TIDMAAF
RNS Number : 5036Q
Airtel Africa PLC
28 October 2021
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.
Alternative performance measures (1) GAAP measures
(Half year ended) (Half year ended)
------------------------------------------------------------------ -------------------------------------------------
Description Sep-21 Sep-20 Reported Constant Description Sep-21 Sep-20 Reported
currency currency currency
------------------------ -------------------
$m $m change change $m $m change
% % %
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Revenue 2,272 1,815 25.2% 27.6% Revenue 2,272 1,815 25.2%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Underlying EBITDA 1,098 812 35.2% 38.5% Operating profit 732 472 55.1%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Underlying EBITDA 360 381 Profit after
margin 48.3% 44.7% bps bps tax 335 145 131.6%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
EPS before exceptional Basic EPS ($
items ($ cents) 7.5 3.0 149.7% cents) 7.6 3.0 155.9%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
Net cash generated
Operating free from operating
cash flow 853 596 43.1% activities 922 744 23.9%
------------------------ ------- ------- ---------- ---------- ------------------- ------- ------- ----------
( (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."
---
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
Airtel Africa - Investor Relations
Pier Falcione +44 7446 858 280
Morten Singleton +44 7464 830 011
Investor.relations@africa.airtel.com +44 207 493 9315
Hudson Sandler
Nick Lyon
Bertie Berger
airtelafrica@hudsonsandler.com +44 207 796 4133
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
Description Unit Half year ended Quarter ended
of measure
----------------- ------------------------------------------ ----------------------------------------
Sep-21 Sep-20 Reported Constant Sep-21 Sep-20 Reported Constant
currency currency currency currency
change change change change
% % % %
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit and loss
summary
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Revenue (1) $m 2,272 1,815 25.2% 27.6% 1,160 965 20.3% 22.7%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue $m 1,140 972 17.3% 19.7% 578 518 11.6% 14.1%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 733 548 33.7% 36.9% 377 283 33.0% 36.4%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
revenue
(2) $m 259 181 42.7% 42.0% 135 100 34.6% 32.5%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Other revenue $m 200 164 21.8% 24.1% 102 87 17.5% 20.1%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Expenses $m (1,181) (1,012) 16.7% 18.5% (599) (533) 12.5% 14.5%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Underlying
EBITDA
(3) $m 1,098 812 35.2% 38.5% 564 437 29.1% 31.9%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Underlying
EBITDA 360 381 330 340
margin % 48.3% 44.7% bps bps 48.6% 45.3% bps bps
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Depreciation and
amortisation $m (366) (328) 11.4% 13.3% (184) (167) 10.4% 12.8%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating
exceptional
items $m - (7) (100.0%) (100.0%) - (7) (100.0%) (100.0%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating profit
(4) $m 732 472 55.1% 59.7% 380 262 44.8% 48.3%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Net finance
costs $m (169) (191) (11.6%) (71) (92) (22.8%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Non-operating
exceptional
items
(5) $m 4 - 0.0% - - 0.0%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit before
tax $m 567 281 101.8% 308 170 81.2%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Tax $m (232) (146) 59.0% (116) (85) 36.0%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Tax -
exceptional
items $m - 10 (100.0%) - 3 (100.0%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Total tax charge $m (232) (136) 70.2% (116) (82) 40.7%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit after
tax (6) $m 335 145 131.6% 192 88 118.6%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Non-controlling
interest $m (50) (33) 49.7% (32) (18) 83.3%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit
attributable
to owners of
the
company -
before
exceptional
items $m 281 113 149.5% 160 75 113.6%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Profit
attributable
to owners of
the
company $m 285 112 155.7% 160 70 127.4%
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
EPS - before
exceptional
items cents 7.5 3.0 149.7% 4.3 2.0 113.7%
================= ============= ======== ======== ========== ========== ======= ======= ========== ==========
Basic EPS cents 7.6 3.0 155.9% 4.3 1.9 127.6%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Weighted average
no of shares million 3,755 3,758 (0.1%) 3,755 3,758 (0.1%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 245 216 13.6% 139 149 (6.9%)
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 853 596 43.1% 425 287 47.8%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Net cash
generated
from operating
activities $m 922 744 23.9% 475 436 8.8%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Net debt $m 3,127 3,459 3,127 3,459
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Leverage (net
debt to
underlying
EBITDA) times 1.5x 2.2x 1.5x 2.2x
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Return on
capital 568 514
employed % 20.2% 14.5% bps 19.8% 14.6% bps
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.1 2.7 16.2% 18.5% 3.2 2.8 12.4% 14.6%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 122.7 116.4 5.4% 122.7 116.4 5.4%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 43.9 39.6 10.9% 43.9 39.6 10.9%
----------------- ------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
customer
base million 23.9 20.1 19.0% 23.9 20.1 19.0%
----------------- -------- -------- ---------- ---------- ------- ------- ---------- ----------
(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
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------- ---------------------------------------- ----------------------------------------
Sep-21 Sep-20 Reported Constant Sep-21 Sep-20 Reported Constant
currency currency currency currency
change change change change
% % % %
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue $m 896 718 24.7% 32.4% 450 377 19.4% 27.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue
(1) $m 471 413 14.0% 21.0% 233 216 7.7% 14.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 351 257 36.6% 45.0% 179 135 33.1% 41.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other revenue
(1) $m 74 48 52.9% 63.0% 38 26 46.8% 56.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA $m 492 386 27.3% 35.2% 246 204 20.3% 28.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA 113 114
margin % 54.9% 53.8% bps bps 54.6% 54.2% 39 bps 39 bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (128) (115) 11.4% 18.2% (65) (63) 3.0% 10.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Exceptional item $m - - 0.0% 0.0% - - 0.0% 0.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit $m 364 271 34.1% 42.3% 181 141 27.9% 35.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 104 97 7.0% 7.0% 56 67 (17.1%) (17.1%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 388 289 34.2% 45.3% 190 137 38.5% 51.8%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.6 2.8 29.6% 37.5% 3.7 2.9 27.5% 35.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 40.4 44.1 (8.2%) 40.4 44.1 (8.2%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 18.2 19.0 (4.4%) 18.2 19.0 (4.4%)
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(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 Africa (1)
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------- ---------------------------------------- ----------------------------------------
Sep-21 Sep-20 Reported Constant Sep-21 Sep-20 Reported Constant
currency currency currency currency
change change change change
% % % %
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue (2) $m 822 659 24.7% 25.8% 428 355 20.6% 19.9%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue
(3) $m 377 312 20.7% 21.8% 199 169 17.2% 16.8%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 217 174 24.8% 25.7% 112 88 26.9% 26.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money revenue
(4) $m 190 132 43.9% 44.5% 99 74 33.2% 30.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other revenue
(3) $m 78 74 5.1% 6.8% 40 39 2.1% 3.3%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA $m 397 292 35.7% 36.2% 213 163 30.3% 28.8%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA 390 367 370 340
margin % 48.3% 44.3% bps bps 49.7% 46.0% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation and
amortisation $m (118) (107) 10.3% 11.1% (60) (53) 12.1% 11.8%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Exceptional item $m - - 0.0% 0.0% - - 0.0% 0.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit
(5) $m 279 184 51.5% 52.0% 153 110 39.2% 37.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 84 81 3.1% 3.1% 51 62 (18.2%) (18.2%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 313 211 48.2% 49.5% 162 101 59.9% 58.6%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 2.5 2.2 10.9% 11.9% 2.5 2.4 7.1% 6.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 56.8 51.3 10.9% 56.8 51.3 10.9%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 18.2 14.9 22.2% 18.2 14.9 22.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money customer
base million 20.0 16.7 19.2% 20.0 16.7 19.2%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(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 Africa (1)
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------- ---------------------------------------- ----------------------------------------
Sep-21 Sep-20 Reported Constant Sep-21 Sep-20 Reported Constant
currency currency currency currency
change change change change
% % % %
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue (2) $m 560 445 25.7% 22.1% 285 236 20.6% 19.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue
(3) $m 294 252 16.7% 13.3% 148 135 9.4% 8.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 165 117 40.7% 36.2% 85 60 42.0% 40.3%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
revenue (4) $m 69 49 40.1% 36.3% 36 26 39.0% 38.3%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Other revenue
(3) $m 53 45 17.9% 15.2% 26 23 13.7% 12.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA $m 227 146 54.9% 50.6% 115 73 58.8% 57.3%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA 761 767 976 974
margin % 40.5% 32.8% bps bps 40.6% 30.8% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (104) (98) 6.4% 3.4% (51) (49) 4.2% 3.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Exceptional item $m - (7) (100.0%) (100.0%) - (7) (100.0%) (100.0%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit
(5) $m 123 41 200.5% 192.0% 64 16 293.4% 289.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 52 36 44.2% 44.2% 30 20 53.8% 53.8%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 175 110 58.4% 52.5% 85 53 60.6% 58.6%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 3.8 3.7 4.7% 1.7% 3.8 3.8 (0.8%) (1.7%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base million 25.4 21.1 20.7% 25.4 21.1 20.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 7.5 5.7 32.6% 7.5 5.7 32.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
customer base million 4.0 3.4 17.9% 4.0 3.4 17.9%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(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
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------------------------------------- ----------------------------------------
Sep-21 Sep-20 Reported Constant Sep-21 Sep-20 Reported Constant
currency currency currency currency
change change change change
% % % %
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue (1) $m 2,076 1,689 22.9% 25.5% 1,058 891 18.8% 21.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA $m 989 737 34.3% 38.1% 509 392 29.9% 33.6%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA 405 436 412 432
margin % 47.7% 43.6% bps bps 48.1% 44.0% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (343) (314) 9.2% 10.9% (172) (163) 5.6% 7.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating exceptional
items $m - (7) (100%) (100.0%) - (7) (100.0%) (100.0%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit
(2) $m 646 413 56.4% 62.5% 336 221 52.0% 57.3%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 229 211 8.6% 8.6% 129 147 (11.9%) (11.9%)
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 760 526 44.6% 50.5% 380 245 55.0% 62.5%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile voice
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice revenue $m 1,140 972 17.3% 19.7% 578 518 11.6% 14.1%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Customer base million 122.7 116.4 5.4% 122.7 116.4 5.4%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice ARPU $ 1.6 1.4 8.9% 11.1% 1.6 1.5 4.2% 6.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile data
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data revenue $m 733 548 33.7% 36.9% 377 283 33.0% 36.4%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base million 43.9 39.6 10.9% 43.9 39.6 10.9%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data ARPU $ 2.9 2.5 16.4% 19.2% 2.9 2.5 16.8% 19.8%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(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
Description Unit Half year ended Quarter ended
of
measure
---------------------- ---------------------------------------- ----------------------------------------
Sep-21 Sep-20 Reported Constant Sep-21 Sep-20 Reported Constant
currency currency currency currency
change change change change
% % % %
