Airtel Africa’s strong growth in key metrics as Q3 revenue rises 21.7% to $3.49bn
Operating profit up 43.1% to $1.15bn PAT almost doubled to $514m Cash flow grew 42.2% to $1.27bn Net cash up 23.1% to $1.49bn.
AIRTEL AFRICA RE CORDED STRONG GROWTHS ACROSS ALL KEY METRICS IN ITS 9MONTHS FI NANCIAL PERFORMANCE JUST RELEASED. The strong performance spurred a 21.7 percent year on year growth in its revenue to $3.49 billion in Q3 2022, resulting especially from the strong and effective strategy execution across all regional segments and key services areas.
Strong 33.9 percent and 39.6 percent year on year increases to $1.13 billion and $406 million in its data and mobile money revenues were key for this impressive performance.
In its published nine-month financials for the period ended 31 December 2021 filed to the Nigerian Exchange on Friday, Airtel Africa revealed that the continued execution of its network distribution and expansion plans drove strong growth in average revenue per user across voice, data and the mobile arms with Nigeria payment service bank (PSB) approval in principle ready to unlock further mobile money opportunity for the company.
Segun Ogunsanya, Airtel Africa’s chief executive officer, on the trading update, said “A strong third quarter has contributed to a pleasing nine-month financial performance across all key metrics. Operationally, we have continued to execute on our network and distribution expansion plans, driving continued strong growth in ARPUs across voice, data and mobile money. We have also seen further improvement in our customer growth trends for the Group with Nigeria returning to strong customer growth after a period affected by the implementation of new ‘know your customer requirements’, posting 1.9 million net additions in the third quarter, taking total Group customer additions to 3.1 million.
“I am particularly pleased with developments in Nigeria, where in November we received approval in principle for both a payment service bank (mobile money) licence and a super-agent licence. We are now working closely with the Central Bank to meet all its conditions to receive the final operating licences and commence operations. This will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services.
“We continued to strengthen our balance sheet, with our leverage ratio now 1.4 times underlying EBITDA, thanks to both the continued increases in operating cash flow delivery and to the $550m of cash that has now been received from minority investments into our mobile money business.
“We will continue to invest in expanding and evolving our platform to further deepen both financial and digital inclusion across Africa. I continue to see huge growth potential across voice, data and mobile money and our strategy is delivering against this opportunity. Our sustained investments in both network and distribution expansion will help to ensure that both the communities and economies across our footprint will continue to benefit from increased and affordable connectivity and financial inclusion. We are committed to continuing to improve the delivery of our services to our customers, with sustainability at the heart of our continued purpose to transform lives across Africa,” he concluded.
According to the filing by the wireless carrier, revenue in Nigeria grew by 29 percent, in East Africa by 24.4 percent and in Francophone Africa by 19 percent in constant currency. Airtel maintained strong double-digit growth across all key services as its voice revenue grew by 16.1 percent, and both data revenue and mobile money revenue grew by 37.2 percent and other revenue by 22 percent. As a result, mobile services revenue grew by 23.3 percent in constant currency (20.7 percent in reported currency) and mobile money services revenue grew by 37.2 percent (39.6 percent in reported currency).
The company’s net finance costs were lower compared with the previous period driven by lower forex losses. The increase in tax charges of $129 million was due to higher operating profit and withholding tax on dividends by subsidiaries; with the prior period also benefiting from $14 million deferred tax credit recognition. Also, basic EPS improved to 11.7 cents and EPS before exceptional items improved to 11.5 cents, with higher profits more than offsetting the associated increased tax.
Furthermore, net debt was $3.05 billion, a reduction of $468 million mainly due to increased cash generation and proceeds from Airtel Money investments. Leverage improved to 1.4x from 2.1x in the previous period, largely driven by increased cash generation, expansion in underlying EBITDA and $550 million of receipts from mobile money minority investors. Airtel’s balance sheet has also been further de-risked by the continued localisation of its debt into the OpCos.
During the third quarter of 2022 PAT almost doubled to $514 million, an increase of 97.3 percent mainly led by higher operating profits along with lower net finance costs, which more than offset the increase in tax charges due to increased profits. Total tax charges increased by $129 million, largely due to higher operating profit and withholding tax on dividends by subsidiaries. The prior period also benefited from the recognition of a deferred tax credit of $14 million in Tanzania.
And then the net cash generated from operating activities increased by $282 million, an increase of 23.1 percent to $1.49 billion (from $1.2 billion in the previous period), mainly driven by higher profit before tax of $382 million partially offset by higher tax payments on the increased profits; while the customer base expanded to 125.8 million, growing by 5.8 percent, with increased penetration across mobile data (customer base up 11.1%) and mobile money services (customer base up 19.6%). Customer base growth was affected by the NIN/SIM regulations in Nigeria but returned to growth in this region in the third quarter; excluding Nigeria, the customer base grew by 12 percent.