m of intangible capex to renew licences in two of our largest markets, Nigeria and Uganda, and acquiring additional spectrum across a few of our markets. Our balance sheet has continued to be de-risked through both a reduction of net debt (now $3.1bn, down from $3.5bn in the prior period) and the increased localisation of our debt into the OpCos, such that our OpCo debt of $2,443m is now higher than our HoldCo debt of $1,540m.

Other significant updates

Dividend

In October 2021, the Board approved an upgrade to the progressive dividend policy as a result of continued strong business performance and significant progress made in reducing the leverage ratio. The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a new base of 5 cents per share for FY 2022, with a continued focus to further strengthen the balance sheet. The Board has declared an interim dividend of 2 cents per share (1.5 cents in H1'21) in line with this upgraded dividend policy.

Launch of sustainability strategy

At our Full Year Results in May 2021, we highlighted that we would publish the measurable medium to long-term sustainability goals we set ourselves. Over the last six months, we have identified the programmes needed, along with key milestones towards these goals. We have also conducted a consultation progress with our stakeholders to gather feedback on the strategy which has been reflected as appropriate.

Today, Airtel Africa has launched an ambitious sustainability strategy that underpins our well-established corporate purpose of 'Transforming Lives.' The strategy demonstrates our commitment to developing the infrastructure and services that will drive both digital and financial inclusion for people across Africa and provides a framework to contribute to six of the United Nations' Sustainable Development Goals ('SDGs') where we believe we can have the biggest impact. These are SDG 4: Delivering quality education;SDG 5: Gender equality; SDG 8: Decent work and economic growth; SDG 9: Industry innovation and infrastructure; SDG 10: Reduced inequalities; and SDG 12: Responsible consumption and production.

The launch of our sustainability strategy builds upon the Group's sustainability framework, announced with the FY'21 results, with its four key pillars of 'Our business', 'Our people', 'Our communities' and 'Our environment', and the strong foundations of the work we are already doing at a Group level and across all our local operations. The new sustainability strategy covers every aspect of our business activities, and has environmental, social and governance criteria at its core.

The sustainability strategy includes nine goals and commitments, with corresponding programmes that address the business' material topics (identified through an extensive consultation at the beginning of the year) and enable the Group to continue delivering sustainable growth and uphold the best governance standards:

· Data security goal: Establish industry-leading data security for our customers; through investments in technology and expertise, updated processes and consumer awareness - with focus areas around confidentiality, integrity and availability.

· Service quality goal: Provide underserved communities with access to reliable networks and connectivity; through the rollout of new infrastructure and technology, improved fibre connectivity and capacity - with focus areas on service accessibility, delivery and reliability.

· Supply chain goal: Ensure all our suppliers are aligned with our sustainability agenda; through programmes to increase supplier disclosure and audit ESG performance - with focus areas on enhanced supplier due diligence and ongoing ESG compliance.

· Commitments to our people: with our ambition to provide rewarding employment opportunities and to achieve genuine diversity and inclusion at all levels across the business through four key commitments:

o Delivering equality in our workforce; through recruitment and programmes to provide training and advancement for everyone regardless of gender, nationality or disability;

o Providing best practice training and development; through upskilling and reskilling initiatives to ensure they can succeed in their future careers. And through supporting female entrepreneurs through training and increasing women's participation in the technology and engineering sectors;

o Providing the highest standards of health and safety for our employees and contractors; through the introduction of a best practice social and health and safety management system, improved policies and full compliance with all legislation and regulation; and,

o Maintaining the highest levels of employee engagement; through the introduction of additional channels that provide every one of our people with a voice.

· Digital inclusion goal: significantly improve digital Inclusion across Africa; by driving the penetration of mobile, smartphones and home broadband in rural areas through the provision of retail and support services.

· Financial inclusion goal: significantly increase financial inclusion in Africa, with particular support for women; through the development of affordable financial products to meet the needs of the un- and under-banked, a reliable service and financial confidence and literacy.

· Access to education goal:  helping transform the lives of over one million children through improving access to education - with programmes around connectivity, the provision of zero-rated education content under a five-year UNICEF partnership, connecting 1,400 schools to the internet by 2027, and the adoption and support of schools in all our markets.

· Greenhouse gas emissions reduction goal: Our ambition is to achieve net zero greenhouse gas ('GHG') emissions ahead of the 2050 deadline set out in the Paris Agreement. To do this we must fully identify, measure and reduce our GHG emissions which can only be achieved in partnership with our peers and the wider industry. We will establish and launch a sector leading and credible decarbonisation pathway in 2022, ahead of the publication of our first Sustainability Report.

· Environmental stewardship: Eliminate hazardous waste from our operations, significantly reduce our non-hazardous waste and minimise our water consumption; with programmes to replace damaging materials, expand recycling schemes and build employees' awareness around the protection of our natural resources.

Our full sustainability strategy has been detailed in a separate announcement released today.

Covid update

The Covid-19 pandemic contributed to a rapid acceleration of already existing macro trends across the countries where we operate, with people, businesses and governments seeking access to more and better connectivity and improved financial inclusion. These challenging times have shown that the telecoms industry is a key and essential service for these economies, allowing customers to work remotely, reduce their travel, keep connected and have access to affordable entertainment and financial services.