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarised statement
of operations
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Revenue (1) $m 259 181 42.7% 42.0% 135 100 34.6% 32.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA $m 126 88 42.9% 41.3% 65 49 34.3% 31.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA (26) (12) (39)
margin % 48.7% 48.6% 5 bps bps 48.6% 48.7% bps bps
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation
and amortisation $m (6) (5) 31.8% 29.0% (3) (2) 72.6% 72.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating profit $m 120 83 43.6% 42.0% 62 47 32.4% 29.7%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Capex $m 11 4 194.2% 194.2% 7 2 318.2% 318.2%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating free
cash flow $m 115 84 36.3% 34.4% 58 47 23.9% 20.8%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
key KPIs
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Transaction value $m 30,462 20,671 47.4% 47.0% 15,811 11,664 35.5% 33.5%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Active customers million 23.9 20.1 19.0% 23.9 20.1 19.0%
---------------------- ---------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile money
ARPU $ 1.9 1.6 17.3% 16.8% 1.9 1.7 11.4% 9.7%
---------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(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)
For six months ended
------------------------------------------------------------------------
Note 30 September 2021 30 September 2020
Income
Revenue 5 2,272 1,815
Other income 6 8
----------------------------------- -----------------------------------
2,278 1,823
Expenses
Network operating expenses 398 330
Access charges 201 177
Licence fee / spectrum usage
charges 110 95
Employee benefits expense 142 142
Sales and marketing expenses 104 86
Impairment loss on financial assets 5 3
Other operating expenses 220 190
Depreciation and amortisation 366 328
----------------------------------- -----------------------------------
1,546 1,351
Operating profit 732 472
Finance costs 178 196
Finance income (9) (4)
Non-operating income (4) -
Share of profit of associate (0) (1)
----------------------------------- -----------------------------------
Profit before tax 567 281
Income tax expense 6 232 136
----------------------------------- -----------------------------------
Profit for the period 335 145
Profit before tax (as presented
above) 567 281
Less: Exceptional items (net) 7 (4) 7
Underlying profit before tax 563 288
------------------------------------ ------ ----------------------------------- -----------------------------------
Profit after tax (as presented
above) 335 145
Less: Exceptional items (net) 7 (4) (3)
Underlying profit after tax 331 142
------------------------------------ ------ ----------------------------------- -----------------------------------
For six months ended
------------------------------------------------------------------------
Notes 30 September 2021 30 September 2020
Profit for the period (continued
from previous page) 335 145
Items to be reclassified
subsequently to profit or loss:
Net gain due to foreign
currency translation
differences 41 29
Net loss on net investments
hedge (8) (11)
----------------------------------- -----------------------------------
33 18
----------------------------------- -----------------------------------
Items not to be reclassified
subsequently to profit or loss:
Re-measurement loss on defined
benefit plans (1) (1)
Tax credit on above 0 0
----------------------------------- -----------------------------------
(1) (1)
----------------------------------- -----------------------------------
Other comprehensive income for the
period 32 17
----------------------------------- -----------------------------------
Total comprehensive income for the
period 367 162
=================================== ===================================
Profit for the period attributable
to: 335 145
Owners of the Company 285 112
Non-controlling interests 50 33
Other comprehensive income for the
period attributable to: 32 17
Owners of the Company 34 19
Non-controlling interests (2) (2)
Total comprehensive income for the
period attributable to: 367 162
Owners of the Company 319 131
Non-controlling interests 48 31
Earnings per share
Basic 8 7.6c 3.0c
Diluted 8 7.6c 3.0c
Consolidated Statement of Financial Position
(All amounts are in US dollar millions unless
otherwise stated) As of
-----------------------------------------------------------
Notes 30 September 2021 31 March 2021
------------------------------- ----------------------------
Assets
Non-current assets
Property, plant and equipment 9 2,084 2,066
Capital work-in-progress 9 185 166
Right of use assets 900 799
Goodwill 10 3,878 3,835
Other intangible assets 512 558
Intangible assets under development 175 177
Investment in associate 6 4
Financial assets
- Investments 0 0
- Derivative instruments 1 6
- Others 17 17
Income tax assets (net) 27 33
Deferred tax assets (net) 268 314
Other non-current assets 119 112
8,172 8,087
Current assets
Inventories 2 7
Financial assets
- Derivative instruments 3 6
- Trade receivables 131 113
- Cash and cash equivalents 698 813
- Other bank balances 190 282
- Balance held under mobile money
trust 505 440
- Others 74 66
Other current assets 178 147
Assets of disposal group
classified as held for sale 17 50 31
1,831 1,905
Total assets 10,003 9,992
=============================== ============================
As of
-----------------------------------------------------------
Current liabilities Notes 30 September 2021 31 March 2021
------------------------------- --------------------------
Financial liabilities
- Borrowings 13 487 342
- Current maturities of long-term
borrowings 13 279 1,126
- Lease liabilities 268 240
- Derivative instruments 13 7
- Trade payables 384 366
- Mobile money wallet balance 487 432
- Others 359 448
Provisions 39 65
Deferred revenue 157 135
Current tax liabilities (net) 156 173
Other current liabilities 162 151
Liabilities of disposal group
classified as held for sale 17 27 19
2,818 3,504
Net current liabilities (987) (1,599)
Non-current liabilities
Financial liabilities
- Borrowings 13 1,866 1,871
- Lease liabilities 1,098 1,037
- Derivative instruments 5 6
- Others 520 91
Provisions 21 25
Deferred tax liabilities (net) 103 81
Other non-current liabilities 20 24
3,633 3,135
Total liabilities 6,451 6,639
=============================== ==========================
Net Assets 3,552 3,353
=============================== ==========================
Equity
Share capital 12 3,420 3,420
Retained earnings 3,165 2,975
Other reserves (3,031) (2,990)
Equity attributable to owners of the company 3,554 3,405
Non-controlling interests ('NCI') (2) (52)
Total equity 3,552 3,353
=============================== ==========================
The accompanying notes form an integral part of these interim
condensed consolidated financial statements.
Consolidated Statement of Changes in Equity (All amounts are in US dollar millions unless
otherwise stated)
Equity attributable to owners of the company Non-controlling Total
interests equity
(NCI)
---------------------------------------------------------------------------------------- ----------------
Share Capital Share Retained Other reserves Equity
premium earnings attributable
to owners
of the
company
------------------------ -------- --------- -------------------------- ------------- ----------------
No of shares Amount Transactions Other
with NCI components
reserve of equity
------------- -----------
As of 1 April
2020 6,839,896,081 3,420 - 2,805 (585) (2,252) 3,388 (107) 3,281
Profit for the
year - - - 112 - - 112 33 145
Other
comprehensive
income/(loss) - - - (1) - 20 19 (2) 17
--------------- ----------- ------------- ----------------
Total
comprehensive
income - - - 111 - 20 131 31 162
Transaction with
owners of equity
Employee
share-based
payment
expenses - - - (0) - 1 1 - 1
Gain/ (loss) on
fair value of
own shares - - - (0) - 0 - - -
Purchase of own
shares - - - - - (0) (0) - (0)
Transactions
with NCI - - - - (0) - (0) 0 (0)
Dividend to
owners of the
company - - - (113) - - (113) - (113)
Dividend
(including tax)
to NCI - - - - - - - (13) (13)
As of 30
September 2020 6,839,896,081 3,420 - 2,803 (585) (2,231) 3,407 (89) 3,318
=============== ======= ======== ========= ============= =========== ============= ================ ========
Profit for the
period - - - 227 - - 227 43 270
Other
comprehensive
income/(loss) - - - 1 - (160) (159) (7) (166)
--------------- ------- -------- --------- ------------- ----------- ------------- ---------------- --------
Total
comprehensive
income / (loss) - - - 228 - (160) 68 36 104
Transaction with
owners of equity
Employee
share-based
payment
expenses - - - (0) - (1) (1) - (1)
Gain/ (loss) on
fair value of
own shares - - - 0 - (0) - - -
Purchase of own
shares - - - - - (4) (4) - (4)
Transactions
with NCI - - - - (9) - (9) 1 (8)
Dividend to
owners of the
company - - - (56) - - (56) - (56)
As of 31 March
2021 6,839,896,081 3,420 - 2,975 (594) (2,396) 3,405 (52) 3,353
=============== ======= ======== ========= ============= =========== ============= ================ ========
Profit for the
period - - - 285 - - 285 50 335
Other
comprehensive
income / (loss) - - - (1) - 35 34 (2) 32
--------------- -----------
Total
comprehensive
income / (loss) - - - 284 - 35 319 48 367
Transaction with
owners of equity
Employee
share-based
payment
expenses - - - (0) - 2 2 - 2
Transactions
with NCI - - - - (77) (1) (78) 21 (57)
Dividend to
owners of the
company [Note 4
(a)] - - - (94) - - (94) - (94)
Dividend
(including tax)
to NCI - - - - - - - (19) (19)
As of 30
September 2021 6,839,896,081 3,420 - 3,165 (671) (2,360) 3,554 (2) 3,552
=============== ======= ======== ========= ============= =========== ============= ================ ========
Statement of Cash Flows (All amounts are in US dollar millions unless otherwise stated)
For the six months ended
----------------------------------------------------------------
30 September 2021 30 September 2020
------------------------------- -------------------------------
Cash flows from operating activities
Profit before tax 567 281
Adjustments for -
Depreciation and amortisation 366 328
Finance income (9) (4)
Finance cost 178 196
Share of profit of associate (0) (1)
Non-operating income adjustment [refer to (4) -
Note 4(d)]
Other non-cash adjustments(1) 7 5
Operating cash flow before changes in working
capital 1,105 805
Changes in working capital
(Increase)/Decrease in trade receivables (22) 1
Decrease/(Increase) in inventories 5 (3)
Increase/(Decrease) in trade payables 7 (7)
Increase in mobile money wallet balance 56 80
Decrease in provisions (18) (0)
Increase in deferred revenue 22 9
Decrease in income received in advance - (1)
Increase in other financial and non-financial
liabilities 14 3
Increase in other financial and non-financial
assets (57) (21)
Net cash generated from operations before tax 1,112 866
Income taxes paid (190) (122)
Net cash generated from operating activities (a) 922 744
------------------------------- -------------------------------
Cash flows from investing activities
Purchase of property, plant and equipment and
capital work-in-progress (308) (359)
Proceeds from sale of tower assets [refer to 10 -
Note 4(d)]
Purchase of intangible assets (7) (8)
Maturity of deposits with bank 261 -
Investment in deposits with bank (2) (163) (663)
Interest received 8 10
Net cash generated/(used) in investing activities
(b) (199) (1,020)
------------------------------- -------------------------------
Cash flows from financing activities
Proceeds from sale of shares to 375 -
non-controlling interests (refer to Note
4(e) and (f))
Acquisition of non-controlling interests (1) (0)
Purchase of own shares by ESOP trust - (0)
Proceeds from borrowings 620 253
Repayment of borrowings (1,396) (121)
Repayment of lease liabilities (113) (109)
Dividend paid to non-controlling interests (17) (6)
Dividend paid to owners of the Company (94) (113)
Interest on borrowings and lease liabilities
and other finance charges (179) (167)
Proceeds on maturity of derivatives (net) 8 -
Net cash used from financing activities (c) (797) (263)
------------------------------- -------------------------------
Increase in cash and cash equivalents during the
period (a+b+c) (74) (539)
Currency translation differences relating to cash
and cash equivalents (6) (3)
Cash and cash equivalent as at beginning of the
period 1,003 1,087
Cash and cash equivalents as at end of the period
(Note 11) (3) 923 545
=============================== ===============================
(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:
Nigeria East Africa Francophone Africa Unallocated Eliminations Total
-------- ------------ ------------------- ------------ ------------- --------
Revenue from external customers
Voice revenue 471 376 293 (0) - 1,140
Data revenue 351 217 165 - - 733
Mobile money revenue (1) 0 151 48 - - 199
Other revenue (2) 72 75 53 - - 200
894 819 559 (0) - 2,272
Inter-segment revenue 2 3 1 - (6) -
Total revenue 896 822 560 (0) (6) 2,272
Segment results: Underlying
EBITDA 492 397 227 355 (373) 1,098
Less:
Depreciation and amortisation 128 118 104 1 15 366
Finance costs 178
Finance income (9)
Non-operating Income, (net) (4)
Share of profit of associate (0)
Charitable donation 0 0 0 (0) - 0
Profit before tax 567
Other segment items
Capital expenditure 104 84 52 5 - 245
-------------------------------- -------- ------------ ------------------- ------------ ------------- --------
As of 30 September 2021
Segment assets 2,168 2,173 1,762 25,281 (21,381) 10,003
Segment liabilities 1,295 3,062 2,635 16,226 (16,767) 6,451
Investment in associate
(included in segment assets
above) - - 6 - - 6
(1) intra-segment elimination of $59m adjusted with Mobile money
revenue. It includes $39m pertaining to East Africa and balance
$20m pertaining to Francophone Africa.
