Airtel Africa reports return to full-year profitability

(Sharecast News) - Airtel Africa posted a return to profitability for the year ended 31 March on Thursday, as strong constant currency growth in mobile services and mobile money offset significant foreign exchange headwinds, particularly in Nigeria. The FTSE 100 mobile operator said reported revenue dipped 0.5% to $4.96bn due to currency devaluation, despite a 21.1% increase in constant currency.

It said the fourth quarter saw a marked easing of currency pressures, with revenue up 17.8% in reported terms and 23.2% in constant currency, supported by recent tariff adjustments in Nigeria.

Mobile services revenue rose 19.6% in constant currency, with data revenue increasing 30.5% and voice up 10.6%.

Mobile money continued to expand rapidly, with revenue up 29.9% in constant currency.

Total customer numbers rose 8.7% to 166.1 million, and mobile money users grew 17.3% to 44.6 million.

Underlying EBITDA declined 5.1% in reported currency to $2.30bn, with margins narrowing to 46.5% from 48.8% a year earlier, affected by higher fuel costs and reduced contribution from Nigeria.

However, margins improved through the year, reaching 47.3% in the fourth quarter from 45.3% in the first, as the group benefited from operational efficiency initiatives.

Airtel Africa reported a net profit of $328m, recovering from an $89m loss the prior year, when results were heavily impacted by derivative and currency losses.

Basic earnings per share came in at six cents, compared to a 4.4 cent loss last year.

Earnings per share before exceptional items declined to 8.2 cents, reflecting higher finance costs linked to tower contract renewals and lingering currency effects.

Capital expenditure came in at $670m, below guidance due to delayed data centre spending.

The group said it now expected capex of $725m to $750m for the current year.

Foreign currency debt was cut by $702m, and 93% of operating company debt was now denominated in local currencies, up from 83% a year ago.

Leverage increased as expected due to tower lease renewals, with reported net debt to EBITDA rising to 2.3x and lease-adjusted leverage at 1.0x.

The board recommended a final dividend of 3.9 cents, bringing the total dividend to 6.5 cents, up 9.2% on the prior year.

Shareholders also received $120m via buybacks over the period.

"We have reported another strong operating performance as our strategy continues to deliver against the significant opportunity that exists across our markets," said chief executive officer Sunil Taldar.

"The focus on our refreshed strategy has seen continued investment in the network while also driving improvements in our digital platforms and offerings to further enhance the customer experience.

"This has enabled increased digital inclusion with a further 20% growth in our smartphone customers to 74.4 million, contributing to a 47.5% increase in data traffic over the year."

Taldar noted that Airtel Money was also supporting "financial inclusion", with customers increasing 17.3% to 44.6 million and an expanding ecosystem underpinning the $136bn transaction value, which increased 32% in constant currency.

"The recent stability in the operating environment is encouraging, however we remain conscious of global developments that may impact our business.

"We will remain focussed on delivering our strategy to transform the lives of our customers and support economic prosperity across our markets."

At 0814 BST, shares in Airtel Africa were down 3.52% at 164.3p.

Reporting by Josh White for Sharecast.com.