Covid-19 presented significant challenges to the business, particularly during the initial phase of the pandemic in Q1 last year, when mobile money and mobile services growth both slowed. However, the actions taken by the Board at that time enabled the continued execution of our strategy, including meeting increased customer demand for data, mobile money and mobile services.

Through multiple lockdowns and during times of national crisis our people have kept our distribution channels available and our networks fully operational. Our business partners have similarly continued to deliver their services despite numerous logistical challenges, and governments and regulators have continued to support the industry and helped facilitate our continued support to the economies of the countries and the communities we serve.

Several times through the pandemic, the governments in the countries where we operate have acted swiftly to implement and enforce restrictions on the movement of people to prevent contagion. These swift actions, along with low population density and relatively youthful population demographics, less frequent travel, and local experience in dealing with contagious diseases, have resulted in generally lower infection rates in sub-Saharan Africa relative to some other regions. Around the world the vaccination effort is well under way, with a significant easing of social distancing rules and travel restrictions. Though Africa lags most developed economies in attaining full vaccination cover.

Despite the resilience demonstrated by our business during the last eighteen months, we are constantly monitoring how the situation is evolving to identify key risks and to put in place adequate mitigation plans to minimise any potential disruptions.

The Group will continue to focus on ensuring the safety of our employees, our outsourced partners and our customers; ensuring that our network and distribution channels remain fully operational and available; ensuring that our customers continue to have access to financial services and ensuring that at Group level we are in the right financial position to meet our financial obligations at all times.

NIN / SIM registration rules in Nigeria

As previously highlighted, following a directive issued by the Nigerian Communications Commission (NCC) on 7 December 2020 to all Nigerian telecom operators, Airtel Nigeria has been working with the government to ensure that all our subscribers provide their valid National Identification Numbers (NINs) to update SIM registration records.

Initially, new customer acquisitions were discontinued until significant progress had been made on linking the active customer base with verified NINs. Natural churn in the customer base led to a net loss of 1.5 million active mobile customers in Nigeria in the half year(0.5 million in Q2 and 1.0 million in Q1) following on from 2.5 million net customer loss in the final quarter of the year to 31 March 2021, however, the financial impact has been minimal, with continued revenue growth, largely due to the significantly lower ARPU of the churned base and increased usage by the active base. In April, the NCC announced that it would allow new customer enrolment to recommence from certified outlets (a branch or kiosk where customers can sign up to Airtel). Airtel Nigeria has so far received approvals for over 7,000 outlets and new customer registrations have recommenced in those outlets accordingly. The NCC also issued a further directive in April with the effect that no individual customers can register more than four SIM cards under one NIN on any network.

The original regulatory directive set an initial deadline for customers to register their NIN with their SIM of 30 December 2020. This was subsequently moved several times with the latest deadline set for 31 October 2021.

We have made significant progress on capturing existing NINs and building the database in collaboration with National Identity Management Commission (NIMC). To date, out of Airtel Nigeria's 40.4 million active customers, we have collated NIN information for 26.7 million active mobile customers. To complete the registration process, we must also verify the NIN information we have received from our subscribers with the NIMC.

For the still significant proportion of the population, and our customers, that do not have a NIN we have opened enrolment centres in collaboration with the NIMC and we are in the process of rolling out thousands of devices to further NIN enrolment. We continue to work closely with the government to ensure full compliance.

Offer to buyout Airtel Nigeria minorities

On 4 October 2021, Airtel Africa announced that its subsidiary Airtel Networks Limited ('Airtel Nigeria') had initiated a process under which it seeks to buy back the 8.26% minority shareholdings at an offer price of NGN 55.81 per share. Assuming all minority shareholders decide to tender their shares, the total consideration is estimated to be NGN 61.24 bn (c.$148.1m using an exchange rate of 413.38 NGN/US dollar). This represents an open offer to all shareholders.

Strategic investments in our mobile money business by Qatar Investment Authority

In July 2021, Airtel Africa signed agreements with Qatar Holding LLC, an affiliate of the Qatar Investment Authority ('QIA'), who will invest $200m in Airtel Mobile Commerce BV ('AMC BV'), a subsidiary of Airtel Africa plc. AMC BV is the holding company for several of Airtel Africa's mobile money operations; and ultimately is intended to own and operate the mobile money businesses across all of Airtel Africa's 14 operating countries.

The Transaction values Airtel Africa's mobile money business at $2.65 billion on a cash and debt free basis. QIA will hold a minority stake in AMC BV upon completion of the transaction (alongside other minority investors), with Airtel Africa continuing to hold the majority stake. The transaction is subject to closing conditions.

This agreement followed earlier similar announcements of investments of $200m by TPG's The Rise Fund and $100m by Mastercard, made on 18 March 2021 and 1 April 2021 respectively, and brings the total announced investment of minorities into AMC BV to $500m. The transaction is a continuation of the Group's pursuit of strategic asset monetisation and investment opportunities, and it is the aim of Airtel Africa to explore the potential listing of the mobile money business within four years.