(2) it includes messaging, value added services, enterprise,
site sharing and handset sale revenue.
Summary of the segmental information and disaggregation of
revenue for the six months ended 30 September 2020 and as of 31
March 2021 is as follows:
Nigeria East Africa Francophone Africa Unallocated Eliminations Total
-------- ------------ ------------------- ------------ ------------- -------
Revenue from external customers
Voice revenue 413 312 250 (3) - 972
Data revenue 257 174 117 - - 548
Mobile money revenue(1) 0 99 32 - - 131
Other revenue(2) 47 72 45 - - 164
717 657 444 (3) - 1,815
Inter-segment revenue 1 2 1 - (4) -
Total revenue 718 659 445 (3) (4) 1,815
Segment results: Underlying
EBITDA 386 292 146 (13) 1 812
Less:
Depreciation and amortisation
(excluding exceptional items) 115 107 98 1 7 328
Finance costs 196
Finance income (4)
Share of profit of associate (1)
Charitable donation 0 2 1 2 - 5
Exceptional items pertaining to
operating profit - - 7 - - 7
Profit before tax 281
Other segment items
Capital expenditure 97 81 36 2 - 216
--------------------------------- -------- ------------ ------------------- ------------ ------------- -------
As of 31 March 2021
Segment assets 1,889 2,042 1,791 25,622 (21,352) 9,992
Segment liabilities 1,192 2,989 2,715 16,895 (17,152) 6,639
Investment in associate
(included in segment assets
above) - - 4 - - 4
(1) intra-segment elimination of $50m adjusted with mobile money
revenue. It includes $33m pertaining to East Africa and balance
$17m pertaining to Francophone Africa.
(2) it includes messaging, value added services, enterprise,
site sharing and handset sale revenue.
6. Income tax expense
For the six months ended
30 September 30 September
2021 2020
------------ ------------
Current tax 167 102
Deferred tax 65 34
------------ ------------
Income tax expense 232 136
============ ============
The tax charge for the six months ended 30 September 2021 has
been calculated for each operating country by applying an estimated
effective rate of tax expected to apply for the period ending 31
March 2022 on the pre-tax profits using rates substantively enacted
by 30 September 2021. The charge is adjusted for discrete items (if
any) occurring in the interim period as required by IAS 34 'Interim
Financial Reporting'.
Tax charge for the six months ended 30 September 2021 also
includes the related tax impacts arising out of withholding tax
('WHT') on unremitted earnings and cross charge to Group entities,
deferred tax asset recognition basis projected profitability in
operating countries, wherever applicable.
7. Exceptional items
Underlying profit before tax excludes the following exceptional
items:
For the six months ended
---------------------------------------------
30 September 2021 30 September 2020
------------------------- ------------------
Profit before tax 567 281
Add: Exceptional items
- Employee restructuring (1) - 7
- Gain on sale of tower assets (2) (4) -
(4) 7
Underlying profit before tax 563 288
========================= ==================
(1) comprises the cost of employee restructuring completed
during the year ended 31 March 2021 in one of the Group's
subsidiaries, including settlement of severance pay defined benefit
plans.
(2) represents gain on sale of telecommunication tower assets in
one of the Group's subsidiaries in Rwanda (refer to Note 4(d)), as
part of Group's strategic asset monetisation programme which also
includes plans to sell tower assets in Tanzania, Malawi,
Madagascar, Chad and Gabon.
Underlying profit after tax excludes the following exceptional
items:
For the six months ended
----------------------------------------------------------------------
30 September 2021 30 September 2020
----------------------------------- ---------------------------------
Profit after tax 335 145
-Exceptional item (as above) (4) 7
- Deferred tax asset recognition (1) - (10)
(4) (3)
----------------------------------- ---------------------------------
Underlying profit after tax 331 142
=================================== =================================
(1) For the six months ended 30 September 2020, Airtel Tanzania
had carried forward losses and temporary differences on which
deferred tax was not recognised in the past. Considering that
Airtel Tanzania turned into continuous and cumulative profits and
on the basis of likely timings and the level of future taxable
profits, the Group determined that it was probable that taxable
profits will be available against which the tax losses and
temporary differences could be utilised in the foreseeable future.
Consequently, the deferred tax asset recognition criteria were met
for $19m out of which $10m was recognised during the six months
ended 30 September 2020.
Profit attributable to non-controlling interests include
benefits of $Nil and $4m during the six months ended 30 September
2021 and 2020 respectively, relating to the above exceptional
items.
For the six months ended
30 September 2021 30 September 2020
------------------ -------------------------------
Profit for the period attributable to owners of the Company 285 112
Weighted average ordinary shares outstanding for basic EPS(1) 3,754,974,316 3,758,151,504
Basic EPS 7.6 cents 3.0 cents
================== ===============================
8. Earnings per share ('EPS')
The details used in the computation of basic EPS:
The details used in the computation of diluted EPS:
For the six months ended
30 September 2021 30 September 2020
------------------ ---------------------------------
Profit for the period attributable to owners of the Company 285 112
Weighted average ordinary shares outstanding for diluted
EPS(1),(2) 3,758,202,848 3,758,850,197
Diluted EPS 7.6 cents 3.0 cents
================== =================================
(1) The difference between the basic and diluted number of
shares at the end of September 2021, being 3,228,532 (September
2020: 698,693), relates to awards committed but not yet issued
under the Group's share-based payment schemes.
(2) Deferred shares have not been considered for EPS computation
as they do not have right to participate in profits.
9. Property, plant and equipment ('PPE'): The following table
presents the reconciliation of changes in the carrying value of PPE
for the six months ended 30 September 2021 and 30 September
2020:
Leasehold Building Land Plant and Furniture Vehicles Office Computer Total Capital work in
Improvements Equipment & Fixture Equipment progress (2)
-------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- ------- -----------------------
Gross carrying
value `
Balance as of 1
April 2020 50 47 26 2,408 25 24 37 661 3,278 259
Additions 0 0 1 267 8 0 3 14 293 217
Disposals /
adjustments
(1) (0) 0 - (29) 0 (0) (0) 1 (28) (293)
Exchange
differences 0 0 1 49 0 0 0 6 56 0
-------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- ------- -----------------------
Balance as of 30
September 2020 50 47 28 2,695 33 24 40 682 3,599 183
============== ========== ====== =========== =========== ========== =========== ========== ======= =======================
Balance as of 1
April 2021 50 46 27 2,858 37 24 45 676 3,763 166
Additions /
capitalisation 0 0 0 188 12 - 5 13 218 238
Disposals /
adjustments
(1) (0) (0) - (61) 0 0 (2) 0 (63) (218)
Transferred to
assets held
for sale - - - (141) - - - - (141) (0)
Exchange
differences (0) 1 (0) 30 1 0 2 6 40 (1)
-------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- ------- -----------------------
Balance as of
30 September
2021 50 47 27 2,874 50 24 50 695 3,817 185
Accumulated
Depreciation
Balance as of 1
April 2020 42 15 1 722 9 22 19 616 1,446 -
Charge 1 1 - 165 4 1 4 13 189 -
Disposals /
adjustments
(1) 0 (0) - (23) (0) (1) (0) 1 (23) -
Exchange
differences 1 0 (0) 38 0 0 1 6 46 -
-------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- ------- -----------------------
Balance as of 30
September 2020 44 16 1 902 13 22 24 636 1,658 -
============== ========== ====== =========== =========== ========== =========== ========== ======= =======================
Balance as of 1
April 2021 44 17 1 936 15 22 27 635 1,697 -
Charge 1 1 - 182 5 0 4 15 208 -
Disposals /
adjustments
(1) 0 - - (60) (1) 0 (1) (0) (62) -
Transferred to
assets held
for sale - - - (129) - - - - (129)
Exchange
differences (0) 0 (0) 12 1 0 0 5 19 -
-------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- ------- -----------------------
Balance as of
30 September
2021 45 18 1 942 20 22 30 655 1,733 -
============== ========== ====== =========== =========== ========== =========== ========== ======= =======================
Net carrying
value
As of 1 April
2020 8 32 25 1,686 16 2 18 45 1,832 259
As at 30
September 2020 6 31 27 1,793 20 2 16 46 1,941 183
As of 1 April
2021 6 29 26 1,922 22 2 18 41 2,066 166
As at 30
September 2021 5 29 26 1,932 30 2 20 40 2,084 185
------------------ -------------- ---------- ------ ----------- ----------- ---------- ----------- ---------- ------- -----------------------
(1) Related to the reversal of gross carrying value and
accumulated depreciation on retirement/disposal of PPE and
reclassification from one category of asset to another.
