AIRTEL SEES SMOOTH AFRICAN SAFARI AHEAD

Astrategic shift in its African operations is bearing results for Bharti Airtel. The company has reported profits in the continent for the past three quarters.

Airtel reported a record Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin of 32.1 per cent in the September quarter. The net profit before exceptional items of Airtel Africa stood at ~306.7 crore. The company had reported a net loss of ~609.9 crore in the same period a year ago.

Airtel started registering profits in the March quarter, marking a turnaround in its African business. Over the past three years, it has sold 10,540 cell towers in 10 countries and the businesses in Burkina Faso and Sierra Leone for $3.25 billion and has now decided on being one of the top two players in all the African countries it operates in.

Airtel is the biggest or second biggest cellular service provider in 13 African countries. It is the third or fourth biggest operator in Ghana, Rwanda and Tanzania.

With Ghana approving the merger of Bharti Ghana with Millicom Ghana, the new entity will become the secondlargest mobile network operator in the country.

Airtel’s African operations are concentrated in five markets, Nigeria, the Democratic Republic of Congo, Uganda, Tanzania and Zambia, which together account for over 60 per cent of the company’s revenues from the continent. According to a report by CLSA, only five of these markets are profitable: Niger, the Democratic Republic of Congo, Zambia, Uganda and the Seychelles.

“The business has entered a positive cash flow era. The investment rationale seven years ago is as valid today,” said Raghunath Mandava, managing director and chief executive officer, Airtel Africa.

The company’s operating free cash has improved from a deficit of $65 million in 2014-15 to a surplus of over $370 million in the first half of 2017-18.

While data growth and adoption of mobile money are central to the growth of Airtel’s operations in Africa, its strategy in the continent of strengthening distribution, modernising networks and bundling products is beginning to pay off.

“Our distribution model, along with the opening of over 8,000 exclusive outlets, has resulted in addition of close to two million subscribers, at the same time lowering churn to 4.9 per cent,” Mandava said. Airtel Money has grown at a rate of 30 per cent, year-on-year, with annual transactions reaching almost $20 billion.

According to a UBS report, 55-60 per cent of Airtel’s margin improvement in Africa was driven by its top line. Analysts expect Airtel’s average revenue per user (ARPU) will grow from $3.2 reported at the end of September.

The company has an African customer base of 81.92 million, of which 21.71 million are data users. Airtel has 20,305 cell towers in Africa. It offers 3G services in 15 countries and 4G services in three countries.

“We plan to expand our 4G networks to eight countries by the end of this year. Data volumes on our network have increased over 80 per cent, year- onyear,” Mandava said. Airtel has invested nearly $9.2 billion and has 650 MHz of airwaves in Africa.

“The business has entered a positive cash flow era. The investment rationale seven years ago is as valid today” RAGHUNATH MANDAVA, Managing director and chief executive officer, Airtel Africa