The proceeds from the transaction will be used to reduce Group debt and invest in network and sales infrastructure in the respective operating countries.

First closing of mobile money minority investments

On 2 August 2021 and 20 August 2021 Airtel Africa announced first closings relating to the Airtel Money minority investment transactions with TPG's The Rise Fund and Mastercard, and subsequently with Qatar Holding LLC respectively.

With the conditions for first closing having been met, The Rise Fund, Mastercard and QIA have invested $150m, $75m and $150m respectively in a secondary purchase of shares in AMC BV from a subsidiary of Airtel Africa; with a further $50m, $25m and $50m respectively to be invested at second close upon further transfers of mobile money operations into AMC BV.

Under the AMC BV shareholders' agreements, both The Rise Fund and QIA have each appointed a director to the board of AMC BV and all minority investors have certain customary information and minority protection rights.

Airtel Africa has so far received a total of $375m from these three investors. The balancing proceeds from the three investors, amounting to $125m, will be received upon completion of the second close, taking cumulative proceeds from minority stake sales in Airtel Money to a total of $500m. Finance cost for the six months ended 30 September 2021 includes an interest expense of $0.8m on a put option liability related to the first closings of mobile money minority investments. Refer to page 27 in note 4 (e) and 4 (f) for further details on the transaction and its accounting.

Sale of towers in Tanzania

In June 2021, Airtel Africa signed a deal for the sale of the tower portfolio belonging to Airtel Tanzania to a joint venture company owned by a wholly owned subsidiary of SBA Communications Corporation, a leading global independent owner and operator of wireless communications infrastructure, as majority owner, and by Paradigm Infrastructure Limited, a UK company focused on developing, owning and operating shared passive wireless infrastructure in selected growth markets.

The tower portfolio in Airtel Tanzania comprises approximately 1,400 towers which form part of the Group's wireless telecommunications infrastructure network. Under the terms of the transaction, the Group's subsidiary, Airtel Tanzania plc, will continue to develop, maintain and operate its equipment on the towers under a separate lease arrangement with the purchaser.

The consideration for the transaction is approximately $175m of which approximately $157.5m is payable on the first closing date (expected to take place in the second half of the Group's current financial year), with the balance payable in instalments upon the completion of the transfer of any remaining towers to the purchaser. Around $60m from the proceeds will be used to invest in network and sales infrastructure in Tanzania and for distribution to the Government of Tanzania, as per the settlement described in the Airtel Africa IPO Prospectus document published in June 2019. The balance of the proceeds will be used to reduce debt at Group level.

Airtel Money partnership in East Africa with Flutterwave

On 5 October Airtel Money announced a new partnership with leading African payments company, Flutterwave, to expand Airtel Money's services to businesses across East Africa. The partnership enables businesses integrating Flutterwave in Uganda, Tanzania, Zambia, Malawi, Kenya and Rwanda, to receive payments from Airtel Money customers, as well as make bulk payments into Airtel Money wallets thanks to Airtel Money's proprietary fintech platforms.

The new services will go live subject to regulatory approvals in the respective countries and will reach Airtel Money's 20.0 million customers based in East Africa.

New shareholding requirements in Kenya

On 9 April 2021, the Minister for ICT in Kenya published an amendment to the National Information Communications and Technology (ICT) Policy Guidelines, 2020 (ICT Policy). The ICT Policy amendment will affect Airtel Africa's Kenya business as follows:

· Airtel Networks Kenya Limited, which currently holds an indefinite exemption from the Minister for ICT, dated 20 March 2013, has three years with effect from 9 April 2021 to comply with the requirement to have a 30% local shareholding.

· Airtel Money Kenya Limited, which holds a Content Service Provider Licence from the Communications Authority of Kenya, with effect from November 2020, has three years from the date of the licence to comply with the requirement to have a 30% local shareholding.

Under the amended ICT policy, a licensee may apply to the ICT Minister for an extension of time to comply with the requirement, or to obtain an exemption.

Appointment of new CEO, and other Board appointments and changes

On 29 April 2021, Airtel Africa announced that Olusegun "Segun" Ogunsanya, managing director and chief executive officer Airtel Nigeria was to succeed Raghunath "Raghu" Mandava, as managing director and chief executive officer following Raghu Mandava's informing the Board of his intention to retire. Segun Ogunsanya joined the Board of Airtel Africa plc with effect from 1 October 2021.

Segun Ogunsanya joined Airtel Africa in 2012 as managing director and chief executive officer Airtel Nigeria and has been responsible for the overall management of our operations in Nigeria, our largest market in Africa. Segun has more than 25 years' business management experience in banking, consumer goods and telecoms. Before joining Airtel in 2012, Segun held leadership roles at Coca-Cola in Ghana, Nigeria, and Kenya (as managing director and chief executive officer). He has also been the managing director of Nigerian Bottling Company Ltd (Coca-Cola Hellenic owned) and Group head of retail banking operations at Ecobank Transnational Inc, covering 28 countries in Africa. He is an electronics engineer and also a chartered accountant.