(2) The carrying value of capital work-in-progress as at 30
September 2021 and 2020 mainly pertains to plant and equipment.
10. Goodwill
The following table presents the reconciliation of changes in
the carrying value of Goodwill for the six months ended 30
September 2021 and 30 September 2020:
Goodwill
---------
Balance as of 1 April 2020 3,943
Exchange Differences 17
---------
Balance as of 30 September 2020 3,960
Balance as of 1 April 2021 3,835
Exchange Differences 43
---------
Balance as of 30 September 2021 3,878
---------
11. Cash and cash equivalents ('C&CE')
For the purpose of the statement of cash flows, C&CE are as
follows:
As of
30 September 2021 30 September 2020
------------------ ------------------
Cash and cash equivalents as per balance sheet 698 408
Balance held under mobile money trust 505 376
Bank overdraft (280) (239)
Cash and cash equivalents classified as held for sale (refer to note 17) 0 -
------------------ ------------------
923 545
------------------ ------------------
12. Share capital
As of
30 September 31 March 2021
2021
----------------------------- -----------------------------
Authorised shares
3,758,151,504 Ordinary shares of US dollar
0.5 each
(March 2021: 3,758,151,504) 1,879 1,879
3,081,744,577 Deferred shares of US dollar
0.5 each (March 2021:3,081,744,577) 1,541 1,541
----------------------------- -----------------------------
3,420 3,420
============================= =============================
Issued, Subscribed and fully paid-up shares
3,758,151,504 Ordinary shares of US dollar
0.5 each
(March 2021: 3,758,151,504) 1,879 1,879
3,081,744,577 Deferred shares of US dollar
0.5 each (March 2021: 3,081,744,577) 1,541 1,541
----------------------------- -----------------------------
3,420 3,420
============================= =============================
Terms/rights attached to equity shares
The company has the following two classes of ordinary
shares:
-- Ordinary shares having par value of $0.5 per share. Each
holder of equity shares is entitled to cast one vote per share and
carries a right to dividends.
-- Deferred shares of $0.5 each. These deferred shares are not
listed and are intended to be cancelled in due course. No share
certificates are to be issued in respect of the deferred shares.
These are not freely transferable and would not affect the net
assets of the Company. The deferred shareholders shall have no
right to receive any dividend or other distribution or return
whether of capital or income. On a return of capital in a
liquidation, the deferred shareholders shall have the right to
receive the nominal amount of each deferred share held, but only
after the holder of each 'Other' share (i.e. shares other than the
deferred shares) in the capital of the Company shall have received
the amount paid up on each such Other share held and the payment in
cash or in specie of GBP100,000 (or its equivalent in any other
currency) on each such Other shares held. The Company shall have an
irrevocable authority from each holder of the deferred shares at
any time to purchase all or any of the deferred shares without
obtaining the consent of the deferred shareholders in consideration
of the payment of an amount not exceeding one US cent in respect of
all the deferred shares then being purchased.
13. Borrowings
Non-current
As of
-----------------------------------------------------------------------
30 September 2021 31 March 2021
----------------------------------- ----------------------------------
Secured
Term loans 50 50
Less: Current portion (A) (50) (50)
- -
----------------------------------- ----------------------------------
Unsecured
Term loans 574 544
Non- convertible bonds 1,521 2,403
2,095 2,947
----------------------------------- ----------------------------------
Less: Current portion (B) (229) (1,076)
1,866 1,871
----------------------------------- ----------------------------------
1,866 1,871
=================================== ==================================
Current maturities of long-term borrowings
included in
current liabilities in the statement of
financial position (A+B) 279 1,126
C urrent
As of
30 September 2021 31 March 2021
------------------------------------- --------------
Unsecured
Term loans (1) 206 92
Bank overdraft 281 250
487 342
===================================== ==============
(1) Term loans as at 30 September 2021, include borrowings
against which certain deposits (included in other bank balances in
statement of financial position) have been placed.
Additional amounts of $650m were drawn down under the Group's
loan and overdraft facilities during the period ended 30 September
2021.
Repayments of bonds and term loans amounting to $1,311m and $85m
respectively were made during the period ended 30 September 2021,
in line with their stated repayment terms.
14. Contingent liabilities and commitments
(i) Contingent liabilities
As of
30 September 2021 31 March 2021
------------------------------- -------------------------------
(a) Taxes, Duties and Other demands (under
adjudication / appeal / dispute)
-Income tax(1) 19 23
-Value added tax 29 30
-Customs duty & Excise duty 5 8
-Other miscellaneous demands 10 9
(b) Claims under legal and regulatory cases
including arbitration matters(2) (3) 85 87
148 157
=============================== ===============================
(1) the reduction of $4m primarily comprises of settlement of
income tax case demand in one of the subsidiaries amounting to
$3m.
(2) One of the subsidiaries of the group is involved in a
dispute with one of its vendors, with respect to invoices for
services provided to a subsidiary under a service contract. The
original order under the contract was issued by the subsidiary for
a total amount of Central African franc (CFA) 473,800,000
(approximately $0.9m). In 2014, the vendor initiated arbitration
proceedings claiming a sum of approximately CFA 1.9bn
(approximately $3.4m). Between 2015 and mid-May 2019, lower courts
imposed a penalty of CFA 35bn (approximately $63m), based on which
certain banks of the subsidiary were summoned to release the funds.
The subsidiary lodged an immediate appeal in the Supreme Court
having jurisdiction over the subsidiary for a stay of execution. On
19 June, 2019, the Supreme Court granted a stay of execution. In
July 2019 the Court of Appeal (in violation of the stay order and a
November 2018 regional Court order) issued a ruling condemning the
subsidiary to pay the said penalty. The subsidiary appealed to the
Supreme Court and applied for a stay of execution by challenging
the merits of the ruling of the Court of Appeal. In September 2019,
the Supreme Court issued a stay of execution against the July 2019
ruling of the Court of Appeal. The vendor filed an appeal before
the Common Court of Justice and Arbitration (CCJA) against the
Supreme Court stay order. Quite unexpectedly, the CCJA on 22 April
2020 annulled the September 2019 stay order of the Supreme Court
and lifted the stay of execution. On 2 June 2020, the Supreme Court
issued a stay order, allowing the subsidiary to prevent seizure of
its bank accounts that had been re-activated by the vendor on the
basis of the 22 April 2020 CCJA decision. On 19 June 2020, the
vendor filed another application with CCJA challenging the stay
order granted in favor of the subsidiary by the Supreme Court on 2
June 2020. The Subsidiary filed its statement of defense on 9
October 2020 against the application filed by the vendor on 19 June
2020 with CCJA, arguing as preliminary objection on jurisdiction of
the Court. On 26 November 2020 CCJA issued an order annulling the
order of 2 June 2020 and asking the subsidiary to pay the
vendor.
Separately, on 15 December 2020 the subsidiary initiated
criminal proceedings against the vendor for fraud and deceitful
conduct. On 12 February 2021 the investigating judge refused to
charge vendor for fraudulent acts, which resulted in new seizures
being attempted by the vendor. The subsidiary filed an appeal on 18
February 2021. On 2 April 2021, the Commercial Court declared the
notice of seizure null and void and ordered the lift of seizure of
16 February 2021. On 29 June, 2021 the matter was mentioned before
the Appeal Court where vendor's attorneys requested a postponement
alleging amicable settlement discussions are on-going with Airtel.
Until the time the vendor formalizes their proposal to amicably
settle the matter and provided such takes into account the
financial loss already suffered and legal costs incurred by Airtel,
the Company is not agreeable to consider out of court
settlement.
As per the law no civil action can be initiated against the
subsidiary while criminal proceedings are ongoing. The group still
awaits the Supreme court ruling on the merits of the case, and
until that time has disclosed this matter as a Contingent Liability
for $63m (included in the closing contingent liability). No
provision has been made against the said claim.
(3) One of the subsidiaries of the Group is involved in a
dispute with one of its distributors, with respect to alleged
unpaid commissions, bonuses and benefits, totaling approximately
$12m, over a period of around eleven years of its business
relationship with the subsidiary. In March 2012, the distributor
filed a claim against the subsidiary in the High Court. On 4
October 2016, the High Court ruled against the subsidiary and
ordered to pay the claimed amount of approximately $12m to the
distributor. On 5 October 2016, the subsidiary filed an appeal in
the Court of Appeal against the order of the High Court, which on
24 July 2020 was ruled against the subsidiary. On 7 August 2020,
the subsidiary filed an appeal against the decision of the Court of
Appeal, in the Supreme Court. Record of appeal has been transmitted
to the Supreme Court and briefs of argument are currently being
prepared.
Despite the strength of the subsidiary's line of defence, as
both the High Court and Court of Appeal have ruled against the
subsidiary, it is appropriate to disclose this matter as contingent
liability for $12m, pending the decision of the Supreme Court. No
provision has been made against the said claim.
There are uncertainties in the legal, regulatory and tax
environments in the countries in which the Group operates, and
there is a risk of demands, which may be raised based on current or
past business operations. Such demands have in past been challenged
and contested on merits with appropriate authorities and
appropriate settlements agreed. Other than amounts provided where
the Group believes there is a probable settlement and contingent
liabilities where the Group has assessed the additional possible
amounts, there are no other legal, tax or regulatory obligations
which may be expected to be material to the financial
statements.
(ii) Guarantees:
Guarantees outstanding as of 30 September 2021 and 31 March 2021
amounting to $11m and $12m respectively have been issued by banks
and financial institutions on behalf of the Group. These guarantees
include certain financial bank guarantees which have been given for
sub-judice matters and the amounts with respect to these have been
disclosed under capital commitments, contingencies and liabilities,
as applicable, in compliance with the applicable accounting
standards.
