AAF Airtel Africa Plc

TIDMAAF

RNS Number : 0768B

Airtel Africa PLC

07 June 2021

Airtel Africa plc

("Airtel Africa", or the "Group")

The 2021 Annual Report and Notice of Annual General Meeting

London and Lagos, 7 June 2021: Airtel Africa, a leading provider of telecommunications and mobile money services, with a presence in 14 countries across Africa, today announces that its Annual Report and financial statements for the year ended 31 March 2021 (the "Annual Report"), Notice of Annual General Meeting (the "AGM"), and Form of Proxy for the AGM have each been sent to shareholders, under the cover of a letter from our Chairman, Mr Sunil Bharti Mittal.

The Annual Report, Notice of AGM and Chairman's Letter are available to view or download from the Company's website at https://airtel.africa/investors

The Company's AGM will be held at 11.00am (UK time) on 15 July 2021 at First Floor, 53/54 Grosvenor Street, London, W1K 3HU.

PLEASE NOTE THAT DUE TO INTERNATIONAL TRAVEL RESTRICTIONS THERE WILL BE LIMITED IN-PERSON BOARD ATTANCE AT THE VENUE. SUBJECT TO UK COVID-19 REGULATIONS AND GOVERNMENT GUIDANCE, SHAREHOLDERS MAY ATT IN-PERSON BUT NOTWITHSTANDING THIS ARE ENCOURAGED TO ATT AND VOTE AT THE AGM ELECTRONICALLY THROUGH THE LUMI PLATFORM. FURTHER INFORMATION ON HOW TO JOIN THE MEETING ELECTRONICALLY CAN BE FOUND ON PAGE 8 OF THE NOTICE OF MEETING.

The Company's full year results announcement on 12 May 2021 highlighted continued strong revenue growth, increased profitability and cash flow, and continued deleveraging.

The appendix to this announcement sets out the required disclosures with regard to the principal risks as contained in the Annual Report. This information is provided in accordance with Disclosure & Transparency Rule 6.3.5(2). This information is not a substitute for reading the full Annual Report for the year ended 31 March 2021.

The Company confirms that, in compliance with Listing Rule 9.6.1, an electronic copy of each of the Company's Annual Report for the year ended 31 March 2021, Notice of AGM and Form of Proxy for the AGM have been submitted to the National Storage Mechanism, appointed by the Financial Conduct Authority, and will be available shortly for inspection at

https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism .

-S-

Enquiries

 
 Airtel Africa 
  Simon O'Hara 
  Investor.relations@africa.airtel.com    +44 207 493 9315 
 
 Hudson Sandler 
  Nick Lyon 
  Bertie Berger 
  airtelafrica@hudsonsandler.com          +44 207 796 4133 
 

APPIX

How we classify our risks

We classify our risks using the below categorisation methodology. The risk classification allows for a consistent approach for risk identification across the Group.

Strategic risks

External risks such as changes in market dynamics or risks to strategic partnerships.

Operational risks

Risks affecting our ability to effectively operate our business model across a variety of functional areas.

Financial risks

Risks impacting our liquidity or solvency, financial reporting or capital structure.

Governance and compliance risks

Risks affecting our ability to comply with our legal, regulatory and governance obligations.

strategic RISKS

Adverse competition and market disruption

Link to strategy

Win with customers -- Win with data -- Win with mobile money

Risk owner

Chief sales and marketing officer

Description

We operate in an increasingly competitive environment across our markets and segments, particularly with respect to pricing and market share. Aggressive competition by existing players or the entry of a new player could put a downward pressure on prices, adversely affecting our revenue and margins, as well as our profitability and long-term survival. The nature and level of the competition we face varies for each of our markets, products and services.

Mitigation

1. Ongoing monitoring of competitive landscape and competitor activities

2. Driving penetration of bundle offerings to lock in customers, increase affordability and reduce churn

3. The continued growth of our Airtel Money business and the increased penetration of our GSM customers using Airtel Money services helps to increase customer stickiness on our network

4. Simplifying customer experience through self-care and other customer touchpoints

Digitisation and innovation

Link to strategy

Win with customers -- Win with data -- Win with mobile money

Risk owner

Chief information officer

Description

Failure to innovate through simplifying the customer experience, developing adequate digital touchpoints in line with changing customer needs and competitive landscape could lead to loss of customers and market share. We need to continually innovate to simplify our user experience, make our business processes more agile, and develop more digital touchpoints to reach our customers and meet their changing needs.