Raghu Mandava has retired as managing director and chief executive officer, as a director of Airtel Africa plc and as a member of the Market Disclosure Committee as of 30 September 2021. Following his cessation of employment at Airtel Africa, Mr. Mandava remains available to advise the Chairman, the Airtel Africa Board and the newly appointed managing director and chief executive officer for a 9-month period.

Jaideep Paul, chief financial officer, was appointed as an executive director and joined the Board of Airtel Africa plc with effect from 1 June 2021.

On 12 October 2021, Airtel Africa announced the appointment of Ms Tsega Gebreyes to the Board as an independent non-executive director, with immediate effect.

New administrative office in Dubai

Airtel Africa plc has opened a new office in Dubai, adding to its existing administrative office locations in Nairobi, London, Amsterdam and Delhi.

The executive committee of Airtel Africa plc will operate out of the new office, which provides for significantly improved connectivity and enhanced cooperation with our 14 operating markets across Africa and with our other administrative offices.

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 46%, 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 their lives at the same time as growing our revenues, profitably, across each of our key services of voice, data and mobile money.

The Group continued to invest in its network and distribution infrastructure to enhance both mobile and 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.

Our 'Win with' strategy describes the six strategic pillars through which we actively work to achieve this. Cutting across these pillars are our commitment to transforming lives, driving sustainable development and acting as a responsible business. We continued to make good progress across each of our core strategic pillars: 'Win with network', 'Win with distribution' (renamed from the previous 'Win with customers'), 'Win with data', 'Win with mobile money', 'Win with cost' and 'Win with people'.

Win with network

The Group's 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. As at the end of Q2'22, 81.8% of our total sites are now on 4G, compared to 69.7% in the previous period. We aim to build 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 34.2% year on year, reaching 13,700+ TB per day, with additional capacity being added at only very marginal cost. We continued to modernise our network across all our countries of operation, with 90% of our sites now on single RAN.

The Group added more than 15,500km of additional fibre, with total fibre now more than 59,500km.

The Group also added additional spectrum in a few of our markets. We have added 10 MHz in the 2600 band and 5 MHz in the 1800 band in Uganda, 5 MHz in the 900 band in Chad and 10 MHz in the 800 band in Zambia. These allocations will help us to maximise network capacity and coverage.

Capital expenditure related to investment activities during H1'22 was $245m, excluding spectrum acquisitions and licence renewals.

Win with distribution (formerly named 'Win with customers')

Sub-Saharan Africa is characterised by low penetrated markets, with unique subscriber penetration at 46%. 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.

The Group continued to build a unique mix of multi-brand and exclusive franchise channels, combined with a simplified and enhanced self-service app to provide a seamless customer onboarding experience. These have enabled us to add customers, resulting in customer base growth of 5.4% year on year, excluding Nigeria the customer base grew by 13.7%. This has also helped us to grow voice revenue by 19.7% 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 15,100 kiosks and mini-shops (taking the total to over 43,500) across our footprint.

The Group also added more than 18,800 activating entities (excluding Nigeria), up by 10.2%.

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 ownership and increasing data usage at scale, largely via smartphone offerings through OEM (Original Equipment Manufacturer) device partnerships, and through expanding 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 0.4 percentage points to 33.6% and our data customer base grew by 10.9%, now representing 35.8% of our total customer base.

Data usage per customer reached 3.3 GB per customer (from 2.5 GB per customer) led by an increase in smartphone penetration and expansion of our home broadband and enterprise customers. This helped us to grow data revenue by 36.9% in constant currency. Growing penetration and the data usage of particularly 3G and 4G customers helped us to grow data ARPU by 19.2%. 4G data usage constituted 64.6% of total data usage on the network in Q2'22 with 4G data usage per customer reaching 5.4 GB per month in Q2'22, up by 7.3% on Q2'21.

 Win with mobile money

The Group has continued to drive financial inclusion across its footprint. 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.

The Group continued to expand our exclusive distribution network of kiosks, mini-shops and Airtel Money branches, so that customers can access their cash with relative ease. We have increased the number of mobile money agents by 28.7%, kiosks/mini-shops by 53.1% and Airtel money branches by 90%. Throughout the period, the expansion of our mobile money product portfolio, both through partnerships with leading financial institutions and through expansion of our merchant ecosystem, have further strengthened our mobile money propositions.

Our distribution expansion and enhanced offerings helped drive 19.0% growth in our mobile money customer base, now serving over 23.9 million customers and representing 19.5% of our total customer base (29.1% excluding Nigeria).

Mobile money continues to be one of our fastest growing service segments, delivering revenue growth of 42% in H1'22. This is an increasingly important part of our business, delivering $61bn of annualised (Q2'22) transaction value and accounting for 11.6% of total revenue in Q2'22.

Mobile money ARPU increased by 16.8% in H1'22, driven by increased transaction values and higher contributions from merchant payments, cash transactions, P2P transfers and mobile services recharges through Airtel Money.

Win with cost

Our operating cost model is focused on enhancing cost efficiency through changes in the operating design and digitisation initiatives. We embrace robust cost discipline and continuously seek to improve our processes to reduce operating costs, delivering one of the highest underlying 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.