(ii) Commitments
The Group has contractual commitments towards capital
expenditure (net of related advances paid) of
$324m and $232m as of 30 September 2021 and 31 March 2021
respectively.
15. Related Party disclosure
(a) List of related parties
i. Parent company
Airtel Africa Mauritius Limited
ii. Intermediate parent entity
Network i2i Limited
Bharti Airtel Limited
Bharti Telecom Limited
iii. Ultimate controlling entity
Bharti Enterprises (Holding) Private Limited. It is held by
private trusts of Bharti family, with Mr. Sunil Bharti Mittal's
family trust effectively controlling the company.
iv. Associate
Seychelles Cables Systems Company Limited
v. Other entities with whom transactions have taken place during the reporting period
a. Fellow subsidiaries
Bharti Airtel International (Mauritius) Limited
Nxtra Data Limited
Bharti Airtel Services Limited
Bharti International (Singapore) Pte Ltd
Bharti Airtel (UK) Limited
Bharti Airtel (USA) Limited
Bharti Airtel (France) SAS
Bharti Airtel Lanka (Private) Limited
Bharti Hexacom Limited
b. Other related parties
Airtel Ghana Limited
Singapore Telecommunication Limited
vi. Key Management Personnel ('KMP')
a. Executive Director
Segun Ogunsanya (since October 2021)
Raghunath Venkateswarlu Mandava (till September 2021)
Jaideep Paul (since June 2021)
b. Non-executive directors
Sunil Bharti Mittal
Awuneba Ajumogobia
Douglas Baillie
John Danilovich
Andrew Green
Akhil Gupta
Shravin Bharti Mittal
Annika Poutiainen
Ravi Rajagopal
Arthur Lang (till October 2020)
Kelly Bayer Rosmarin (since October 2020)
Tsega Gebreyes (since October 2021)
c. Others
Segun Ogunsanya (till September 2021)
Jaideep Paul (till May 2021)
Ian Ferrao
Michael Foley
Razvan Ungureanu
Luc Serviant
Daddy Mukadi
Neelesh Singh
Ramakrishna Lella
Olivier Pognon (till 15 October 2021)
Edgard Maidou (since 16 October 2021)
Rogany Ramiah
Stephen Nthenge
Vimal Kumar Ambat (since February 2021)
Ashish Malhotra (since October 2020)
Vinny Puri (since March 2021)
C Surendran (since August 2021)
(b) The details of significant transactions with the related
parties for the six months ended 30 September,
2021 and 2020 respectively, are provided below:
For the six months ended
--------------------------------------
30 September 2021 30 September 2020
------------------ ------------------
Sale / rendering of services
Bharti Airtel (UK) Limited 30 30
Bharti Airtel Limited 3 3
Purchase / receiving of services
Bharti Airtel (France) SAS 4 8
Bharti Airtel (UK) Limited 16 17
Bharti Airtel Limited 7 5
Network i2i Limited 3 3
Guarantee and collateral fee expense
Bharti Airtel Limited 3 5
Dividend Paid
Airtel Africa Mauritius Limited 53 63
(c) Key management compensation ('KMP')
KMP are those persons having authority and responsibility for
planning, directing and controlling the activities of the Group,
directly or indirectly, including any director, whether executive
or otherwise. For the Group, these include executive committee
members. Remuneration to KMP were as follows:
For the six months ended
---------------------------------
30 September
30 September 2021 2020
------------------ -------------
Short-term employee benefits 5 4
Performance linked incentive 2 1
Share-based payment 2 0
Other long-term benefits 1 1
Other benefits 0 1
10 7
================== =============
16. Fair Value of financial assets and liabilities
The category wise details as to the carrying value, fair value
and the level of fair value measurement hierarchy of the group's
financial instruments are as follows:
Carrying value as of Fair value as of
30 September 2021 31 March 2021 30 September 2021 31 March 2021
------------------ -------------- ------------------ --------------
Financial assets
FVTPL
Derivatives
- Forward and option
contracts Level 2 3 12 3 12
- Currency swaps and
interest rate swaps Level 2 0 0 0 0
- Cross currency swaps Level 3 1 1 1 1
Other bank balances Level 2 11 - 11 -
Investments Level 2 0 0 0 0
Amortised cost
Trade receivables 131 113 131 113
Cash and cash equivalents 698 813 698 813
Other bank balances 179 282 179 282
Balance held under mobile money trust 505 440 505 440
Other financial assets 91 83 91 83
1,619 1,744 1,619 1,744
================== ============== ================== ==============
Financial liabilities
FVTPL
Derivatives
- Forward and option
contracts Level 2 14 6 14 6
- Currency swaps and
interest rate swaps Level 2 2 2 2 2
- Cross currency swaps Level 3 1 3 1 3
- Embedded derivatives Level 2 1 1 1 1
Amortised cost
Borrowings - fixed rate Level 1 1,521 2,403 1,601 2,479
Borrowings - fixed rate Level 2 98 100 98 98
Other financial liabilities - Put
option liability Level 3 432 - 432 -
Borrowings 1,013 836 1,013 836
Trade payables 384 366 384 366
Mobile money wallet balance 487 432 487 432
Other financial liabilities 447 539 447 539
------------------ -------------- ------------------ --------------
4,400 4,688 4,480 4,762
================== ============== ================== ==============
The following methods/assumptions were used to estimate the fair
values:
-- The carrying value of bank deposits, trade receivables, trade
payables, short-term borrowings, other current financial assets and
liabilities approximate their fair value mainly due to the
short-term maturities of these instruments.
-- Fair value of quoted financial instruments is based on quoted
market price at the reporting date.
-- The fair value of non-current financial assets, long-term
borrowings and other financial liabilities is estimated by
discounting future cash flows using current rates applicable to
instruments with similar terms, currency, credit risk and remaining
maturities.
-- The fair values of derivatives and other bank balances
(measured at FVTPL) are estimated by using pricing models, wherein
the inputs to those models are based on readily observable market
parameters. The valuation models used by the Group reflect the
contractual terms of the derivatives (including the period to
maturity), and market-based parameters such as interest rates,
foreign exchange rates, volatility etc. These models do not contain
a high level of subjectivity as the valuation techniques used do
not require significant judgement and inputs thereto are readily
observable.
-- The fair value of the put option liability (included in other
financial liability) to buy back the stake held by non-controlling
interest in AMC BV (refer to note 4(e)) is measured at the present
value of the redemption amount (i.e. expected cash outflows).
Since, the liability will be based on fair value of the equity
shares of AMC BV (subject to a cap) at the end of 48 months, the
expected cash flows are estimated by determining the projected
equity valuation of the AMC BV at the end of 48 months and applying
cap thereon.
During the six months ended 30 September 2021 and year ended 31
March 2021 there were no transfers between Level 1 and Level 2 fair
value measurements, and no transfer into and out of Level 3 fair
value measurements.
The following table describes the key inputs used in the
valuation (basis discounted cash flow technique) of the Level 2 and
Level 3 financial assets/liabilities as of 30 September 2021 and 31
March 2021:
Financial assets / liabilities Inputs used
-------------------------------------------------- ------------------------------------------------
- Currency swaps, forward and option contracts, and Forward foreign currency exchange rates, Interest rate
other bank balances
- Interest rate swaps Prevailing / forward interest rates in market, Interest
rate
- Embedded derivatives Prevailing interest rates in market, inflation rates
- Other financial assets / fixed rate borrowings / other Prevailing interest rates in market, Future payouts,
financial Interest rates
Liabilities
Reconciliation of fair value measurements categorised within
level 3 of the fair value hierarchy - Financial
Assets/(Liabilities) (net)
-- Cross Currency Swaps ('CCS')
For the six months For the year
ended ended
------------------- --------------
30 September 2021 31 March 2021
------------------- --------------
Opening Balance (3) -
Issuance(1) - -
Recognised in finance costs in profit
and loss (unrealised)(2) 3 (3)
Closing Balance 0 (3)
=================== ==============
(1) the Group during the year ended 31 March 2021 had entered
into a Cross Currency Swap (CCS) in one of its subsidiaries, which
was accounted for as FVTPL. The fair value of CCS was estimated
based on the contractual terms of the CCS and parameters such as
interest rates, foreign exchange rates etc. Since, the data from
any observable markets in respect of interest rates was not
available, the interest rates were considered to be significant
unobservable inputs to the valuation of this CCS.
(2) these amounts represent the amounts recognised in the
financial statements during the period.
-- Put option Liability
For the six months For the year
ended ended
------------------------------------------------- -------------------------------
30 September 2021 31 March 2021
------------------------------------------------- -------------------------------
Opening Balance - -
Liability recognised by debiting 431 -
transaction
with NCI reserve
Recognised in finance costs in
profit
and loss (unrealised) 1
Closing Balance 432 -
================================================= ===============================
17. Assets and Liabilities held for sale
Assets and liabilities of disposal groups held for sale at 30
September 2021 relate to our telecommunication tower subsidiary in
Madagascar (part of Francophone Africa segment) consequent to
agreement entered in March 2021, and approximately 1400
telecommunications tower assets and related liabilities in Tanzania
(part of East Africa segment). These disposals did not meet the
definition of a discontinued operation as per IFRS 5.
The completion of above sale transactions is considered highly
probable and is only subject to conditions that are usual and
customary. These sales are expected to be completed within next 12
months from the reporting date.
For these disposals, the Group had agreed a selling price with
the prospective purchaser which was used as the fair value for the
impairment test and the same was classified as Level 3 on the fair
value hierarchy. The disposals are expected to result in profits
and therefore no impairment was recognized on classification as
held for sale.
During the six months ended 30 September 2021, the sale of 162
towers in Rwanda has been completed and thus the related assets and
liabilities held for sale have been de-recognised.
The disposal groups were stated at their carrying values and
comprised the following assets and liabilities:
As of
30 September
2021 31 March 2021
------------ -------------
Assets of disposal group classified as held
for sale
Property, plant and equipment 32 19
Capital work-in-progress 0 0
Right of use assets 14 5
Income tax assets 1 0
Deferred tax assets 2 2
Trade receivables 0 0
Cash and cash equivalents 0 1
Loans and security Deposits 0 0
Other current assets 1 4
------------ -------------
50 31
Liabilities of disposal group classified as
held for sale
Lease liabilities 15 7
Provisions 5 1
Deferred tax liabilities 1 1
Trade payables 5 2
Other current liabilities 1 8
------------ -------------
27 19
The cumulative other comprehensive loss relating to the disposal
group classified as held for sale is $5m and $4m as of 30 September
2021 and 31 March 2021 respectively.