Mitigation

1. Roll out of digital apps and self-care channels to simplify customer experience

2. Set up of Airtel Africa Digital Labs focused on developing cutting edge digital solutions to address customer needs and solve complex problems using the latest technologies

3. Simplifying our core IT systems and integration capabilities to allow for faster deployment of new products and services and integration with third-party applications

COVID-19

Risk owner

Chief executive officer

Description

Covid-19 continues to be both a healthcare crisis and a major disruptor in the lives of people and the economic activities of businesses and governments across the world. The pandemic has underlined how critical telecoms are to the countries in which we operate, and throughout the crisis we have maintained our services as well as supporting communities, including by coordinating medical relief with respective governments. While the pandemic has shown the continued resilience of our operating model, we continue to monitor the evolution of the pandemic to prevent any negative adverse impact on the Group's ability to operate its business effectively.

Mitigation

1. The Group's business continuity plans continue to be in place ensuring minimal disruption in our abilities to provide critical telecom services

2. Ongoing crisis monitoring by the crisis management team at the Group office through regular engagement with the OpCo crisis management teams with overall oversight by the Executive Committee

3. To protect the health and safety of our employees, the Group's operations continue to adopt a work from home policy with a predominant number of the Group's employees working remotely

4. Availability of digital self-care channels through which customers can access the company's products and services and resolve basic customer queries

operational RISKs

Technology obsolescence

Link to strategy

Win with data -- Win with mobile money -- Win with network -- Win with customers -- Win with cost

Risk owners

Chief technology officer

Chief information officer

Description

An inability to effectively and efficiently invest and upgrade our network and IT infrastructure would affect our ability to compete effectively in the market. While we continually invest in improving and maintaining our networks and IT systems to address current levels of volume and capacity growth, we need to continue to commit substantial capital to keep pace with rapid changes in technology and the competitive landscape.

Mitigation

1. Refreshing our IT infrastructure with focus on cloud technology

2. Network modernisation project involving upgrades to our core (mobile switching) and packet (mobile data) networks

3. Reducing the cost of network operations by adopting radio agnostic technology, 'single RAN', which allows easy switching of network resources and spectrum between 2G, 3G and 4G networks at minimal marginal costs

Cyber and information security threats

Link to strategy

Win with customers -- Win with data -- Win with network

Risk owner

Chief information officer

Description

Cybersecurity threats through internal or external sabotage or system vulnerabilities could potentially result in customer data breaches and/or service downtimes. Like any other business, we are increasingly exposed to the risk that third parties or malicious insiders may attempt to use cyber-crime techniques, including distributed denial of service attacks, to disrupt the availability, confidentiality and integrity of our IT systems. This could disrupt our key operations, make it difficult to recover critical services and damage our assets.

Mitigation

1. Ongoing review and implementation of security controls to mitigate possible system vulnerabilities

2. Awareness campaign and training of employees on IT and cybersecurity risks and control measures

3. Continuing to identify risk and assess vulnerability

Increase in cost structure

Link to strategy

Win with cost

Risk owner

Chief supply chain officer

Description

Adverse changes in our external business environment and/or supply chain processes could lead to a significant increase in our operating cost structure and negatively impacting profitability. Our operating costs are subject to supply chain risks including fluctuations in global commodity prices, market uncertainty, energy costs (such as diesel and electricity), and the cost of obtaining and maintaining licences, spectrum and other regulatory requirements. Prevailing macroeconomic conditions and a variety of other factors beyond our control also contribute to this risk. We need to continually re-evaluate our operating model and cost structure to identify innovative ways to optimise our costs.

Mitigation

1. Continuous review of our operating model and supply chain processes to identify cost optimisation opportunities

2. Rolling out various initiatives to optimise our operating structure to improve business performance

Leadership succession planning

Link to strategy

Win with customers

Risk owner

Chief human resources officer

Description

We need to continually identify and develop successors for key leadership positions across our organisation to ensure minimal disruption to the execution of our corporate strategy. Our ability to execute our business strategies depends in large part on the efforts of our key people. In some of the countries in which we operate, there's a shortage of skilled telecommunications professionals. Any failure to successfully recruit, train, integrate, retain and motivate key skilled employees could have a material adverse effect on our business, the results of our operations, financial condition and prospects.

