WED, 11 MAY, 2022-theGBJournal | Airtel Africa (AIRTELAFRI) released its Q4/FY 22 audited results before the market opened today, 11 May. The group reported EPS of US$0.04 (+43.0% y/y) in Q4 22, bringing FY 22 EPS to US$0.17 (+86.3% y/y). A final dividend of US$0.03 (N12.54 @ N418/US$1) was proposed- in line Coronation Asset Management Research estimate- and equates to a yield of 0.9% on the last closing price.
Note that Airtel Africa has a March year-end.
Mr Segun Ogunsanya, chief executive officer, on the trading update: “This is another strong set of results for Airtel Africa, demonstrating our solid execution as we continue to enrich the lives of a growing number of people through leveraging the sizeable opportunity to promote digital and financial inclusion across our markets.’’
The achieved EPS was in line with estimate (2% variance) for FY 22 but was 5.1% higher than the consensus estimate.
The market’s reaction was neutral as the stock was flat today. Year-to-date, the stock is up by 46.6%.
Revenue grew by double-digits for the seventh successive quarter, rising by 17.7% y/y in Q4 22. The movement was primarily driven by growth in Data (+26.3% y/y) and Voice (+11.9% y/y).
Growth in Data, which contributed 32.6% (Q4 21: 30.3%) to revenue, was delivered through a combination of Data customer base growth (+15.2% y/y) and Data Average Revenue Per User (ARPU) growth (+10.5% y/y).
According to management, the expansion of AIRTELAFRI’s 4G network infrastructure helped drive the customer base growth, and 87.6% of the Group’s sites are now operating on 4G, compared with 76.5% in the prior year. In addition, Data customer base penetration (percentage of the total customer base) reached 36.4%, an increase of 2.1 percentage points, with 4G customers making up 42.6% of the total Data customer base.
Total customer base growth (+8.7% y/y) and Voice ARPU growth (+3.9% y/y), following the continued expansion of the Group’s network and distribution infrastructure, supported voice revenue (+11.9% y/y) which accounted for 50.0% of total revenue in Q4 22.
Elsewhere, Mobile money revenue (+33.6% y/y) continued to grow by double-digits, following the continued expansion of the Group’s distribution network, particularly the expansion of the exclusive channel of Airtel money branches and kiosks. However, although growth in the segment remains strong, we note that mobile money revenue growth has slowed in recent quarters (Q1 22: +53.1%; Q2 22: +35.0%; Q3 22: +33.6%). According to management, this was due to the implementation of additional levies by the Government of Tanzania on mobile money withdrawal and P2P transactions from July 2021, which were subsequently revised downwards in early September 2021.
During the quarter, total expenses (ex-depreciation) grew by 18.8% y/y, owing to the continued effects of Nigerian Naira and the Malawian Kwacha devaluations on network operations costs and increased spectrum license fees. Consequently, EBITDA grew by 16.8% y/y, with EBITDA margin printing 47.3% (vs 49.4% in Q3 22 and 47.7% in Q4 21).
Lower tax rate underpins higher profits
Net finance costs (+24.8% y/y) rose in Q4 22 due to a one-off cost of US$19m on prepayment of $505m bonds during the quarter. Overall, Q4 PBT grew 67.9% y/y, and PAT grew 43.6% y/y. The effective tax for the quarter was 33.0%, compared with 39.9% in Q3 22 and 28.4% in Q4 21.
Conference call highlights
Nigeria PSB
$30m of $700-750m capex planned for FY 23 has been earmarked for the rollout of the Nigeria Payment Service Bank (PSB).
Nigeria PSB will primarily target two types of customers: (1) those who do not have any financial services (no account or wallet) will be offered services as a store of value for their cash, and (2) those who have bank accounts will be offered more sophisticated products with Airtel acting as an intermediary for insurance, loans, and investment products.
NIN – SIM linkage registration rules in Nigeria
Airtel Nigeria barred 12m subscribers in April 2022. Since then, 3.6m of those subscribers have submitted their NINs, and services have been reinstated for c. 1m subscribers.
Nigeria tariff increases
Airtel does not have pricing power in Nigeria. The regulator sets tariffs. No movement on tariffs at the moment, but Airtel will follow any regulatory directives given.
Data revenue growth
Airtel Nigeria Q4 22 data revenue grew by 28.0% y/y, much slower than MTNN (+54.5% y/y). Management says there were issues with the company’s fibre infrastructure in January and February 2022, which led to the slowdown in the data revenue growth trend.
Cash upstreaming
Airtel Nigeria repatriated $145m in FY 22 at an average exchange rate of N484.90/$1. In addition, $100m was repatriated in April 2022 at an undisclosed exchange rate.
Network makeup
65% of the devices across the group’s network are 2G devices, 15% are 3G devices, and 20% are 4G devices. 4G devices account for 80% of data traffic and 80% of revenues.
‘’Turning to the outlook, long-term opportunities for us remain attractive. While mindful of currency devaluation and repatriation risks, wecontinue to work actively to mitigate all our material risks and to deliver value for all our stakeholders. There are increasing challenges from global inflationary pressures, but we continue to target revenue growth ahead of the market and moderate margin expansion,” Segun Ogunsanya said.
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