18. Events after the balance sheet date
No subsequent events or transactions have occurred since the
date of statement of financial position that would have a material
effect on the financial statements as at and for the six months
ended 30 September 2021, except as disclosed below:
-- The Group on 4 October 2021, announced that its subsidiary
Airtel Networks Limited ('Airtel Nigeria') has initiated a process
under which it seeks to buy back the 8.26% minority shareholdings
in an open offer to all of Airtel Nigeria's shareholders 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 (approximately $148m using an
exchange rate of 413.38 NGN/US dollar).
Appendix
Additional information pertaining to three months ended
September 30, 2021
Consolidated Statement of Comprehensive Income (unaudited)
(All amounts are in US dollar millions unless otherwise
stated)
For three months ended
----------------------------------------------------------------------
30 September 2021 30 September 2020
---------------------------------- ----------------------------------
Income
Revenue 1,160 965
Other income 3 5
1,163 970
Expenses
Network operating expenses 203 174
Access charges 99 93
Licence fee / spectrum usage charges 57 47
Employee benefits expense 73 77
Sales and marketing expenses 54 47
Impairment reversal on financial
assets (1) (2)
Other expenses 114 105
Depreciation and amortisation 184 167
783 708
Operating profit 380 262
Finance costs 77 94
Finance income (5) (2)
Share of profit for associate (0) (0)
Profit before tax 308 170
Tax expense 116 82
Profit for the period 192 88
Profit before tax (as presented
above) 308 170
Add: Exceptional items (net) - 7
Underlying profit before tax 308 177
------------------------------------------ ---------------------------------- ----------------------------------
Profit after tax (as presented
above) 192 88
Add: Exceptional items (net) - 4
Underlying profit after tax 192 92
------------------------------------------ ---------------------------------- ----------------------------------
Other comprehensive income ('OCI')
Items to be reclassified subsequently
to profit or loss:
Net gain due to foreign currency
translation differences 21 39
Net loss on net investments hedge - (8)
21 31
---------------------------------- ----------------------------------
Items not to be reclassified
subsequently to profit or loss:
Re-measurement loss on defined
benefit plans (1) (1)
Tax credit on above 0 (0)
(1) (1)
---------------------------------- ----------------------------------
Other comprehensive income for the
period 20 30
Total comprehensive income for the
period 212 118
---------------------------------- ----------------------------------
For three months ended
30 September 2021 30 September 2020
---------------------------------- ----------------------------------
Profit for the period attributable to: 192 88
Owners of the Company 160 70
Non-controlling interests 32 18
Other comprehensive loss for the period
attributable to: 20 30
Owners of the Company 21 32
Non-controlling interests (1) (2)
Total comprehensive income for the
period attributable to: 212 118
Owners of the Company 181 102
Non-controlling interests 31 16
Alternative performance measures (APMs)
Introduction
In the reporting of financial information, the directors have
adopted various APMs. These measures are not defined by
International Financial Reporting Standards (IFRS) and therefore
may not be directly comparable with other companies APMs, including
those in the Group's industry.
APMs should be considered in addition to, and are not intended
to be a substitute for, or superior to, IFRS measurements.
Purpose
The directors believe that these APMs assist in providing
additional useful information on the underlying trends, performance
and position of the Group.
APMs are also used to enhance the comparability of information
between reporting periods and geographical units (such as
like-for-like sales), by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the Group's performance. Consequently, APMs are used
by the directors and management for performance analysis, planning,
reporting and incentive-setting purposes.
The directors believe the following metrics to be the APMs used
by the Group to help evaluate growth trends, establish budgets and
assess operational performance and efficiencies. These measures
provide an enhanced understanding of the Group's results and
related trends, therefore increasing transparency and clarity into
the core results of the business.
The following metrics are useful in evaluating the Group's
operating performance:
APM Closest Adjustment to reconcile to IFRS measure Table Definition and purpose
equivalent Reference
IFRS measure (1)
--------------------------
Underlying Operating Table A The Group defines
EBITDA and profit * Depreciation and amortisation underlying EBITDA as
margin operating profit/(loss)
for the period before
* Charity and donation depreciation
and amortisation, charity
and donation and adjusted
* Exceptional items for exceptional items.
Group defines underlying
EBITDA margin as
underlying EBITDA divided
by total revenue.
Underlying EBITDA and
margin are measures used
by the directors to
assess the trading
performance
of the business and are
therefore the measure of
segment profit that the
Group presents under
IFRS. Underlying EBITDA
and margin are also
presented on a
consolidated basis
because the
directors believe it is
important to consider
profitability on a basis
consistent with that
of the Group's operating
segments. When presented
on a consolidated basis,
underlying EBITDA
and margin are APMs.
Depreciation and
amortisation is a
non-cash item which
fluctuates depending on
the timing
of capital investment and
useful economic life.
Directors believe that a
measure which removes
this volatility improves
comparability of the
Group's results period on
period and hence is
adjusted to arrive at
underlying EBITDA and
margin.
Charity and donations are
not related to the
trading performance of
the Group and hence
adjusted
to arrive at underlying
EBITDA and margin.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
underlying EBITDA and
margin.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Underlying Profit / Table B The Group defines
profit / (loss) before * Exceptional items underlying profit/(loss)
(loss) before tax before tax as
tax profit/(loss) before tax
adjusted
for exceptional items.
The directors view
underlying profit/(loss)
before tax to be a
meaningful measure to
analyse
the Group's
profitability.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
underlying profit/(loss)
before tax.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Effective tax Reported tax Table C The Group defines
rate rate * Exceptional items effective tax rate as
reported tax rate
(reported tax charge
* Foreign exchange rate movements divided by
reported profit before
tax) adjusted for
* One-off tax impact of prior period, tax litigation exceptional items,
settlement and impact of tax on permanent differences foreign exchange rate
movements
and one-off tax items of
prior period adjustment,
tax settlements and
impact of permanent
differences on tax.
This provides an
indication of the current
on-going tax rate across
the Group.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
effective tax rate.
Foreign exchange rate
movements are specific
items that are non-tax
deductible in a few of
the entities which are
loss making and where DTA
is not yet triggered and
hence are considered
to hinder comparison of
the Group's effective tax
rate on a
period-to-period basis
and therefore
excluded to arrive at
effective tax rate.
One-off tax impact on
account of prior period
adjustment, any tax
litigation settlement and
tax impact on permanent
differences are
additional specific items
that because of their
size
and frequency in the
results, are considered
to hinder comparison of
the Group's effective
tax rate on a
period-to-period basis.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Underlying Profit/(loss) Table D The Group defines
profit/(loss) for the * Exceptional items underlying profit/(loss)
after tax period after tax as
profit/(loss) for the
period adjusted
for exceptional items.
The directors view
underlying profit/(loss)
after tax to be a
meaningful measure to
analyse
the Group's
profitability.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
underlying profit/(loss)
after tax.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Earnings per EPS Table E The Group defines
share before * Exceptional items earnings per share before
exceptional exceptional items as
items profit/(loss) for the
period
before exceptional items
attributable to owners of
the company divided by
the weighted average
number of ordinary shares
in issue during the
financial period.
This measure reflects the
earnings per share before
exceptional items for
each share unit
of the company.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
earnings for the purpose
of earnings per
share before exceptional
items.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Operating Cash Table F The Group defines
free cash generated * Income tax paid operating free cash flow
flow from as net cash generated
operating from operating activities
activities * Changes in working capital before income tax paid,
changes in working
capital, other non-cash
* Other non-cash items items, non-operating
income,
charity and donation and
* Non-operating income exceptional items, less
capital expenditures. The
Group views operating
* Charity and donation free cash flow as a key
liquidity measure, as it
indicates the cash
* Exceptional items available to pay
dividends,
repay debt or make
* Capital expenditures further investments in
the Group.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Net debt and No direct Table G The Group defines net
leverage equivalent * Borrowing debt as borrowings
ratio including lease
liabilities less cash and
* Lease liabilities cash equivalents,
term deposits with banks,
deposits given against
* Cash and cash equivalent borrowings/non-derivative
financial instruments,
processing costs related
* Term deposits with banks to borrowings and fair
value hedge adjustments.
The Group defines
* Deposits given against borrowings/ non-derivative leverage ratio as net
financial instruments debt divided by
underlying EBITDA.
The directors view net
* Fair value hedges debt and the leverage
ratio to be meaningful
measures to monitor the
Group's ability to cover
its debt through its
earnings.
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
Return on No direct Table H The Group defines return
capital equivalent * Exceptional items to arrive at underlying EBIT on capital employed
employed ('ROCE') as underlying
EBIT divided by average
capital employed.
The directors view ROCE
as a financial ratio that
measures the Group's
profitability and the
efficiency with which its
capital is being
utilised.
The Group defines
underlying EBIT as
operating profit/(loss)
for the period adjusted
for exceptional
items.
Exceptional items are
additional specific items
that because of their
size, nature or incidence
in the results, are
considered to hinder
comparison of the Group's
performance on a
period-to-period
basis and could distort
the understanding of our
performance for the
period and the
comparability
between periods and hence
are adjusted to arrive at
Underlying EBIT.
Capital employed is
defined as sum of equity
attributable to owners of
the company,
non-controlling
interests and net debt.
Average capital employed
is average of capital
employed at the closing
and beginning of the
relevant period.
For quarterly
computations, ROCE is
calculated by dividing
underlying EBIT for the
preceding
12 months by the average
capital employed (being
the average of the
capital employed averages
for the preceding four
quarters).
-------------- -------------- ------------------------------------------------------------ --------- --------------------------
(1) Refer "Reconciliation between GAAP and Alternative
Performance Measures" for respective table.
Some of the Group's IFRS measures and APMs are translated at
constant currency exchange rates to measure the organic performance
of the Group. In determining the percentage change in constant
currency terms, both current and previous financial reporting
period's results have been converted using exchange rates
prevailing as on 31 March 2021. Reported currency percentage change
is derived on the basis of the average actual periodic exchange
rates for that financial period. Variances between constant
currency and reported currency percentages are due to exchange rate
movements between the previous financial reporting period and the
current period.
Changes to APMs
During the period following APMs have been removed:
-- Underlying revenue and adjusted effective tax rate - due to
the absence of any exceptional revenue/ tax during the period,
-- Free cash flows - since the Group's dividends are no longer linked to such metric.