As we continued to expand our business, various cost efficiency initiatives were undertaken during the period, relating mainly to:(i) reduced operating costs at sites due to single RAN; (ii) optimisation of incremental network/site requirement through efficient spectrum utilisation (iii) remodelling our managed services through diversification of supply; and (iv) bandwidth capacity optimisation and implementation of dynamic and contextual interactive voice recognition ('IVR') for more efficient customer interactions. In addition to these initiatives, we have reduced our travel and facility expenses during the period, largely attributable to continued Covid-related restrictions on movements and working from home initiatives.

These have contributed to an expansion of our underlying EBITDA margin by 360 basis points in reported currency and 381 basis points in constant currency. Our underlying EBITDA margin was 48.3% for H1'22, and our operating expenditure as a percentage of revenue improved by 3.8 percentage points.

Win with people

Our values of being Alive, Inclusive and Respectful, underpin our vision of being a responsible employer. We work in highly collaborative teams across the 18 countries in which we have operations or offices, and with 34 different nationalities represented.

Our talented and diverse people have continued to demonstrate incredible dedication and resilience. Their commitment to our business and customers has been a key driver to our long-term growth and as we continue to transform lives in the markets we serve.

Diversity and inclusion remain a key focus area for our business, as we expand financial and digital inclusion to the communities we serve.

Investing in opportunities for learning and development of our people across all our operations has been accelerated through the launch of several digital platforms. Building and maintaining strong functional expertise and capability is a key driver of our performance.

We are committed to employee engagement and upward feedback through regular market visits, town-halls and open mic sessions, which enable us to understand issues that really matter to our colleagues, our workplaces and business operations.

Our reward system is based on simple and consistent metrics that drive a high-performance culture and our people performance metrics are aligned to our business priorities.

We continue to make strides to be an employer of choice with a diverse and inclusive work environment.

Financial review for the quarter ended 30 September 2021

Nigeria

(1) Voice revenue includes inter-segment revenue of $0.5m and other revenue includes inter-segment revenue of $1m in half year ended 30 September 2021. Excluding inter-segment revenue, voice revenue was $471m and other revenue was $72m in half year ended 30 September 2021.

Reported revenue grew by 24.7%, with constant currency revenue growth of 32.4% offset by Nigerian naira devaluation of 6.1% (YoY). ARPU grew by 37.5%, to which voice contributed 14.8%, data contributed 18.1% and the balance came from other revenue.

Voice revenue grew by 21.0%. This was driven by an increase in voice usage per customer with ARPU growth of 25.6%. The year-on-year decline in the customer base of 3.6 million was due to the implementation of new "Know-Your-Customer" (KYC) requirements in Nigeria which had included a temporary halt to new customer activations. New activations have been permitted in regulatory approved outlets since the end of April 2021. The number of outlets receiving regulatory approval has grown in the second quarter from 2,100 to 7,000, and accordingly the business is now approaching the level where monthly net customer movements are stabilising.

Data revenue grew by 45.0% in constant currency, driven by the growth in data usage per customer to 3.9 GB per month (from 2.7 GB per month in the prior period). This in turn drove data APRU growth of 41.4%. Expansion of our 4G network, with 88.8% of total sites now on 4G, and an increase in smartphone penetration further supported the growth in data usage. Data is one of the key growth drivers in Nigeria. Data revenue accounted for 39.1% of total revenue in Nigeria in H1'22, up 3.4 percentage points from 35.7% in the prior period. 4G data usage accounted for 70.1% of total data usage in Q2'22, up from 61.6% in Q2'21 and the 4G data customer base now contribute 42.4% of the total data customer base in Nigeria.

Other revenue grew by 63.0%, with the main contribution coming from the growth in value added services revenue, led by airtime credit services.

Underlying EBITDA grew by 27.3% to $492m in reported currency, with a constant currency growth of 35.2%. The underlying EBITDA margin improved to 54.9%, an increase of 113 basis points in reported currency and 114 basis points in constant currency. This margin expansion was due to improvements in operational efficiency.

Operating free cash flow in Nigeria was $388m, up 45.3%, due to the expansion of underlying EBITDA.

East Africa1

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

(2) Revenue includes intra-segment eliminations of $39m for half year ended 30 September 2021 and $33m for half year ended 30 September 2020.

(3) Voice revenue includes inter-segment revenue of $0.3m and other revenue includes inter-segment revenue of $3m in half year ended 30 September 2021. Excluding inter-segment revenue, voice revenue was $376m and other revenue was $75m in half year ended 30 September 2021.

(4) Mobile money revenue post intra-segment eliminations with mobile services was $151m for half year ended 30 September 2021 and $99m for the prior period.

(5) Operating profit includes CSR (Corporate social responsibility) expense of $1.6m in the prior period.

Revenue in East Africa grew by 24.7% to $822m in reported currency, with constant currency growth of 25.8%. The constant currency revenue growth of 25.8% was driven by growth across all service segments; voice revenue grew by 21.8%, data revenue by 25.7% and mobile money revenue by 44.5%. Reported currency revenue growth reflects the strong constant currency revenue growth partially offset by currency devaluation, mainly in Zambia (10.8%) and Malawi (8.8%), while the Ugandan shilling appreciated (4.7%).

