Airtel Africa declares interim dividend of 2.6 cents per share, an increase of 9%

Airtel Africa plc (LON:AAF) has announced its results for half year ended 30 September 2024.

Sustained operating momentum reflecting continued execution against significant growth opportunity

Operating highlights

·    Total customer base grew by 6.1% to 156.6 million. Data customer penetration continues to rise, driving a 10.4% increase in data customers to 66.0 million. Data usage per customer increased by 30.9% to 6.6 GBs, with smartphone penetration increasing 5.3% to reach 42.9%. 

·    Mobile money subscribers of 41.5 million, increased by 13.4% reflecting our continued investment into distribution to support increased financial inclusion across our markets. Transaction value increased by 30.1% in constant currency² with annualised transaction value of $128bn.

·    Data ARPU growth of 13.5% and mobile money ARPU growth of 10.9% in constant currency continued to support overall ARPU’s which rose 11.1% YoY in constant currency.

·    Customer experience remains core to our strategy with sustained network investment during the period. Data capacity across our network has increased by 20% with the rollout of over 2,800 sites and around 3,500 kms of fibre.

Financial performance

·    Revenue in constant currency grew by 19.9% in H1’25 with growth accelerating to 20.8% in Q2’25 driven by an acceleration of growth in Nigeria to 38.2% and in Francophone Africa to 9.0%. Across the Group mobile services revenue grew by 18.4% and Mobile Money revenue grew by 28.8% in constant currency. Reported currency revenues declined by 9.7% to $2,370m reflecting the impact of currency devaluation, particularly in Nigeria.

·    A substantial increase in fuel prices across our markets and the lower contribution of Nigeria to the Group after the naira devaluation contributed to a decline in EBITDA margins to 45.8% from 49.6% in H1’24. In Q2’25, EBITDA margin at 46.4% improved sequentially from 45.3% in Q1’25 reflecting the initial successes in our cost efficiency programme launched earlier in the year. Constant currency EBITDA increased 13.5% whilst reported currency EBITDA declined by 16.5% to $1,087m for H1’25.

·    Profit after tax of $79m was impacted by $151m of exceptional derivative and foreign exchange losses (net of tax), arising from the further depreciation in the Nigerian naira during the period.

·    EPS before exceptional items declined from 7.0 cents in the prior period to 4.9 cents, primarily reflecting the translation impact of currency devaluation. Basic EPS of 0.8 cents compares to negative (1.5 cents) in the prior period, predominantly reflecting the $471m exceptional derivative and foreign exchange losses in the prior period, compared to $231m in the current period.

Capital allocation

·    Capex at $316m was 1.3% higher compared to prior period. Capex guidance for the full year remains between $725m and $750m as we continue to invest for future growth.

·    Over the year we have significantly reduced our foreign currency debt exposure, having paid down $809m of foreign currency debt. 89% of our OpCo debt (excl. lease liabilities) is now in local currency, up from 71% a year ago.

·    To secure beneficial contract structures and further enhance our partnership with ATC, we have extended our tower lease agreements for approximately 7,100 sites in four markets for a further 12-year period. The new agreements have a focus on renewable energy investment which will drive operating cost efficiencies over the medium-term and will have a neutral to positive impact on near-term free cash flow. The renewals has resulted in a $1.2bn increase in lease liabilities, which has been the primary driver of the increase in leverage to 2.3x from 1.6x in the previous quarter. No further material change in leverage should be expected from further renewals in the near-to-medium term.

·    The Board has declared an interim dividend of 2.6 cents per share, an increase of 9%, in-line with our progressive dividend policy. The $100m share buyback continues, with 61m shares purchased for a consideration of $88m as at the end of September 2024.

Sunil Taldar, Airtel Africa Chief executive officer, on the trading update:

“The sustained operating momentum over the period is testament to our teams’ ability to execute our strategy brilliantly. During the period we refined our strategy to significantly increase our focus on delivering best in class experience to our customers. To meet our customer’s expectations, we will strengthen our ‘go-to-market’ through enhanced distribution, simplified customer journeys and best in class network experience. This will further unlock the significant opportunity Africa offers and will provide the foundation of strong growth across our markets and our business segments, especially as we build and scale up the B2B and home broadband segments.

The scale of the opportunity across our markets remains substantial. A young and fast-growing population, combined with low levels of SIM and banking penetration on one hand, and increasing smartphone and digital payment adoption across our existing base on the other, provides a unique opportunity to leverage our extensive infrastructure for sustained growth in Sub-Saharan Africa.

We have already seen strong progress, with an acceleration in constant currency revenue growth over the last quarter as demand for our services remains strong, reflected in the 48% growth in data volumes over the first half of the year, despite the challenging backdrop in some of our markets.

Furthermore, we have seen our cost optimisation programme already show initial green shoots, which combined with operational leverage, has contributed to an expansion of our EBITDA margins in Q2’25 compared to the previous quarter. Foreign currency debt has fallen to just 11% of market debt at the end of September which reflects the work we have undertaken to de-risk the balance sheet.

We remain absolutely focussed on executing against our strategy to efficiently and effectively deliver essential services to improve the lives, communities and economies we serve. The growth opportunity across our markets remains compelling and we continue to focus on margin improvement.”

(1)        Alternative performance measures (APM) are described on page 46

(2)        An explanation of constant currency adjustments is described on page 48

Conference call

Airtel Africa management will host an analyst and investor conference call at 13:00pm UK time (BST), on Friday 25th October 2024, 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:

Conference call registration link