-- Restated EPS - as this is no longer valid, as there has been
no significant change in the number of shares issued between the
current and previous financial reporting periods.
Reconciliation between GAAP and Alternative Performance
Measures
Table A: Underlying EBITDA and margin
Description Unit Half year ended
of measure
-------------------------------- ------------- ---------------------------------------
Sep-21 Sep-20
-------------------------------- ------------- ------------------------------ -------
Operating profit $m 732 472
Add:
Depreciation and amortisation $m 366 328
Charity and donation $m 0 5
Exceptional items $m - 7
Underlying EBITDA $m 1,098 812
Revenue $m 2,272 1,815
-------------------------------- ------------- ------------------------------ -------
Underlying EBITDA margin (%) % 48.3% 44.7%
-------------------------------- ------------- ------------------------------ -------
Table B: Underlying profit / (loss) before tax
Description Unit Half year ended
of measure
---------------------------- ------------- ------------------
Sep-21 Sep-20
---------------------------- ------------- -------- --------
Profit / (loss) before tax $m 567 281
Exceptional items (net) $m (4) 7
Underlying profit / (loss)
before tax $m 563 288
--------
Table C: Effective tax rate
Description Unit Half year ended
of measure
--------------------------- -------------
Sep-21 Sep-20
--------------------------- ------------- ------------------------------------ ------------------------------------
Profit Income Tax rate Profit Income Tax rate
before tax expense % before tax expense %
taxation taxation
--------------------------- ------------- ---------- ------------- --------- ---------- ------------- ---------
Reported effective tax
rate $m 567 232 41.0% 281 136 48.5%
Adjusted for:
Exceptional items
(provided
below) $m (4) 7 10
Foreign exchange rate
movements for non-DTA
operating companies
& holding companies $m 24 36
One-off adjustment $m (12) (5) 6
Tax on Permanent
Difference
(net) $m (2) 0
Effective tax rate $m 575 225 39.2% 324 152 46.9%
---------
Exceptional items
1. Deferred tax asset
recognition $m 10
2. Gain on sale of tower
assets $m (4)
3. Employee restructuring $m 7
Total $m (4) 7 10
---------
Table D: Underlying profit / (loss) after tax
Description Unit Half year ended
of measure
---------------------------------- ------------- ------------------
Sep-21 Sep-20
---------------------------------- ------------- -------- --------
Profit / (loss) after tax $m 335 145
Exceptional items $m (4) (3)
Underlying profit / (loss) after
tax $m 331 142
--------
Table E: Earnings per share before exceptional items
Description Unit of Half year ended
measure
------------------------------------------ ---------- ------------------
Sep-21 Sep-20
------------------------------------------ ---------- -------- --------
Profit for the period attributable
to owners of the company $m 285 112
Operating and Non-operating exceptional
items $m (4) 7
Tax exceptional items $m (10)
Non-controlling interest exceptional
items $m 4
------------------------------------------ ---------- -------- --------
Profit for the period attributable
to owners of the company- before
exceptional items $m 281 113
Weighted average number of ordinary
shares in issue during the financial
period. Million 3,755 3,758
Earnings per share before exceptional
items Cents 7.5 3.0
--------
Table F: Operating free cash flow
Description Unit of Half year ended
measure
------------------------------------------- ---------- ------------------
Sep-21 Sep-20
------------------------------------------- ---------- -------- --------
Net cash generated from operating
activities $m 922 744
Add: Income tax paid $m 190 122
Net cash generation from operation
before tax $m 1,112 866
Less: Changes in working capital
(Increase)/Decrease in trade
receivables $m 22 (1)
Decrease/(Increase) in inventories $m (5) 3
Increase/(Decrease) in trade
payables $m (7) 7
Increase in mobile money wallet
balance $m (56) (80)
Decrease in provisions $m 18 0
Increase in deferred revenue $m (22) (9)
Decrease in income received
in advance $m - 1
Increase in other financial
and non-financial liabilities $m (14) (3)
Increase in other financial
and non-financial assets $m 57 21
Operating cash flow before changes
in working capital $m 1,105 805
Other non-cash adjustments $m (7) (5)
Charity and donation $m 0 5
Exceptional items $m - 7
Underlying EBITDA $m 1,098 812
Less: Capital expenditure $m (245) (216)
Operating free cash flow $m 853 596
--------
Table G: Net debt and leverage
Description Unit of As at As at
measure
---------------------------------------------- ----------
Sep-21 Sep-20
---------------------------------------------- ---------- ------- -------
Long term borrowing, net of current
portion $m 1,866 1,859
Short-term borrowings and current
portion of long-term borrowing $m 766 1,462
Add: Processing costs related to
borrowings $m 3 4
Add/(less): Fair value hedge adjustment $m (18) (24)
Less: Cash and cash equivalents $m (698) (409)
Less: Term deposits with banks $m (15) (663)
Less: Deposits given against borrowings/ $m (143) -
non-derivative financial instruments
Add: Lease liabilities $m 1,366 1,230
Net debt $m 3,127 3,459
-------
Underlying EBITDA (LTM) $m 2,078 1,607
Leverage (LTM) times 1.5 2.2
---------------------------------------------- ---------- ------- -------
Table H: Return on capital employed
Description Unit of Half year ended
measure
--------------------------------------- ---------- ------------------
Sep-21 Sep-20
--------------------------------------- ---------- -------- --------
Operating profit (preceding 12
months) $m 1,379 978
Less:
Exceptional items $m (21) (10)
--------------------------------------- ---------- -------- --------
Underlying EBIT (preceding 12 months) $m 1,358 968
--------------------------------------- ---------- -------- --------
Average capital employed (1) $m 6,728 6,676
--------------------------------------- ---------- -------- --------
Return on capital employed % 20.2% 14.5%
--------------------------------------- ---------- -------- --------
(1) Average capital employed is calculated as average of capital
employed at closing and opening of the relevant period.
INDEPENT REVIEW REPORT TO AIRTEL AFRICA PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2021 which comprises the interim
condensed consolidated statement of comprehensive income, the
interim condensed consolidated statement of financial position, the
interim condensed consolidated statement of cash flows, the interim
condensed consolidated statement of changes in equity and related
notes 1 to 18. We have read the other information contained in the
half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2021 is not prepared, in all material respects, in
accordance with United Kingdom adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
27 October 2021
Glossary
Technical and Industry Terms
4G data customer A customer having a 4G handset and who has used at least
1MB on any of the Group's GPRS, 3G
& 4G network in the last 30 days.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money (mobile money) Airtel Money is the brand name for Airtel Africa's mobile
money products and services. The
term is used interchangeably with 'mobile money' when
referring to our mobile money business,
finance, operations and activities.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money ARPU Mobile money average revenue per user. This is derived by
dividing total mobile money revenue
during the relevant period by the average number of
active mobile money customers and dividing
the result by the number of months in the relevant
period.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money customer base Total number of active subscribers who have enacted any
mobile money usage event in last 30
days.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money customer penetration The proportion of total Airtel Africa active mobile
customers who use mobile money services.
Calculated by dividing the mobile money customer base by
the Group's total customer base.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money transaction value Any financial transaction performed on Airtel Africa's
mobile money platform.
---------------------------------------------------------- ----------------------------------------------------------
Airtel Money transaction value per customer per month Calculated by dividing the total mobile money transaction
value on the Group's mobile money
platform during the relevant period by the average number
of active mobile money customers
and dividing the result by the number of months in the
relevant period.
---------------------------------------------------------- ----------------------------------------------------------
ARPU Average revenue per user per month. This is derived by
dividing total revenue during the relevant
period by the average number of customers during the
period and dividing the result by the
number of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Average customers The average number of active customers for a period.
Derived from the monthly averages during
the relevant period. Monthly averages are calculated
using the number of active customers
at the beginning and the end of each month.
---------------------------------------------------------- ----------------------------------------------------------
Broadband base stations Base stations that carry either 3G and/or 4G capability
across all technologies and spectrum
bands.
---------------------------------------------------------- ----------------------------------------------------------
Capital expenditure An alternative performance measure (non-GAAP). Defined as
investment in gross fixed assets
(both tangible and intangible but excluding spectrum and
licences) plus capital work in progress
(CWIP), excluding provisions on CWIP for the period.
---------------------------------------------------------- ----------------------------------------------------------
Constant currency The Group has presented certain financial information
that is calculated by translating the
results for the current financial year and previous
financial years at a fixed 'constant currency'
exchange rate, which is done to measure the organic
performance of the Group. Growth rates
for reporting regions and service segments are in
constant currency as it better represents
the underlying performance of the business. Constant
currency growth rates for prior periods
are calculated using closing exchange rates as at the end
of prior period.
---------------------------------------------------------- ----------------------------------------------------------
Churn Churn is derived by dividing the total number of customer
disconnections during the relevant
period by the average number of customers and dividing
the result by the number of months
in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Customer Defined as a unique active subscriber with a unique
mobile telephone number who has used any
of Airtel's services in the last 30 days.
---------------------------------------------------------- ----------------------------------------------------------
Customer base The total number of active subscribers that have used any
of our services (voice calls, SMS,
data usage or mobile money transaction) in the last 30
days.
---------------------------------------------------------- ----------------------------------------------------------
Data ARPU Data ARPU is derived by dividing total data revenue
during the relevant period by the average
number of data customers and dividing the result by the
number of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Data customer base The total number of subscribers who have consumed at
least 1MB on the Group's GPRS, 3G or
4G network in the last 30 days.
---------------------------------------------------------- ----------------------------------------------------------
Data customer penetration The proportion of customers using data services.
Calculated by dividing the data customer
base by the total customer base.
---------------------------------------------------------- ----------------------------------------------------------
Data usage per customer Calculated by dividing the total MBs consumed on the
Group's network during the relevant period
by the average data customer base over the same period
and dividing the result by the number
of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Diluted earnings per share Diluted EPS is calculated by adjusting the profit for the
year attributable to the shareholders
and the weighted average number of shares considered for
deriving basic EPS, for the effects
of all the shares that could have been issued upon
conversion of all dilutive potential shares.
The dilutive potential shares are adjusted for the
proceeds receivable had the shares actually
been issued at fair value. Further, the dilutive
potential shares are deemed converted as
at beginning of the period, unless issued at a later date
during the period.
---------------------------------------------------------- ----------------------------------------------------------
Earnings per share (EPS) EPS is calculated by dividing the profit for the period
attributable to the owners of the
company by the weighted average number of ordinary shares
outstanding during the period.
---------------------------------------------------------- ----------------------------------------------------------
Foreign exchange rate movements for non-DTA operating Foreign exchange rate movements are specific items that
companies are non-tax deductible in a few of
and holding companies our operating entities, hence these hinder a
like-for-like comparison of the Group's effective
tax rate on a period-to-period basis and are therefore
excluded when calculating the effective
tax rate.
---------------------------------------------------------- ----------------------------------------------------------
Free cash flow Free cash flow is defined as operating free cash flow
less cash interest, income tax paid
and change in operating working capital.
---------------------------------------------------------- ----------------------------------------------------------
Information and communication technologies (ICT) ICT refers to all communication technologies, including
the internet, wireless networks, cell
phones, computers, software, middleware,
videoconferencing, social networking, and other media
applications and services.
---------------------------------------------------------- ----------------------------------------------------------
Interconnect user charges (IUC) Interconnect user charges are the charges paid to the
telecom operator on whose network a
call is terminated.
---------------------------------------------------------- ----------------------------------------------------------
Lease liability Lease liability represents the present value of future
lease payment obligations.
---------------------------------------------------------- ----------------------------------------------------------
Leverage An alternative performance measure (non-GAAP). Leverage
(or leverage ratio) is calculated
by dividing net debt at the end of the relevant period by
the underlying EBITDA for the preceding
12 months.
---------------------------------------------------------- ----------------------------------------------------------
Minutes of usage Minutes of usage refer to the duration in minutes for
which customers use the Group's network
for making and receiving voice calls. It is typically
expressed over a period of one month.
It includes all incoming and outgoing call minutes,
including roaming calls.
---------------------------------------------------------- ----------------------------------------------------------
Mobile services Mobile services are our core telecom services, mainly
voice and data services, but also including
revenue from tower operation services provided by the
Group and excluding mobile money services.
---------------------------------------------------------- ----------------------------------------------------------
Net debt An alternative performance measure (non-GAAP). The Group
defines net debt as borrowings including
lease liabilities less cash and cash equivalents, term
deposits with banks, processing costs
related to borrowings and fair value hedge adjustments.
---------------------------------------------------------- ----------------------------------------------------------
Net debt to underlying EBITDA (LTM) An alternative performance measure (non-GAAP) Calculated
by dividing net debt as at the end
of the relevant period by underlying EBITDA for the
preceding 12 months (from the end of the
relevant period). This is also referred to as the
leverage ratio.
---------------------------------------------------------- ----------------------------------------------------------
Network towers or 'sites' Physical network infrastructure comprising a base
transmission system (BTS) which holds the
radio transceivers (TRXs) that define a cell and
coordinates the radio link protocols with
the mobile device. It includes all ground-based, roof top
and in-building solutions.
---------------------------------------------------------- ----------------------------------------------------------
Operating company (OpCo) Operating company (or OpCo) is a defined corporate
business unit, providing telecoms services
and mobile money services in the Group's footprint.
---------------------------------------------------------- ----------------------------------------------------------
Operating free cash flow An alternative performance measure (non-GAAP). Calculated
by subtracting capital expenditure
from underlying EBITDA.
---------------------------------------------------------- ----------------------------------------------------------
Operating leverage An alternative performance measure (non-GAAP). Operating
leverage is a measure of the operating
efficiency of the business. It is calculated by dividing
operating expenditure (excluding
regulatory charges) by total revenue.
---------------------------------------------------------- ----------------------------------------------------------
Operating profit Operating profit is a GAAP measure of profitability.
Calculated as revenue less operating
expenditure (including depreciation and amortisation and
operating exceptional items).
---------------------------------------------------------- ----------------------------------------------------------
Other revenue Other revenue includes revenues from messaging, value
added services (VAS), enterprise, site
sharing and handset sale revenue.
---------------------------------------------------------- ----------------------------------------------------------
Reported currency Our reported currency is US dollars. Accordingly, actual
periodic exchange rates are used
to translate the local currency financial statements of
OpCos into US dollars. Under reported
currency the assets and liabilities are translated into
US dollars at the exchange rates prevailing
at the reporting date whereas the statements of profit
and loss are translated into US dollars
at monthly average exchange rates.
---------------------------------------------------------- ----------------------------------------------------------
Smartphone A smartphone is defined as a mobile phone with an
interactive touch screen that allows the
user to access the internet and additional data
applications, providing additional functionality
to that of a basic feature phone which is used only for
making voice calls and sending and
receiving text messages.
---------------------------------------------------------- ----------------------------------------------------------
Smartphone penetration Calculated by dividing the number of smartphone devices
in use by the total number of customers.
---------------------------------------------------------- ----------------------------------------------------------
Total MBs on network Total MBs consumed (uploaded & downloaded) by customers
on the Group's GPRS, 3G and 4G network
during the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Underlying EBIT Defined as operating profit/(loss) for the period
adjusted for exceptional items.
---------------------------------------------------------- ----------------------------------------------------------
Underlying EBITDA An alternative performance measure (non-GAAP). Defined as
operating profit before depreciation,
amortisation, CSR cost and exceptional items.
---------------------------------------------------------- ----------------------------------------------------------
Underlying EBITDA margin An alternative performance measure (non-GAAP). Calculated
by dividing underlying EBITDA for
the relevant period by revenue for the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Unstructured Supplementary Service Data Unstructured Supplementary Service Data (USSD), also
known as "quick codes" or "feature codes",
is a communications protocol for GSM mobile operators,
similar to SMS messaging. It has a
variety of uses such as WAP browsing, prepaid callback
services, mobile-money services, location-based
content services, menu-based information services, and
for configuring phones on the network.
---------------------------------------------------------- ----------------------------------------------------------
Voice minutes of usage per customer per month Calculated by dividing the total number of voice minutes
of usage on the Group's network during
the relevant period by the average number of customers
and dividing the result by the number
of months in the relevant period.
---------------------------------------------------------- ----------------------------------------------------------
Weighted average number of shares The weighted average number of shares is calculated by
multiplying the number of outstanding
shares by the portion of the reporting period those
shares covered, doing this for each portion
and then summing the total.
---------------------------------------------------------- ----------------------------------------------------------
Abbreviations
2G Second-generation mobile technology
---------- ------------------------------------------------
3G Third-generation mobile technology
---------- ------------------------------------------------
4G Fourth-generation mobile technology
---------- ------------------------------------------------
ARPU Average revenue per user
---------- ------------------------------------------------
bn Billion
---------- ------------------------------------------------
bps Basis points
---------- ------------------------------------------------
CAGR Compound annual growth rate
---------- ------------------------------------------------
Capex Capital expenditure
---------- ------------------------------------------------
CSR Corporate social responsibility
---------- ------------------------------------------------
DTA Deferred Tax Asset
---------- ------------------------------------------------
EBIT Earnings before interest and tax
---------- ------------------------------------------------
EBITDA Earnings before interest, tax, depreciation and
amortisation
---------- ------------------------------------------------
EPS Earnings per share
---------- ------------------------------------------------
FPPP Financial position and prospects procedures
---------- ------------------------------------------------
GAAP Generally accepted accounting principles
---------- ------------------------------------------------
GB Gigabyte
---------- ------------------------------------------------
HoldCo Holding company
---------- ------------------------------------------------
IAS International accounting standards
---------- ------------------------------------------------
ICT Information and communication technologies
---------- ------------------------------------------------
ICT (Hub) Information communication technology (Hub) IFRS
---------- ------------------------------------------------
IFRS International financial reporting standards
---------- ------------------------------------------------
IMF International monetary fund
---------- ------------------------------------------------
IPO Initial public offering
---------- ------------------------------------------------
KPIs Key performance indicators
---------- ------------------------------------------------
KYC Know your customer
---------- ------------------------------------------------
LTE Long-term evolution (4G technology)
---------- ------------------------------------------------
LTM Last 12 months
---------- ------------------------------------------------
m Million
---------- ------------------------------------------------
MB Megabyte
---------- ------------------------------------------------
MI Minority interest (non-controlling interest)
---------- ------------------------------------------------
NGO Non-governmental organisation
---------- ------------------------------------------------
OpCo Operating company
---------- ------------------------------------------------
P2P Person to person
---------- ------------------------------------------------
PAYG Pay-as-you-go
---------- ------------------------------------------------
QoS Quality of service
---------- ------------------------------------------------
RAN Radio access network
---------- ------------------------------------------------
SIM Subscriber identification module
---------- ------------------------------------------------
Single RAN Single radio access network
---------- ------------------------------------------------
SMS Short messaging service
---------- ------------------------------------------------
TB Terabyte
---------- ------------------------------------------------
Telecoms Telecommunications
---------- ------------------------------------------------
UoM Unit of measure
---------- ------------------------------------------------
USSD Unstructured supplementary service data
---------- ------------------------------------------------
Risk Factors
The Group's business and the industry in which it operates,
together with all other information contained in this document,
including, in particular, the risk factors summarised below.
Additional risks and uncertainties relating to the Group that are
not currently known to the Group, or that the Group currently deem
immaterial, may individually or cumulatively also have a material
adverse effect on the Group's business, results of operations and
financial condition.
Principal risks summarised
1. We operate in a competitive environment with the potential
for aggressive competition by existing players, or the entry of new
players, which could both put a downward pressure on prices,
adversely affecting our revenue and profitability.
2. 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.
3. An inability to invest and upgrade our network and IT
infrastructure could affect our ability to compete effectively in
the market.
4. Cybersecurity threats through internal or external sabotage
or system vulnerabilities could potentially result in customer data
breaches and/or service downtimes.
5. 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 impact profitability.
6. Shortages of skilled telecommunications professionals in some
markets and the inability to identify and develop successors for
key leadership positions could both lead to disruptions in the
execution of our corporate strategy.
7. Our internal control environment is subject to the risk that
controls may become inadequate due to changes in internal or
external conditions, new accounting requirements, delays, or
inaccuracies in reporting.
8. Our telecommunications networks are subject to the risks of
technical failures, aging infrastructure, human error, wilful acts
of destruction or natural disasters.
9. Our multinational footprint means we are exposed to the risks
of currency fluctuations including the availability of funds for
repatriation to the Group company triggered by adverse
macroeconomic conditions in the markets where we operate.
10. We operate in a diverse and dynamic legal, tax and
regulatory environment. A failure to comply with relevant laws and
regulations could lead to penalties, sanctions, and reputational
damage.
11. Disruptions and uncertainties caused by the Covid-19
pandemic may impact the Group's ability to operate its business
effectively and to achieve its objectives.
[1] Alternative performance measures (APM) are described on page 45.
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IR FFFFVIFLDFIL
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