Voice revenue grew by 21.8%, driven by both customer base growth of 10.9% and voice ARPU growth of 8.3%. Customer base growth was driven largely by the expansion of both network coverage and distribution. Voice ARPU growth was driven largely by the increase in voice usage per customer of 5.3%, to 344 minutes per customer per month. Total network minutes grew by 18.4% year on year.

Data revenue grew by 25.7%, driven by both data customer base growth of 22.2% and data ARPU growth of 2.2%. The customer base growth was supported by the expansion of our 4G network infrastructure, with 83.5% of sites now on 4G in East Africa, compared with 68.6% during the prior period. 4G data usage now contributes 58.6% to total data usage, up from 45.7% in the previous period, and the 4G data customer base now constitutes 35.9% of the total data customer base. Data ARPU growth was driven by an increase in usage per customer of 20.2%, reaching 3.1 GB per customer per month (from 2.6 GB in the prior period).

Mobile money revenue grew by 44.5%, largely driven by growth in Zambia, Uganda, Malawi and Tanzania. Revenue growth was driven by both customer base growth of 19.2% and ARPU growth of 20.0%, due largely to expansion of our distribution network. Mobile money ARPU growth was driven by the 24.0% growth in the transaction value per customer to $178 per customer per month (from $145 in the prior period). Mobile money revenue accounted for 23.1% of total East Africa revenue, up 3.1 percentage points from 20.0% in the prior period. The slowdown in mobile money revenue growth in Q2 was due to the implementation of additional levies by the Government of Tanzania on mobile money withdrawal and P2P transactions from 15 July 2021, which were subsequently revised downwards in early September 2021.

The underlying EBITDA margin in East Africa was 48.3%, an improvement of 390 basis points in reported currency and 367 basis points in constant currency, led by both accelerated growth in revenue and efficiency improvements in operating expenses.

Operating free cash flow was $313m, up 49.5% due to the growth in underlying EBITDA.

Francophone Africa1

(1) The Francophone Africa business region includes Chad, Democratic Republic of the Congo, Gabon, Madagascar, Niger, Republic of the Congo, and The Seychelles.

(2) Revenue includes intra-segment eliminations of $20m for half year ended 30 September 2021 and $17m for half year ended 30 September 2020.

(3) Voice revenue includes inter-segment revenue of $1m in half year ended 30 September 2021. Excluding inter-segment revenue, voice revenue was $293m in half year ended 30 September 2021.

(4) Mobile money revenue post intra-segment eliminations with mobile services was $48m in half year ended 30 September 2021 and $32m in half year ended 30 September 2020.

(5) Operating profit includes CSR (Corporate Social Responsibility) expense of $1.1m in half year ended 30 September 2020.

Our performance in Francophone Africa has further improved, with the highest reported currency revenue growth of the regions at 25.7%. Revenue grew by 22.1% in constant currency, largely driven by growth in Democratic Republic of the Congo (DRC), Chad, Niger and Gabon. The reported currency revenue growth is higher than in constant currency due to appreciation of the Central African franc (4.9%).

Voice revenue grew by 13.3% in constant currency, mainly driven by customer base growth of 20.7%. The customer base growth was driven by expansion of both our network coverage and distribution. Voice usage per customer grew by 5.8% and total voice minutes on the network grew by 27.1%. The voice revenue growth of 13.3% was slightly offset by a marginal decline in voice ARPU of 5.6%, mainly due to reductions in international revenue and local incoming call revenues due to changes in interconnect rates in Gabon and Congo B.

Data revenue grew by 36.2% in constant currency, driven by both customer growth of 32.6% and data ARPU growth of 2.0%. The data customer base growth was driven largely by both expansion of our 4G network (with 61.5% of total sites now on 4G), and the expanding adoption of our "more for more" bundle offerings, up 6.4% and contributing 91.2% of data revenue in Q2'22. The 4G data customer base now constitutes 42.0% of the total Francophone Africa data customer base, and 4G data usage contributed 62.9% of total data usage in Q2'22, up from 52% in the prior period.

Mobile money revenue grew by 36.3%, driven by both customer base growth of 17.9% and mobile money ARPU growth of 6.4%. The customer base growth of 17.9% was supported by the expansion of our distribution network through more agents and Airtel Money branches. The increase in mobile money transaction value per customer of 11.4% resulted in ARPU growth of 6.4%.

The underlying EBITDA margin was 40.5% during the period, an improvement of 761 basis points in reported currency and 767 basis points in constant currency, driven by both revenue growth and increased efficiency in operating expenses.

Operating free cash flow was $175m, up 52.5%, due to the improvement in underlying EBITDA.

Mobile services

 (1) Mobile service revenue after intersegment eliminations was $2,073m in half year ended 30 September 2021 and $1,687m in half year ended 30 September 2020.

(2) Operating profit includes CSR (Corporate Social Responsibility) expense of $3m in prior period.

Revenue for mobile services grew by 22.9% in reported currency with constant currency growth of 25.5%, driven by both voice and data revenue growth.