Mitigation

1. Defined functional and leadership development plans for the leadership and critical roles within Airtel Africa

2. Ongoing identification of high potential employees for talent development

3. Long term incentive arrangements to encourage employee retention and alignment to long term company objectives

Internal controls and compliance

Risk owner

Chief financial officer

Description

Gaps in our internal control and compliance environment could affect our reputation and lead to financial losses. Our financial reporting is subject to the risk that controls may become inadequate due to changes in internal or external conditions, new accounting requirements, or delays or inaccuracies in reporting. We continue to implement internal risk management and reporting procedures at Group and OpCo levels to protect against risks of internal control weaknesses and inadequate control over financial reporting.

Mitigation

1. Ongoing review and strengthening of the Group's internal controls over financial reporting and compliance processes

2. Review process for addressing and mitigating findings from internal audit, with oversight from the Audit and Risk Committee

3. Continually identifying and mitigating risks

Network resilience and business continuity

Link to strategy

Win with data -- Win with network

Risk owners

Chief technology officer

Chief information officer

Description

Our ability to provide unparalleled quality of service to our customers and meet quality of service (QoS) requirements depends on the robustness and resilience of our network and IT infrastructure and our ability to respond appropriately to any disruptions. Our telecommunications networks are subject to risks of technical failures, aging infrastructure, human error, wilful acts of destruction or natural disasters. This can include equipment failures, energy or fuel shortages, software errors, damage to fibres, lack of redundancy plans and inadequate disaster recovery plans.

Mitigation

1. Implementing geographically redundant disaster recovery sites for our networks and IT infrastructure across our OpCos

2. Regular testing of fallback plans for network and IT systems to ensure reliability of switch over from active to redundant nodes in the event of a disaster

FINANCIAL RISK

Exchange rate fluctuation

Link to strategy

Win with data

Risk owner

Chief financial officer

Description

Our multinational footprint means we're constantly exposed to the risk of adverse currency fluctuations and the macroeconomic conditions in the markets where we operate. We derive revenue and incur costs in local currencies where we operate, but we also incur costs in foreign currencies, mainly from buying equipment and services from manufacturers and technology service providers. That means adverse movements in exchange rates between the currencies in our OpCos and the US dollar could have a negative effect on our liquidity and financial condition. Furthermore, in some of our markets, triggered by broader macroeconomic conditions, we are faced with instances of limited supply of foreign currency within the local monetary system. This constrains the ability to fully benefit at the Group level from the strong cash generation of those few OpCos.

Mitigation

1. Renegotiating Forex denominated contracts to local currency contracts

2. Hedging foreign currency denominated payables and loans, and matching assets and liabilities, where possible

3. Availability of adequate funding arrangements to mitigate any short-term liquidity constraints caused by fluctuations in Forex supply within our OpCos

4. Geographical diversification allows us to continue to access liquidity broadly across our footprint

GOVERNANCE AND COMPLIANCE RISKS

Compliance to legal requirements

Risk owner

Chief legal officer

Chief regulatory officer

Description

We operate in diverse legal and regulatory environments both in terms of the countries, where we operate, and the regulators for the services we provide. Establishing and maintaining adequate procedures, systems and controls enables us to comply with our obligations in all the jurisdictions where we operate and for the services we provide to our customers. We are required to comply with Know Your Customer, anti-money laundering, anti-bribery and corruption, sanctions, data privacy, quality of service and other laws and regulations. A failure to comply could lead to unanticipated regulatory penalties and sanctions or tax levies, as well as damage to our reputation.

Mitigation

1. Instituting various policies across the Group to comply with the legal requirements in the jurisdictions where we operate

2. Continuing engagement with regulators and industry bodies on key policy matters across our operating footprint

3. Implementing a regular compliance tracking process, identifying root causes for cases of non-compliance and taking corrective actions

4. Implementing an escalation process for reporting significant matters to the Group office

5. Communicating with and training employees on relevant company policies

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June 07, 2021 11:08 ET (15:08 GMT)