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Airtel records profit growth in East Africa

The company will soon welcome two new minority investors – The Rise Fund and Mastercard – in its mobile money business

Kampala, Uganda | ISAAC KHISA | India’s Bharti Airtel operations in East African shrugged off the effects of coronavirus pandemic to record a 15% surge in revenue to US$1.38bn citing increased demand for voice, internet and mobile money services.

The company’s combined financial results for Uganda, Kenya, Rwanda, Tanzania, Malawi and Zambia,  shows a 2.9% surge in voice revenue to US$541million, 34.4% surge in internet revenue to US$254million and 18.1% surge in mobile money revenue to US$110million. Other revenue streams recorded 11.5% surge to US$ 96million.

While the voice usage per customer increased by 18.3% to 330 minutes per customer per month, data recorded growth across all the operating markets in the region, driven by expansion of the 4G network infrastructure, with 76% of sites now on 4G in East Africa, compared with 66% during the prior year.

The total data usage on the network grew by 70.7%, led by the 39.3% increase in data usage per customer per month to 2.7 GB per customer compared with 1.9 GB in the prior year.  Similarly, mobile money recorded a huge revenues, largely driven by growth in Uganda, Tanzania, Zambia, and Malawi.

However, capital expenditure stood at US$249m, up 37.5% due to planned network expansion across the markets. Operating free cash flow was $382m, up 42%, largely due to the growth in underlying earnings before interest, taxes, depreciation, and amortization.

For that, Airtel’s operations in the region recorded a 53.7% surge to US$ 408millon during the period under review.

African revenue growth

Overall across the African continent where it operates in 14 markets, Airtel recorded 14.2% growth in revenue to $3,908m; with profits growing faster at 24.2% to US$1.1bn.

However, profit after tax grew marginally by 1.8% to US$ 415milion. This was largely flat compared with the previous year a result of the prior period recognition of a one-off gain of $72m related to the expired indemnity to certain pre-IPO investors and a higher deferred tax credit of $15m and one-off derivative gain of $47m in the prior year, as well as higher tax in the current year.

Raghunath Mandava, chief executive officer, Airtel Africa, said the company’s performance has been generally strong amidst the pandemic.

“Contributions to this growth came across all regions, with particular improvement in Francophone Africa, and across all our major services, with mobile money, data and voice each posting double-digit revenue growth,” he said.

“Our customer base also grew strongly for most of the year with new customer registration requirements in Nigeria stemming our onboarding of new customers in the final quarter, and these restrictions were lifted in second half of April.”

Mandava said in line with the strategy of unlocking value in the mobile money business, they will soon welcome two new minority investors – The Rise Fund and Mastercard – in agreed transactions which value this part of business at $2.65bn, as well as bringing $300m into the Group. He said the company has also agreed to sell more of its tower portfolio, yielding yet more cash for the business.

Mandava, however, noted that they are cautious about the pandemic more especially with the current surge in cases.

“So far this has had no adverse impact on the business, though we will continue to monitor the situation closely,” he said, adding “in these times, our purpose of transforming lives has never been more critical.”

“It has always meant more than simply providing mobile and financial services; it is about our drive to create a sustainable future.”

Future outlook

Mandava said the company’s leadership team has this year worked to create a sustainability framework, outlining the role that they can play and focus areas that can make the biggest difference for each of its business, its people, community, and the environment.

He said the company will report back with its goals later this year and deliver the first sustainability report in 2022.

“The combination of bringing connectivity to underpenetrated mobile markets and improving financial inclusion through banking the unbanked, across our territories of operation, together provide us with a sizeable runway of sustainable profitable growth potential, and one we remain very confident of delivering,” he added.

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