Voice revenue grew by 19.7% in constant currency, driven by both customer base growth of 5.4% and voice ARPU growth of 11.1%. The customer base growth was driven by expansion of network and distribution infrastructure. The slowdown in customer base growth was due to the new SIM registration regulations in Nigeria; excluding Nigeria the customer base grew by 13.7%. New activations in Nigeria have been permitted in regulatory approved outlets since the end of April 2021. Voice minutes per customer has increased by 11.5% to 253 minutes per month, resulting in voice ARPU growth of 11.1%. Total network minutes increased by 20.1%.

Data revenue grew by 36.9% in constant currency, driven by both data customer base growth of 10.9% and data ARPU growth of 19.2%. The data customer base growth was driven by expansion of our 4G network infrastructure, with 81.8% of sites now operating on 4G, compared with 69.7% in the prior period, and increased smartphone penetration, up 0.4 percentage point. Data customer base penetration (percentage of the total customer base) reached 35.8%, an increase of 1.8 percentage points. The 4G data customer base now constitutes 39.7% of the total data customer base, compared with 31.1% in the previous period. Data ARPU grew by 19.2% to $2.9. This was largely driven by the increase in data usage per customer of 30.5% to 3.3 GB per customer per month (from 2.5 GB per customer per month). The increase in 4G data customer penetration also helped to drive data ARPU growth.

Data revenue contribution reached 32.3% of total Group revenue in the half year, up from 30.2% in the prior period.

Mobile money

 (1) Mobile money service revenue post inter-segment eliminations with mobile services was $199m in half year ended 30 September 2021 and $131m in half year ended 30 September 2020.

Mobile money revenue grew by 42.7% to $259m in reported currency with constant currency growth of 42.0%. The slowdown in mobile money revenue growth in Q2 was due to the implementation of additional levies by the Government of Tanzania on mobile money withdrawal and P2P transactions from 15 July 2021, which were subsequently revised downwards in early September 2021. The constant currency revenue growth of 42.0% was driven by both customer base growth of 19.0% and ARPU growth of 16.8%, led by growth in the transaction value per customer of 20.9%. The customer base growth was largely driven by expansion of our distribution network, as we continued to invest in exclusive kiosks and mobile money branches. The expansion of our mobile money product portfolio, through partnerships with leading financial institutions, and the expansion of our merchant ecosystem further strengthened our mobile money propositions.

Underlying EBITDA grew by 42.9% to $126m in reported currency with constant currency growth of 41.3%. The underlying EBITDA margin was 48.7%, broadly in line with the prior year.

The Q2'22 annualised transaction value reached $61bn in constant currency, with mobile money revenue contributing 11.6% of total revenue in Q2'22.

The mobile money customer base stood at 23.9 million at 30 September 2021, up 19.0% from the prior period, with 19.5% of our total customer base now Airtel Money customers, an increase of 2.2 percentage points. Mobile money ARPU grew by 16.8%, driven by the increase in transaction values and higher contributions from merchant payments, cash transactions, P2P transfers and mobile service recharges through Airtel Money.

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 underlying performance of the business.

Interim Condensed Consolidated Financial Statements

Consolidated Statement of Comprehensive Income 

(All amounts are in US dollar millions unless otherwise stated)

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

(1) For the six months ended 30 September 2021 and 30 September 2020, it mainly includes movement in trade receivables impairment and other provisions. (2) Includes investment in deposits with original maturity of more than 3 months and deposits placed against certain borrowings. These are included within other bank balances in consolidated statement of financial position. (3) Includes balance held under mobile money trust of $505m (September 2020: $376m) on behalf of mobile money customers which are not available for use by the Group.

Notes to Interim Condensed Consolidated Financial Statements

(All amounts are in US dollar millions unless otherwise stated)

1. Corporate information

Airtel Africa plc ('the company') is a public company limited by shares incorporated and domiciled in United Kingdom (UK) 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. In July 2019, the company listed on London Stock Exchange ('LSE') and Nigerian Stock Exchange ('NSE'). 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 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 2021. 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 2021 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 2021 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 2021. 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 2021 were authorised by the Board of Directors on 27 October 2021.

3. Basis of measurement

The interim financial statements have been prepared under the historical cost convention except for few financial instruments held at fair value and are presented in United States dollars ($), with all values stated in millions and rounded to the nearest million except when otherwise indicated. Further, amounts which are less than half a million appear as '0'.

3.1 Going concern

These interim financial statements have been prepared on a going concern basis. In making this going concern assessment, the group has considered cash flow projections to November 2022 under both base- and reasonable worst- case scenarios taking into considerations its principal risks and uncertainties including a reduction in revenue and EBITDA, the potential impact of COVID-19 and a significant devaluation of the various currencies including Nigerian naira and possible inability of repatriation of funds from its subsidiaries. As part of this evaluation, the Group has considered available ways to mitigate these risks and uncertainties and has also considered that the Group has committed undrawn facilities of $854m as of the date of authorisation of these interim financial statements (out of which $747m are due to expire beyond the going concern assessment period), which will fulfil the Group's cash flow requirement under both base- and reasonable worst- case scenarios.

The outstanding 2023 non-convertible bonds of $505m contains a covenant that could restrict certain major subsidiaries from incurring indebtedness unless the majority shareholder meets a designated consolidated indebtedness to underlying EBITDA ratio. This covenant is in force only under certain agreed circumstances which currently do not exist and thus the covenant is currently under suspension and the covenant test is not applicable.

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 interim financial statements.

4. Significant transactions/new developments

a) The directors recommended and shareholders approved a final dividend of 2.5 cents per ordinary share for the year ended 31 March 2021, which was paid on 23 July 2021 to the holders of ordinary shares on the register of members at the close of business on 25 June 2021.

b) On 2 June 2021, the Group signed an agreement to sell approximately 1,400 telecommunications tower assets and related liabilities in Tanzania at a consideration of $175m to a joint venture company, owned by a wholly-owned subsidiary of SBA Communications Corporation (a leading global independent owner and operator of wireless communications infrastructure) as majority owner and by Paradigm Infrastructure Limited under a sale and leaseback arrangement. The completion of such sale is considered highly probable and is only subject to conditions that are usual and customary. Consequently, the Group has classified such assets and liabilities as held for sale as of 30 September 2021. For disclosures on Group's assets held for sale, refer to Note 17.

c) As of September 2021, the completion of sale of a subsidiary holding 735 towers in Malawi (agreement entered in March 2021), continues to be subject to a non-customary condition which is beyond the Group's control. As of 30 September 2021, the Group cannot ascertain the likelihood of this condition as being highly probable and consequently has not classified the assets of the Malawian tower company as held for sale.

d) On 22 February 2021, the Group had signed an agreement to sell 162 towers in Rwanda to IHS Rwanda Ltd under a sale and lease back arrangement. Such sale has been completed during the six months ended 30 September 2021 and consideration of $10m has been received. The resultant upfront gain has been recorded as 'non-operating income' and is presented as exceptional item (refer to Note 7(1)). The Group has recognised Right of Use assets and Lease Liabilities for the portion of towers leased back by the Group.

e) On 2 August 2021, the Group completed the first close relating to the Airtel Money minority investment transactions with both TPG's The Rise Fund and Mastercard, previously announced by the Group on 18 March 2021 and 1 April 2021 respectively. With the conditions for first close having now been met, The Rise Fund and Mastercard have invested USD 150m and USD 75m respectively in a secondary purchase of shares of one of the Group's subsidiaries Airtel Mobile Commerce B.V. ('AMC BV') from another subsidiary of the Group, with a further USD 50m and USD 25m respectively to be invested at second close upon further transfers of mobile money operations into AMC BV. The Group has recorded non-controlling interest pertaining to these investments including the shares which are held under Escrow, a part of which may be transferred to the investors at subsequent close of the transaction. The Group has concluded that it does not control shares placed under Escrow and hence has included such shares as part of non-controlling interest.

Under the terms of the transaction, and in very limited circumstances (including in the event that there is no Initial Public Offering of shares in AMC BV within four years of first close), TPG and Mastercard would have the option, so as to provide liquidity to them, to sell its shares in AMC BV to Airtel Africa or its affiliates at fair market value (determined by a mutually agreed merchant bank using an agreed internationally accepted valuation methodology). The Group has determined that successfully executing the IPO is not within complete control of the Group and has thus recorded a financial liability at the present value of the expected buy-back amount (USD 431m recognised within other non-current financial liabilities) by debiting 'transactions with NCI reserve'. Subsequent re-measurement of this liability has been recognized as a finance cost. Finance cost for the six months ended 30 September 2021 includes an amount of USD 1m on account of subsequent measurement of this financial liability (September 2020: Nil).

f) As part of Airtel Money minority investment transactions, on 30 July 2021, the Group entered into an agreement under which Qatar Holdings LLC agreed to invest USD 200m in AMC BV, by way of purchase of a portion of AMC BV's shareholding from the Group. The transaction is structured to close in two stages i.e. upon receipt of USD 150m at first close and USD 50m at second close based on closing conditions defined in the sale agreements. On 19 August 2021, the Group completed the first close of this transaction and received USD 150m in a secondary sale of shares of one of Group's subsidiaries AMC BV from another subsidiary of the Group. The Group has thus recorded non-controlling interest pertaining to such investment including the shares which are held under Escrow, a part of which may be transferred to the investors at sub-sequent close of the transaction. The Group has concluded that it does not control shares placed under Es-crow and hence has included such shares as part of non-controlling interest.

g) The proposed interim dividend of 2 cents per share was approved by the Board on 27 October 2021 and has not been included as a liability as at September 30, 2021.

5. Segmental Information

The Group's segment information is provided on the basis of geographical clusters 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 are as follows:

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

Each segment derives revenue from mobile services, mobile money and other services. 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 amortisation before exceptional items as adjusted for charitable donations. This is the measure reported to the CODM for purposes of resource allocation and assessment of segment performance.

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.

Inter-segment revenues eliminated upon consolidation of segments/Group accounting policy alignments are reflected in the 'eliminations' column.

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 licences) 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 2021 is as follows: