Report on the results for the first quarter ended June 30, 2020
Airtel Africa plc
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July 24, 2020
The financial statements included in this quarterly report fairly presents in all material respects the financial position, results of operations and cash flow of the Group as of, and for the periods presented in this report.
| Mobile Services I Mobile Money |
Supplemental Disclosures
Congo RDC Towers S.A., Gabon Towers S.A. (under dissolution), Indian Basis of preparation:- The results for the three months ended 30 June Ocean Telecom Limited, Madagascar Towers S.A., Malawi Towers 2020 are unaudited and in the opinion of management, include all adjustments necessary for the fair presentation of the results of the same Limited, Mobile Commerce Congo S.A., Montana International, period. The financial information has been prepared based on Partnership Investments S.A.R.L, Société Malgache de Telephonie International Accounting Standard 34 (IAS 34) and apply the same Cellulaire SA, Tanzania Towers Limited, Bharti Airtel Rwanda Holdings accounting policies, presentation and methods of calculation as those Limited , Airtel Money Transfer Ltd, Airtel Money Tanzania Limited , Airtel followed in the preparation of the Group’s annual consolidated financial Mobile Commerce Nigeria Limited (incorporate w.e.f. August 31, 2017), statements for the year ended 31 March 2020 except to the extent Airtel Mobile Commerce Nigeria B.V.(incorporated w.e.f. 5th December, required prescribed by IAS 34. This report should be read in conjunction 2018), Airtel Mobile Commerce (Seychelles) B.V. (incorporated w.e.f. with audited consolidated financial statements and related notes for the year ended 31 March 2020. The comparative information has been 29th January, 2019), Airtel Mobile Commerce Congo B.V. (incorporated drawn based on Airtel Africa plc’s Audited Consolidated Financial w.e.f. 29th January, 2019), Airtel Mobile Commerce Kenya B.V. Statements for the year ended 31 March 2020 prepared under (incorporated w.e.f. 29th January, 2019), Airtel Mobile Commerce International Financial Reporting Standard (IFRS). Madagascar B.V. (incorporated w.e.f. 29th January, 2019), Airtel Mobile Commerce Malawi B.V. (incorporated w.e.f. 29th January, 2019), Airtel Use of certain Alternative performance measures (APM):- This result Mobile Commerce Rwanda B.V. (incorporated w.e.f. 29th January, announcement contains certain information on the Group’s results of 2019), Airtel Mobile Commerce Tchad B.V. (incorporated w.e.f. 29th operations and cash flows that have been derived from amounts January, 2019), Airtel Mobile Commerce Uganda B.V. (incorporated calculated in accordance with International Financial Reporting Standard w.e.f. 29th January, 2019), Airtel Mobile Commerce Zambia B.V. (IFRS), but are not in themselves IFRS measures. They should not be (incorporated w.e.f. 29th January, 2019), Airtel International LLP viewed in isolation as alternatives to the equivalent IFRS measures and (incorporated w.e.f. 27th March, 2019, Tigo Rwanda Limited (merged should be read in conjunction with the equivalent IFRS measures. with Airtel Rwanda Ltd w.e.f. July 3, 2018), Airtel Money Trust, Seychelles Cable Systems Company Limited (Associate), Airtel Mobile Further, disclosures are also provided under “7.2 Use of Alternative Commerce Gabon B.V., Airtel Mobile Commerce Niger B.V., Airtel performance measures (APM) Financial Information” on page 30 Mobile Commerce DRC B.V. and Airtel Money Kenya Limited.
Safe Harbor: The IAS 34 financials considered for the purpose of this Disclaimer: By reading this presentation you agree to be bound by the report is unaudited. following conditions.
Convenience translation: - We publish our financial statements in The information contained in this presentation in relation to Airtel Africa United States Dollars. All references herein to “US dollars”, “USD”, “$” plc ("Airtel Africa") and its subsidiaries has been prepared solely for use and “US$” are to United States dollars. Translation of income statement at this presentation. The presentation is not directed to, or intended for items have been made from local currencies of Africa operating units to distribution to or use by, any person or entity that is a citizen or resident USD (unless otherwise indicated) using the respective monthly average or located in any jurisdiction where such distribution, publication, rates. Translation of statement of financial position items has been made availability or use would be contrary to law or regulation or which would using the closing rate. All amounts translated as described above are require any registration or licensing within such jurisdiction. provided solely for the convenience of the reader, and no representation is made that the local currencies or USD amounts referred to herein could References in this presentation to "Airtel Africa", "Group", "we", "us" and have been or could be converted into USD or local currencies "our" when denoting opinion refer to Airtel Africa plc and its subsidiaries. respectively, as the case may be, at any particular rate, the above rates or at all. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding off. Forward-looking statement This document contains certain forward-looking statements including "forward-looking" statements made within the meaning of Section 21E of Others: In this report, the terms “we”, “us”, “our”, “ Airtel - Africa”, or the United States Securities Exchange Act of 1934, regarding our “Africa”, unless otherwise specified or the context otherwise implies, refer intentions, beliefs or current expectations concerning, amongst other to the Airtel Africa plc and its subsidiaries and its associate, Bharti Airtel things, our results of operations, financial condition, liquidity, prospects, International (Netherlands) B.V., Africa Towers N.V., Airtel (Seychelles) growth, strategies and the economic and business circumstances Limited, Airtel Congo S.A, Airtel Gabon S.A., Airtel Madagascar S.A., occurring from time to time in the countries and markets in which the Airtel Malawi plc, Airtel Mobile Commerce B.V., Airtel Mobile Commerce Group operates. Holdings B.V., Airtel Mobile Commerce Kenya Limited, Airtel Mobile Commerce Limited (Malawi), Airtel Mobile Commerce Madagascar S.A., These statements are often, but not always, made through the use of Airtel Mobile Commerce Rwanda Limited, Airtel Mobile Commerce words or phrases such as "believe," "anticipate," "could," "may," "would," (Seychelles) Limited, Airtel Mobile Commerce Tanzania Limited, Airtel "should," "intend," "plan," "potential," "predict," "will," "expect," "estimate," Mobile Commerce Tchad SARL, Airtel Mobile Commerce Uganda "project," "positioned," "strategy," "outlook", "target" and similar Limited, Airtel Mobile Commerce Zambia Limited , Airtel Money RDC expressions. S.A., Airtel Money Niger S.A., Airtel Money S.A. (Gabon), Airtel Networks Kenya Limited, Airtel Networks Limited, Airtel Networks Zambia plc, Airtel Rwanda Limited, Airtel Tanzania plc (formerly known as Airtel Tanzania It is believed that the expectations reflected in this document are Limited), Airtel Tchad S.A., Airtel Uganda Limited, Bharti Airtel Africa reasonable, but they may be affected by a wide range of variables that B.V., Bharti Airtel Chad Holdings B.V. , Bharti Airtel Congo Holdings B.V., could cause actual results to differ materially from those currently Bharti Airtel Developers Forum Limited, Bharti Airtel Gabon Holdings anticipated. B.V. , Bharti Airtel Kenya B.V., Bharti Airtel Kenya Holdings B.V., Bharti Airtel Madagascar Holdings B.V. , Bharti Airtel Malawi Holdings B.V. , All such forward-looking statements involve estimates and assumptions Bharti Airtel Mali Holdings B.V., Bharti Airtel Niger Holdings B.V. , Bharti that are subject to risks, uncertainties and other factors that could cause Airtel Nigeria B.V. , Bharti Airtel Nigeria Holdings II B.V. , Bharti Airtel actual future financial condition, performance and results to differ RDC Holdings B.V. , Bharti Airtel Services B.V. , Bharti Airtel Tanzania materially from the plans, goals, expectations and results expressed in B.V., Bharti Airtel Uganda Holdings B.V., Bharti Airtel Zambia Holdings the forward-looking statements and other financial and/or statistical B.V., Celtel (Mauritius) Holdings Limited, Airtel Congo RDC S.A., Celtel data within this communication. Niger S.A., Channel Sea Management Company (Mauritius) Limited,
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Among the key factors that could cause actual results to differ materially No profit or earnings per share forecasts from those projected in the forward-looking statements are uncertainties related to the following: the impact of competition from illicit trade; the No statement in this communication is intended to be, nor should be impact of adverse domestic or international legislation and regulation; construed as, a profit forecast or a profit estimate and no statement in changes in domestic or international tax laws and rates; adverse litigation this communication should be interpreted to mean that earnings per and dispute outcomes and the effect of such outcomes on Airtel Africa’s share of Airtel Africa for the current or any future financial periods would financial condition; changes or differences in domestic or international necessarily match, exceed or be lower than the historical published economic or political conditions; the ability to obtain price increases and earnings per share of Airtel Africa. the impact of price increases on consumer affordability thresholds; adverse decisions by domestic or international regulatory bodies; the Audience impact of market size reduction and consumer down-trading; translational and transactional foreign exchange rate exposure; the The material in this presentation is provided for the purpose of giving impact of serious injury, illness or death in the workplace; the ability to information about Airtel Africa and its subsidiaries to investors only and maintain credit ratings; the ability to develop, produce or market new is not intended for general consumers. Airtel Africa, its directors, alternative products and to do so profitably; the ability to effectively employees, agents or advisers do not accept or assume responsibility to implement strategic initiatives and actions taken to increase sales any other person to whom this material is shown or into whose hands it growth; the ability to enhance cash generation and pay dividends and may come and any such responsibility or liability is expressly disclaimed. 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$ rounded to the nearest Millions. Therefore, discrepancies in the tables between totals and the sums of the amounts listed may occur due to such rounding.
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TABLE OF CONTENTS
Section 1 Performance at a glance 4
Section 2 Financial Highlights
2.1 Consolidated - Summary of Consolidated Financial Statements 5
2.2 Consolidated - Summary of Statement of Financial Position 6
Section 3 Segment Wise – Summary of Financial Statements
3.1 Summarized Statement of Operations 7
3.2 Segment Wise Contribution 10
Section 4 Product wise – Summary of Financial Statements
4.1 Mobile Services – Summarized Statement of Operations 11
4.2 Mobile Services – Segment Wise Contribution 15
4.3 Mobile Money – Summarized Statement of Operations 16
4.4 Product Wise Contribution 17
Section 5 Operating Highlights 18
Section 6 Management Discussion and Analysis
6.1 Reporting Methodology 22
6.2 Key Company Developments 22
6.3 Results of Operations 23
Section 7 Detailed Financial and Related Information 26
Section 8 Net Debt and Cost Schedules 33
Section 9 Trends and Ratio Analysis 35
Section 10 Key Accounting Policies 48
Section 11 Glossary 54
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SECTION 1
PERFORMANCE AT A GLANCE
Financial Year Ended Quarter Ended Particulars Unit IFRS IFRS 2020 2019 2018 Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Operating Highlights Total Customer Base 000’s 110,604 98,851 89,262 111,461 110,604 107,140 103,881 99,670 Total Minutes on Netw ork Mn Min 250,080 207,334 159,549 71,891 68,870 65,086 60,795 55,329 Data MBs Mn MBs 710,510 392,631 237,563 279,541 219,015 189,798 162,394 139,303 Mobile Money Transaction Value US$ Mn 30,224 23,582 18,888 9,038 8,031 8,001 7,442 6,751 Netw ork Tow ers Nos 22,909 21,059 19,731 23,471 22,909 22,253 21,936 21,385 Total Employees Nos 3,363 3,075 3,273 3,432 3,363 3,286 3,184 3,100 No. of countries of operation Nos 14 14 14 14 14 14 14 14 Population Covered Mn 385 369 357 388 385 383 381 375 Consolidated Financials (US$ Mn) Ongoing Operations (Reported Currency) Revenue US$ Mn 3,422 3,077 2,910 851 899 883 844 796 EBITDA US$ Mn 1,515 1,332 1,139 375 397 399 372 348 EBIT US$ Mn 905 796 600 210 244 245 219 198 Cash profit from operations before US$ Mn 1,210 1,001 786 295 325 326 293 267 Derivative and Exchange Fluctuations Profit before tax (before exceptional items) US$ Mn 533 441 158 111 97 167 153 117 Net Income (after NCI) US$ Mn 370 412 (138) 42 65 90 90 125 Capex US$ Mn 641 630 411 66 246 150 147 99 Operating Free Cash Flow (EBITDA - Capex) US$ Mn 874 702 728 309 151 249 225 249 Net Debt US$ Mn 3,247 4,005 7,755 3,425 3,247 3,233 3,191 4,081 Shareholder's Equity US$ Mn 3,388 2,626 (1,085) 3,304 3,388 3,529 3,556 2,783 Non-controlling interests ('NCI') US$ Mn (107) (196) (232) (93) (107) (168) (171) (177) Total Equity US$ Mn 3,281 2,429 (1,317) 3,211 3,281 3,361 3,385 2,606 Total Capital Employed US$ Mn 6,528 6,435 6,438 6,636 6,528 6,595 6,576 6,687 Key Ratios EBITDA Margin % 44.3% 43.3% 39.1% 44.1% 44.1% 45.2% 44.1% 43.7% EBIT Margin % 26.5% 25.9% 20.6% 24.7% 27.2% 27.7% 25.9% 24.8% Net Profit Margin % 10.8% 13.4% (4.7%) 4.9% 7.2% 10.1% 10.6% 15.7% Net Debt to EBITDA (LTM) Times 2.1 3.0 6.8 2.2 2.1 2.2 2.3 3.0 Net Debt to EBITDA (Annualised) Times 2.1 3.0 6.8 2.3 2.0 2.0 2.1 2.9 Interest Coverage ratio Times 5.1 3.9 3.5 5.1 5.5 5.4 4.8 4.5 Return on Equity (Pre-Tax) % 18.3% 15.3% 0.0% 16.9% 18.3% 18.5% 16.0% 17.0% Return on Equity (Post-Tax) % 10.9% 15.7% 0.0% 8.7% 10.9% 11.0% 11.8% 14.2% Return on Capital employed % 14.0% 12.4% 9.2% 13.9% 13.7% 13.2% 12.6% 12.6%
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SECTION 2
FINANCIAL HIGHLIGHTS
The financial information contained in this report is drawn from Airtel Africa plc’s interim unaudited condensed consolidated financial statements prepared under IAS 34 for the three months ended 30 June 2020 and from Airtel Africa plc’s Audited Consolidated Financial Statements for the year ended 31 March 2020 prepared under International Financial Reporting Standard (IFRS) for all the comparative periods presented.
2.1 Summary of Consolidated Financial Statements
2.1.1 Consolidated Summarized Statement of Operations – (in Reported Currency)
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 851 796 7% EBITDA 375 348 8% EBITDA / Revenue 44.1% 43.7% 0.4 pp EBIT 210 198 6% Finance cost (net) 99 82 20% Share of results of Associate (0) (0) 45% Profit before tax (before exceptional items) 111 117 (4%) Income tax expense 61 48 27% Profit after tax (before exceptional items) 50 68 (26%) Non Controlling Interest (before exceptional items) 12 6 93% Net Income (before exceptional items) 38 62 (38%) Exceptional Items (net of tax) (7) (64) 89% Profit after tax (after exceptional items) 57 132 (57%) Non Controlling Interest 15 7 125% Net Income (after NCI) 42 125 (67%) Capex 66 99 (33%) Operating Free Cash Flow (EBITDA - Capex) 309 249 24% Total Capital Employed 6,636 6,687 (1%)
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2.1.2 Consolidated Summarized Statement of Operations – (in Constant Currency)
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 856 757 13% EBITDA 377 329 15% EBITDA / Revenue 44.0% 43.4% 0.6 pp EBIT 211 185 14% Finance cost (net) 77 78 (2%) Share of results of Associate (0) (0) 45% Profit before tax* 134 107 25% Income tax expense 61 44 38% Profit after tax (before exceptional items) 73 63 16% Non Controlling Interest (before exceptional items) 12 6 93% Net Income (before exceptional items) 61 57 8% Exceptional Items (net of tax) (7) (64) 90% Profit after tax (after exceptional items) 80 127 (37%) Non Controlling Interest 16 7 126% Net Income (after NCI) 64 120 (47%) Capex 66 99 (33%) Operating Free Cash Flow (EBITDA - Capex) 310 230 35% Total Capital Employed 6,636 6,687 (1%) *Derivative and Exchange fluctuation impact is excluded to calculate Profit before tax and Profit after tax in Constant Currency. Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex and Capital Employed.
2.2 Consolidated - Summary of Statement of Financial Position (in Reported Currency) Amount in US$ Mn As at As at Particulars Jun 30, 2020 Mar 31, 2020 Assets Non-current assets 7,652 7,654 Current assets 1,753 1,671 Total assets 9,405 9,325
Liabilities Current liabilities 3,409 2,488 Non-current liabilities 2,785 3,556 Total liabilities 6,194 6,044
Net current liability (1,656) (817)
Net Assets 3,211 3,281
Equity Equity attributable to ow ners of the company 3,304 3,388 Non-controlling interests ('NCI') (93) (107) Total equity 3,211 3,281
Total Equity and liabilities 9,405 9,325
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SECTION 3
SEGMENT WISE – SUMMARY OF FINANCIAL STATEMENTS
Segmental reporting includes all businesses of that geography.
3.1 Summarized Statement of Operations
3.1.1 Nigeria
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 341 313 9% EBITDA 182 167 9% EBITDA / Revenue 53.3% 53.3% 0.0 pp EBIT 130 122 6% Capex 30 53 (43%) Operating Free Cash Flow 152 113 34% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 343 293 17% EBITDA 183 156 17% EBITDA / Revenue 53.3% 53.3% 0.0 pp EBIT 130 114 14% Capex 30 53 (43%) Operating Free Cash Flow 153 103 48% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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3.1.2 East Africa (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 305 277 10% EBITDA 129 111 17% EBITDA / Revenue 42.4% 40.0% 2.4 pp EBIT 74 51 45% Capex 19 30 (35%) Operating Free Cash Flow 110 81 36% (EBITDA - Capex)
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 306 261 17% EBITDA 130 103 26% EBITDA / Revenue 42.3% 39.5% 2.8 pp EBIT 74 47 59% Capex 19 30 (35%) Operating Free Cash Flow 110 73 50% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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3.1.3 Francophone Africa (DRC, Gabon, Congo B, Madagascar, Niger, Chad and Seychelles)
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 209 209 0% EBITDA 74 64 15% EBITDA / Revenue 35.1% 30.8% 4.4 pp EBIT 25 18 33% Capex 16 14 13% Operating Free Cash Flow 58 50 15% (EBITDA - Capex)
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 211 206 2% EBITDA 74 64 16% EBITDA / Revenue 35.0% 30.9% 4.1 pp EBIT 24 18 32% Capex 16 14 13% Operating Free Cash Flow 58 49 17% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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3.2 Segment Wise Contribution (in Constant Currency)
Quarter Ended:
Amount in US$ Mn, except ratios Quarter Ended Jun-20 Region Revenue % of Total EBITDA % of Total Capex % of Total
Nigeria 343 40% 183 48% 30 46% East Africa 306 36% 130 34% 19 29% Francophone Africa 211 25% 74 20% 16 24% Total before Elimnation/Others 859 100% 386 103% 66 99% Eliminations / Others (4) (0%) (9) (3%) 1 1% Total 856 100% 377 100% 66 100% Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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SECTION 4
PRODUCT WISE – SUMMARY OF FINANCIAL STATEMENTS
4.1 Mobile Services- Summarized Statement of Operations
4.1.1 Consolidated Summarized Statement of Operations
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 799 750 6% EBITDA 345 309 12% EBITDA / Revenue 43.2% 41.2% 2.0 pp EBIT 192 161 19% Capex 64 96 (33%) Operating Free Cash Flow 281 213 32% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 803 714 13% EBITDA 347 291 19% EBITDA / Revenue 43.1% 40.8% 2.3 pp EBIT 192 150 28% Capex 64 96 (33%) Operating Free Cash Flow 283 196 44% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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4.1.2 Nigeria
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 341 311 9% EBITDA 182 165 10% EBITDA / Revenue 53.3% 53.1% 0.3 pp EBIT 130 121 7% Capex 30 53 (43%) Operating Free Cash Flow 152 112 35% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 343 291 18% EBITDA 183 155 18% EBITDA / Revenue 53.3% 53.1% 0.3 pp EBIT 130 113 15% Capex 30 53 (43%) Operating Free Cash Flow 153 101 50% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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4.1.3 East Africa (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 264 244 8% EBITDA 103 91 13% EBITDA / Revenue 38.9% 37.3% 1.6 pp EBIT 50 33 50% Capex 18 29 (39%) Operating Free Cash Flow 85 62 37% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 266 230 15% EBITDA 103 85 22% EBITDA / Revenue 38.8% 36.7% 2.0 pp EBIT 50 30 66% Capex 18 29 (39%) Operating Free Cash Flow 85 55 54% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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4.1.4 Francophone Africa (DRC, Gabon, Congo B, Madagascar, Niger, Chad and Seychelles)
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 196 196 0% EBITDA 62 53 17% EBITDA / Revenue 31.4% 26.9% 4.5 pp EBIT 13 7 79% Capex 16 13 20% Operating Free Cash Flow 46 39 16% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 197 193 2% EBITDA 62 52 18% EBITDA / Revenue 31.3% 27.0% 4.2 pp EBIT 13 7 74% Capex 16 13 20% Operating Free Cash Flow 46 39 17% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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4.2 Mobile Services - Segment Wise Contribution (in Constant Currency)
Quarter Ended:
Amount in US$ Mn, except ratios Quarter Ended Jun-20 Region Revenue % of Total EBITDA % of Total Capex % of Total Nigeria 343 43% 183 53% 30 47% East Africa 266 33% 103 30% 18 28% Francophone Africa 197 25% 62 18% 16 25% Total before Elimnation/Others 805 100% 347 100% 64 100% Eliminations / Others (2) (0%) (1) (0%) 0 0% Total 803 100% 347 100% 64 100%
Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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4.3 Mobile Money - Summarized Statement of Operations
4.3.1 Consolidated Summarized Statement of Operations
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 81 68 20% EBITDA 39 33 21% EBITDA / Revenue 48.5% 48.1% 0.4 pp EBIT 37 31 18% Capex 2 2 11% Operating Free Cash Flow 37 31 22% (EBITDA - Capex)
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Revenue 81 64 26% EBITDA 39 31 27% EBITDA / Revenue 48.5% 48.3% 0.2 pp EBIT 37 30 24% Capex 2 2 11% Operating Free Cash Flow 37 29 28% (EBITDA - Capex) Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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4.4 Product Wise Contribution (in Constant Currency)
Quarter Ended: Amount in US$ Mn, except ratios Quarter Ended Jun-20 Products Revenue % of Total EBITDA % of Total Capex % of Total Mobile Services 803 94% 347 92% 64 97% Mobile Money 81 10% 39 10% 2 3% Total before Elimnation/Others 884 103% 386 103% 66 100% Eliminations / Others (29) (3%) (9) (3%) 0 0% Total 856 100% 377 100% 66 100%
Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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SECTION 5
OPERATING HIGHLIGHTS
The financial figures used for computing ARPU & Revenue per Site are based on IFRS.
5.1 Operational Performance (Quarter Ended)
5.1.1 Consolidated Operational Performance
Q-on-Q Y-on-Y Parameters Unit Jun-20 Mar-20 Jun-19 Change Change Customer Base 000's 111,461 110,604 0.8% 99,670 11.8% Net Additions 000's 857 3,464 (75.3%) 819 4.6% Monthly Churn % 5.7% 5.3% 0.4 pp 5.0% 0.7 pp Average Revenue Per User (ARPU) US$ 2.6 2.7 (2.6%) 2.5 1.6% Voice Voice Revenue US$ Mn 456 494 (7.6%) 446 2.2% Minutes on the netw ork Mn 71,891 68,870 4.4% 55,329 29.9% Voice Average Revenue Per User (ARPU) US$ 1.4 1.5 (8.5%) 1.5 (8.1%) Voice Usage per customer min 218 211 3.4% 186 16.9% Data Data Revenue US$ Mn 267 245 9.0% 197 35.7% Data Customer Base 000's 36,972 35,443 4.3% 30,001 23.2% As % of Customer Base % 33.2% 32.0% 1.1 pp 30.1% 3.1 pp Total MBs on the netw ork Mn MBs 279,541 219,015 27.6% 139,303 100.7% Data Average Revenue Per User (ARPU) US$ 2.5 2.4 3.8% 2.2 13.7% Data Usage per customer MBs 2,607 2,145 21.5% 1,550 68.2%
Mobile Money Transaction Value US$ Mn 9,038 8,031 12.5% 6,751 33.9% Transaction Value per Sub US$ 164 155 5.6% 153 7.5% Mobile Money Revenue US$ Mn 81 81 1.0% 64 26.3% Active Customers 000's 18,529 18,294 1.3% 14,600 26.9% Mobile Money ARPU US$ 1.5 1.6 (5.2%) 1.5 1.4%
Network and Coverage Netw ork tow ers Nos 23,471 22,909 562 21,385 2,086 Owned Towers Nos 4,569 4,548 21 4,500 69 Leased Towers Nos 18,902 18,361 541 16,885 2,017 Of w hich Mobile Broadband tow ers Nos 21,171 20,378 793 17,049 4,122 Total Mobile Broadband Base stations Nos 51,963 47,082 4,881 35,283 16,680 Data Capacity TB/day 8,371 7,572 10.5% 5,300 57.9%
Revenue Per Site Per Month US$ 12,257 12,809 (4.3%) 11,865 3.3% Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for Constant currency.
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5.2 Nigeria Operational Performance
Q-on-Q Y-on-Y Parameters Unit Jun-20 Mar-20 Jun-19 Change Change Customer Base 000's 42,513 41,757 1.8% 37,468 13.5% Net Additions 000's 757 1,902 (60.2%) 347 118.0% Monthly Churn % 5.7% 5.8% -0.1 pp 5.3% 0.4 pp Average Revenue Per User (ARPU) US$ 2.7 2.9 (6.3%) 2.6 4.5%
Voice Voice Revenue US$ Mn 198 222 (10.8%) 185 6.9% Minutes on the netw ork Mn 19,275 20,447 (5.7%) 15,809 21.9% Voice Average Revenue Per User (ARPU) US$ 1.6 1.8 (12.5%) 1.7 (4.6%) Voice Usage per customer min 154 166 (7.5%) 141 8.8% Data Data Revenue US$ Mn 122 114 7.1% 88 39.7% Data Customer Base 000's 17,334 16,715 3.7% 14,628 18.5% As % of Customer Base % 40.8% 40.0% 0.7 pp 39.0% 1.7 pp Total MBs on the netw ork Mn MBs 139,285 108,561 28.3% 71,108 95.9% Data Average Revenue Per User (ARPU) US$ 2.4 2.4 2.0% 2.0 20.7% Data Usage per customer MBs 2,752 2,252 22.2% 1,626 69.2%
Network and Coverage Netw ork tow ers Nos 9,802 9,352 450 8,523 1,279 Owned Towers Nos 204 200 4 260 (56) Leased Towers Nos 9,598 9,152 446 8,263 1,335 Of which Mobile Broadband towers Nos 9,326 8,796 530 7,115 2,211 Total Mobile Broadband Base stations Nos 19,258 15,788 3,470 12,223 7,035 Data Capacity TB/day 3,489 2,980 17.1% 2,176 60.4% Revenue Per Site Per Month US$ 11,904 13,060 (8.9%) 11,531 3.2%
Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for Constant currency.
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5.3 East Africa Operational Performance (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
Q-on-Q Y-on-Y Parameters Unit Jun-20 Mar-20 Jun-19 Change Change Customer Base 000's 48,757 48,634 0.3% 43,052 13.3% Net Additions 000's 123 1,268 (90.3%) 194 (36.5%) Monthly Churn % 5.7% 4.7% 1.0 pp 4.8% 1.0 pp Average Revenue Per User (ARPU) US$ 2.1 2.1 1.6% 2.0 4.2%
Voice Voice Revenue US$ Mn 144 147 (2.7%) 133 7.9% Minutes on the netw ork Mn 45,107 41,049 9.9% 32,660 38.1% Voice Average Revenue Per User (ARPU) US$ 1.0 1.0 (3.3%) 1.0 (4.2%) Voice Usage per customer min 311 285 9.1% 254 22.5%
Data Data Revenue US$ Mn 86 79 8.6% 66 30.5% Data Customer Base 000's 14,041 13,322 5.4% 11,219 25.2% As % of Customer Base % 28.8% 27.4% 1.4 pp 26.1% 2.7 pp Total MBs on the netw ork Mn MBs 110,172 85,983 28.1% 55,875 97.2% Data Average Revenue Per User (ARPU) US$ 2.1 2.1 3.2% 2.0 7.4% Data Usage per customer MBs 2,711 2,227 21.7% 1,671 62.2%
Network and Coverage Netw ork tow ers Nos 9,039 8,987 52 8,572 467 Owned Towers Nos 2,535 2,499 36 2,468 67 Leased Towers Nos 6,504 6,488 16 6,104 400 Of which Mobile Broadband towers Nos 7,880 7,809 71 6,888 992 Total Mobile Broadband Base stations Nos 22,071 21,162 909 16,903 5,168 Data Capacity TB/day 3,355 3,147 6.6% 2,330 44.0% Revenue Per Site Per Month US$ 11,264 11,156 1.0% 10,171 10.8%
Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for Constant currency.
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5.4 Francophone Africa Operational Performance (DRC, Gabon, Congo B, Madagascar, Niger, Chad and Seychelles)
Q-on-Q Y-on-Y Parameters Unit Jun-20 Mar-20 Jun-19 Change Change Customer Base 000's 20,190 20,213 (0.1%) 19,150 5.4% Net Additions 000's (23) 294 (107.7%) 278 (108.1%) Monthly Churn % 5.9% 6.0% -0.1 pp 5.2% 0.6 pp Average Revenue Per User (ARPU) US$ 3.5 3.6 (2.0%) 3.6 (3.5%)
Voice Voice Revenue US$ Mn 117 127 (7.9%) 130 (9.8%) Minutes on the netw ork Mn 7,509 7,373 1.8% 6,860 9.5% Voice Average Revenue Per User (ARPU) US$ 1.9 2.1 (7.8%) 2.3 (14.9%) Voice Usage per customer min 125 122 2.0% 121 3.3%
Data Data Revenue US$ Mn 58 51 13.9% 43 35.4% Data Customer Base 000's 5,596 5,405 3.5% 4,154 34.7% As % of Customer Base % 27.7% 26.7% 1.0 pp 21.7% 6.0 pp Total MBs on the netw ork Mn MBs 30,083 24,471 22.9% 12,320 144.2% Data Average Revenue Per User (ARPU) US$ 3.6 3.3 8.9% 3.4 7.6% Data Usage per customer MBs 1,882 1,601 17.6% 970 94.0%
Network and Coverage Netw ork tow ers Nos 4,630 4,570 60 4,290 340 Owned Towers Nos 1,830 1,849 (19) 1,772 58 Leased Towers Nos 2,800 2,721 79 2,518 282 Of which Mobile Broadband towers Nos 3,965 3,773 192 3,046 919 Total Mobile Broadband Base stations Nos 10,634 10,132 502 6,157 4,477 Data Capacity TB/day 1,527 1,445 5.6% 794 92.2%
Revenue Per Site Per Month US$ 15,222 15,806 (3.7%) 16,080 (5.3%) Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for Constant currency.
.
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SECTION 6
MANAGEMENT DISCUSSION AND ANALYSIS
6.1 Reporting Methodology
The results for the three months ended 30 June 2020 are Additional spectrum unaudited and in the opinion of management, include all adjustments necessary for the fair presentation of the results In June 2020, Airtel Malawi plc was allocated a spectrum of 10 of the same period. The financial information has been MHz in the 2600 band for an annual fee of $0.3 Mn. prepared based on International Accounting Standard 34 (IAS 34) and apply the same accounting policies, Partnership with UNICEF presentation and methods of calculation as those followed in the preparation of the Group’s annual consolidated financial In May 2020, Airtel Africa announced a partnership with UNICEF statements for the year ended 31 March 2020 except to the aimed at providing children with access to remote learning and extent required prescribed by IAS 34. This report should be enabling access to cash assistance for their families via mobile read in conjunction with audited consolidated financial cash transfers. Under this partnership, UNICEF and Airtel Africa statements and related notes for the year ended 31 March will use mobile technology to benefit an estimated 133 million 2020. The comparative information has been drawn based school age children currently affected by school closures in 13 on Airtel Africa plc’s Audited Consolidated Financial countries across sub-Saharan Africa during the Covid-19 Statements for the year ended 31 March 2020 prepared pandemic. under International Financial Reporting Standard (IFRS). Mobile money The information, apart from the extract of the Financial (a) Partnership with Mukuru Statements in Section 7, is on underlying basis and exceptional items are shown separately. This enables an In July 2020, Airtel Africa entered into a partnership with Mukuru, organic comparison of results with past periods. one of Africa’s largest remittance organisations, which will enable 6.2 Key company developments Mukuru customers to instantly send cross-border transfers directly to Airtel Money customer wallets in 12 African countries. This
partnership will be particularly beneficial for customers making Other significant updates intra-Africa payments from Southern Africa where Mukuru has a leading presence. The partnership, subject to local regulatory Airtel TV approvals, will initially launch in Malawi, Zambia, Uganda, Tanzania, Kenya and the Democratic Republic of the Congo. It will In May 2020, Airtel TV launched in Tanzania and it is now live in then roll out to subsequent Airtel Money markets. four countries with more than a million registered users across Nigeria, Uganda, Zambia and Tanzania. In April, we launched (b) Partnership with WorldRemit TVOD (Transactional Video-On-Demand) services for our customers in Nigeria, and with this service customers can now In July 2020, Airtel Africa scaled up its operations with enjoy latest Nollywood blockbusters on the Airtel TV app. WorldRemit, the global digital money transfer service that operates in over 50 send countries to over 150 receive countries. This MyAirtel selfcare App partnership will enable customers from across the globe to receive money into Airtel Money wallets. The diaspora living in more than The new MyAirtel selfcare app launched in April 2020 in all 14 50 countries around the world can quickly and easily send money countries. Using the MyAirtel app, a customer can check Airtime transfers at any time via WorldRemit to Airtel Money customers or Bundles and purchase them using Airtel Money or any credit or back home. debit cards. It also has Airtel Money features such as Send Money to Airtel and other operators, Pay Bills, Pay Merchants, Scan and These partnerships align with the Group’s strategy of expanding pay using Airtel’s or Mastercard’s QR codes and virtual cards. the range and depth of Airtel Money offerings to drive customer growth and penetration.
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6.3 Results of Operations
The financial results presented in this section are compiled based on the consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and the underlying information.
Key Highlights – For the Quarter ended June 30, 2020
Customer base grew by 11.8% to 111.5 million Revenue increased by 6.9% to $851 Mn, with constant currency revenue growth of 13.0% Constant currency revenue growth was recorded across all key business segments, with voice revenue up by 2.2%, data by 35.7% and mobile money by 26.3% EBITDA increased by 7.9% to $375 Mn, with constant currency growth of 14.6% Reported EBITDA margin was 44.1%, up by 0.4 pp (0.6 pp in constant currency) Operating profit increased by 12.9% to $210 Mn, an increase of 21.5% in constant currency Free cash flow was $96 Mn compared to $62 Mn in the same period last year Earnings per share (EPS) before exceptional items was $1.0 cents and basic EPS was $1.1 cents Net debt to EBITDA was 2.2x, compared to 3.0x in June 2019
Results for the Quarter ended June 30, 2020
6.4.1 Airtel Africa Consolidated
Reported revenue grew by 6.9%, with constant currency growth of Alternative performance measures 13.0%. The constant currency growth of 13.0% was partially offset by currency devaluation, mainly in Nigeria (6.9%), Zambia (28.3%) EBITDA was up by 7.9% to $375 Mn with constant currency and Kenya (4.4%). The revenue growth was largely driven by the growth of 14.6%. The EBITDA growth was driven by revenue growth of our customer base, up by 11.8% to 111.5 million and growth of 13% and efficiency in operating expenses. Reported ARPU growth of 1.6% in constant currency. Revenue growth was EBITDA margin of 44.1% improved by 0.4 pp, and by 0.6 pp in recorded across all the regions: Nigeria up 17.1%, East Africa up constant currency. 17.5% and Francophone Africa up 2.2%. Notably, revenue growth was broad based across all our key segments: voice up 2.2%, data Foreign exchange had an adverse impact of $43.3 Mn on revenue up 35.7% and mobile money up 26.3% in constant currency terms. and $20.4 Mn on EBITDA, largely driven by the devaluation of the Nigerian naira, Zambian kwacha, Kenyan shilling and other East Reported operating profit amounted to $210 Mn, up 12.9% and African currencies. 21.5% in constant currency. The effective tax rate was 49.7% compared to 49.3% in the same Net finance costs increased by $17 Mn, driven by higher other period last year, largely as a result of the profit mix change finance costs which more than offset reduced interest costs of $5.5 amongst the operating entities (“OPCOs”). The effective tax rate Mn as a result of lower debt. The increase in other finance costs at 49.7% is higher than the weighted average statutory tax rate of was primarily driven by the higher impact of devaluation on foreign approximately 34%, largely due to the profit mix between various exchange denominated liabilities and borrowings largely as a OPCOs and higher withholding tax on dividend declared. The result of devaluation in Zambian kwacha, Madagascar Ariary and adjusted effective tax rate was 44.4% compared to 36.3%, largely Seychelles Rupee. as a result of recognition of higher deferred tax credit of $13.8 Mn in DRC in the prior period as against $6.7 Mn in Tanzania during Total tax charge was $54 Mn as compared to $35 Mn in same the quarter ended 30 June 2020. period last year. This was due to higher operating profit and withholding tax on dividends declared. Q1 2020 also benefited Exceptional items of $6.7 Mn in June 2020 consisted of a deferred from a deferred tax credit of $13.8 Mn in DRC as compared to $6.7 tax credit in Tanzania. Deferred tax credit in Tanzania for FY‘21 is Mn in Q1 2021 in Tanzania. expected to be $27 Mn. Exceptional items for the period ended June 2019 consisted of a $13.8 Mn and $72 Mn gain related to the Profit after tax was $57 Mn, down by 56.9%, largely as a result of expired indemnity to certain pre-IPO investors. Deferred tax credit a one-off gain of $72 Mn related to the expired indemnity to certain in DRC for full year FY‘20 amounted to $50.6 Mn. pre-IPO investors in the same period last year, higher finance costs and tax. Excluding one-off benefits in the previous quarter, Free cash flow was $96 Mn, up by 53.5% largely due to the higher profit after tax for the quarter reduced by $13 Mn mainly due to EBITDA rising by $27 Mn, reduced interest payments falling by $8 higher derivative and exchange loss of $19.4 Mn in Q1 2021. Mn resulting from lower debt and lower capex reduced by $33 Mn partially offset by an increase in cash tax. Basic EPS was down by 72.8% to $1.1 cents, due to an increase in shares issued. If all the shares as of 30 June 2020 had been EPS before exceptional items was down 49.4% to $1.0 cents, issued on 1 April 2019, the restated basic EPS for the June 2019 primarily due to the increase in the number of shares issued. If would have been $3.3 cents. Restated EPS reduced as a result of these shares had been issued on 1 April 2019, the restated EPS higher finance costs and tax. before exceptional items would have been $1.6 cents for the quarter ended 30 June 2019. Restated EPS reduced as a result of higher other finance cost (derivative and exchange loss) and tax.
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6.4.2 Net debt and leverage Data revenue amounted to $86 Mn, up by 30.5% supported by data customer base growth of 25.2% and ARPU increase of 7.4%. Net debt was $3,425 Mn compared to $4,081 Mn in June 2019. Growth was recorded across all OPCOs, driven by expansion of The $656 Mn reduction in net debt is due to an increase in cash of network infrastructure, with 68% of the sites now on 4G network $680 Mn from the IPO proceeds and a $122 Mn proceeds from the as compared to 47% during previous period. Our mobile network cancellation of derivatives which was partially offset by interim in Zambia, Malawi and Uganda now consists of 100% of 4G sites. dividend payment of $113 Mn. As a result, leverage improved to 2.2x at the end of June 2020, from 3.0x at the end of June 2019. Mobile money revenue grew by 34.6%, largely driven by growth in Zambia, Tanzania, Uganda and Malawi. Slowdown in revenue 6.4.3 Segment Wise – Africa growth during the quarter was due to the restriction on movements as a result of the Covid-19 pandemic and the temporary waiver of 6.4.3.1 Nigeria charges on certain transactions to support the communities and economies in these unprecedented circumstances. The revenue In Nigeria, revenue in constant currency increased by 17.1%, with growth of 34.6% was driven by a 27.4% increase in customer base reported revenue growth of 8.9% as a result of the Nigerian naira and a 20% growth in transaction value per customer, supported by devaluation. Slowdown in revenue growth during the quarter was the expansion of our distribution network through more agents, driven by the restriction on movements imposed as a result of the kiosks and Airtel Money branches. Covid-19 pandemic, which impacted customer usage, particularly in voice. EBITDA margin was 42.4%, an improvement of 2.8 pp compared with the previous period supported by both revenue growth and Voice revenue increased 6.9% to $197 Mn, which was supported efficiency improvement in operating expenses. by a 13.5% increase in the customer base and was partially offset by a 4.6% drop in voice ARPU. The ARPU decline was a result of Capital expenditure during the period was $19 Mn, slightly lower change in customer usage mix due to the Covid-19 pandemic. The than the previous period due to lockdown in most of the countries customer base growth of 13.5% was driven by expansion of our which impacted the deployment as well. Operating free cash flow distribution network supported by the accelerated rollout of our was up by 50.4% at $110 Mn as a result of improvement in network infrastructure. EBITDA and lower capital expenditure.
Data revenue growth of 40% was supported by 18.5% growth in 6.4.3.3 Francophone Africa data customers and data ARPU growth of 20.7%. Data customer Reported revenue was up by 0.4%, as constant currency growth penetration in our customer base was 41%, up by 1.7 pp from of 2.2% was offset by currency devaluation. Revenue growth of previous period. The accelerated rollout of 4G network supported data, mobile money and other revenue was partially offset by a customer base growth (with 70% of total sites now being 4G) and decline in voice revenue. Performance across the region was affordable data bundle offerings. The total data usage on our mixed, with growth in Democratic Republic of the Congo (DRC), network almost doubled versus the previous period. Additionally, Gabon and Chad partially offset by revenue decline in other 4G data usage contributed 58% to the total data usage. Data countries in the region. usage per customer reached 2.7GB, up by 69.2% and the data revenue accounted for 35.7% of total revenue, up 5.8%. Voice revenue decreased by 9.8%, largely due to a drop in EBITDA grew by 17.1%, with reported currency growth of 9.0% interconnect usage charges in Niger, Madagascar and Chad, and and EBITDA margin being flat at 53.3% level, mainly as a result of overall market weakness in some countries in the region caused the higher provision for enterprise customer bad debts due to by macroeconomic conditions, which were further impacted by the lower collection on account of the slowdown in economy due to Covid-19 pandemic. Covid-19. Data revenue increased by 35.4%, supported by customer base Capital expenditure amounted to $30 Mn, reducing from $53 Mn growth of 34.7% and data ARPU growth of 7.6%. All countries as a result of lockdown in April and May 2020. contributed to revenue growth with the exception of Seychelles. Our expansion of 4G network and “More for More” bundle offering Operating free cash flow was $152 Mn, up by 48.2%, largely as a resulted in a data customer base increase. Data usage per result of double-digit EBITDA growth and lower capital customer almost doubled and reached 1.8GB per customer per expenditure. month. 6.4.3.2 East Africa Mobile money revenue was up 16.8%. Slowdown in revenue East Africa delivered a good performance with revenue up 10.1% growth during the quarter was due to the restriction on movements in reported currency and 17.5% in constant currency. Growth was as a result of the Covid-19 pandemic and the temporary waiving broad based across all services, and partially offset by currency of charges on certain transactions to support the communities and devaluation in Zambia and Kenya. All OPCOs, except Rwanda, economies in these unprecedented circumstances. delivered double-digit revenue growth.
Voice revenue was $143 Mn, an increase of 7.9% in constant EBITDA up by 14.6%, with constant currency growth of 15.9% and currency as a result of 13.3% customer base growth and 22.5% EBITDA margin improvement by 4.4 pp in reported currency, 4.1 growth in terms of voice usage per customer, which was pp in constant currency. June 2019 had one-off quality of service marginally offset by 4% ARPU drop. charges of $8.7 Mn in Gabon.
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Capex was at $16 Mn an increase of 12.7% as we continued to 6.4.4.2 Mobile Money expand our 4G network. Over 900 sites were added during the period, with 58% of sites now on 4G. Operating free cash was $58 Reported mobile money revenue was $81 Mn, up 20.0%, with a Mn, up by 16.8%, as result of improvement in EBITDA. constant currency growth of 26.3%. Slowdown in revenue growth during the quarter was due to the restriction on movements as a 6.4.4 Product wise Africa result of the Covid-19 pandemic, the temporary waiving of charges on certain transactions such as P2P transfer charges, wallet-to- 6.4.4.1 Mobile services: banks, bank-to-wallet and certain merchant payments to support the communities and economies in these unprecedented Reported mobile revenue was up by 6.5%, with 12.5% growth in circumstances and the withdrawal of USD charges in Nigeria as constant currency, with both voice and data revenue contributing per new guideline issued by the Regulator. to this growth. The revenue growth of 26.3% was driven by a customer base Reported voice revenue dropped by 3.2% while in constant growth of 26.9% and a 33.9% growth in transaction value. The currency grew by 2.2%. The double-digit customer base growth of sales and distribution network continued to expand through the 11.8% was partially offset by a drop in Voice ARPU. Customer addition of exclusive kiosks, Airtel Money branches and the mobile base growth was supported by the expansion of our distribution money agent network. network and infrastructure network. Voice usage per customer grew by 16.9% and total minutes on the network grew by 30%. EBITDA amounted to $39 Mn, an increase of 21% in reported ARPU dropped by 8.1% in constant currency terms, largely driven currency and 26.7% in constant currency. EBITDA margin was at by a drop in interconnect usage charges across key markets in 48.5%, an increase of 0.4 pp in reported currency. Total East Africa and Francophone Africa. transaction value was up 33.9% in constant currency, amounting to $36 bn annualised transaction value. Data revenue continued to grow at 35.7% in constant currency, as a result of growth in our data customer base by 23.2%, accelerated Mobile money customer base grew to 18.5 Mn, up 26.9% over the 4G network rollout and increase in data usage. Currently, 33.2% previous period, with Airtel Money customers representing 16.6% of our total customers are data users, up from 30.1% compared to of our total customers. Mobile money ARPU was up 1.4%, driven the previous period. Data usage doubled as compared to the by the increase in transaction values and a higher contribution previous period and reached 280 billion MBs, data usage per from merchant payments and recharge of mobile services through customer was up 68.2% to 2.5GB per customer per month, largely Airtel Money. resulting from our 4G network expansion and popular data bundles offerings. Growing penetration on 3G and 4G network resulted in data ARPU growth of 13.7%.
Data revenue now contributes to 31.1% to the total revenue, up from 26% in the previous period.
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SECTION 7
DETAILED FINANCIAL AND RELATED INFORMATION
7.1 Summarized extracts from interim unaudited condensed consolidated financial statements prepared under IAS 34 for the three months ended 30 June 2020 and audited consolidated financial statements for the year ended 31 March 2020 prepared in accordance with IFRS.
7.1.1 Consolidated Statement of Comprehensive Income Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Income Revenue 851 796 7% Other income 3 4 (16%) 854 800 7% Expenses Netw ork operating expenses 156 141 11% Access Charges 84 90 (6%) License fee / spectrum usage charges 48 46 4% Employee benefits expense 65 50 30% Sales and marketing expenses 40 38 6% Impairment loss on financial assets 5 4 22% Other expenses 85 88 (4%) Depreciation and amortisation 161 157 3% 644 614 5% Operating profit 210 186 13%
Finance costs 101 107 (6%) Finance income (2) (16) 85% Non-operating income - (72) 100% Share of profit of associate (0) (0) 45% Profit before tax 111 167 (33%) Tax expense 54 35 57%
Profit for the period 57 132 (57%)
Profit before tax (as presented above) 111 167 (33%) Add: Exceptional items (net) - (50) 100% Underlying profit before tax 111 117 (5%)
Profit after tax (as presented above) 57 132 (57%) Add: Exceptional items (net) (7) (64) 89% Underlying profit after tax 50 68 (26%)
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7.1.2 Consolidated Statement of Comprehensive Income Amount in US$ Mn, except ratios Quarter Ended Particulars Y-on-Y Jun-20 Jun-19 Change Other comprehensive income ('OCI') Items to be reclassified subsequently to profit or loss: Net losses due to foreign currency translation differences (10) (30) 68% Net loss on net investments hedge (3) - Net loss on cash flow hedge - (2) 100% (13) (32) 59% Items not to be reclassified subsequently to profit or loss: Re-measurement loss on defined benefit plans (0) (1) 90% Tax credit on above 0 0 (51%) (0) (1) 97%
Other comprehensive loss for the period (13) (33) 60%
Total comprehensive income for the period 44 99 (55%)
Profit for the period attributable to: 57 132 (57%) Ow ners of the Company 42 125 (67%) Non-controlling interests 15 7 124% Other comprehensive loss for the period attributable to: (13) (33) 60% Ow ners of the Company (13) (33) 61% Non-controlling interests (0) (0) (321%) Total comprehensive income for the period attributable to: 44 99 (55%) Ow ners of the Company 29 92 (69%) Non-controlling interests 15 7 126%
Earnings per share Basic 1.11c 4.07c Diluted 1.11c 4.07c
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7.1.3 Consolidated Summarized Financial Position Amount in US$ Mn As at As at Particulars Jun 30, 2020 Mar 31, 2020 Assets Non-current assets Property, plant and equipment 1,876 1,832 Capital w ork-in-progress 178 259 Right of use assets 700 639 Goodw ill 3,939 3,943 Other intangible assets 435 456 Intangible assets under development 31 30 Investment in associate 3 3 Financial Assets - Investments 0 0 - Derivative instruments 0 0 - Security deposits 8 7 - Others 1 1 Income tax assets (net) 40 39 Deferred tax assets (net) 330 333 Other non-current assets 111 112 7,652 7,654 Current assets Inventories 7 3 Financial Assets - Derivative instruments 3 10 - Trade receivables 150 132 - Cash and cash equivalents 1,026 1,010 - Other Bank balance 7 6 - Balance held under mobile money trust 350 295 - Others 61 66 Other current assets 149 149 1,753 1,671
Total Assets 9,405 9,325
Current liabilities Financial Liabilities - Borrow ings 350 235 - Current maturities of long-term borrow ings 1,272 429 - Lease liabilities 211 199 - Derivative instruments 4 3 - Trade payables 428 416 - Mobile money w allet balance 350 295 - Others 388 458 Provisions 70 70 Deferred revenue 125 124 Current tax liabilities (net) 86 144 Other current liabilities 125 115 3,409 2,488 Net current liability (1,656) (817)
Non-current liabilities Financial Liabilities - Borrow ings 1,636 2,446 - Lease liabilities 1,003 970 - Derivative instruments 4 4 - Others 14 15 Provisions 26 23 Deferred tax liabilities (net) 74 69 Other non-current liabilities 28 29 2,785 3,556 Total liabilities 6,194 6,044
Net Assets 3,211 3,281 Equity Share capital 3,420 3,420 Retained earnings 2,734 2,805 Other reserve (2,850) (2,837) Equity attributable to ow ners of the company 3,304 3,388 Non-controlling interests ('NCI') (93) (107) Total equity 3,211 3,281
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7.1.4 Consolidated Summarized Statement of Cash Flows
Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19 Cash flow s from operating activities Profit before tax 111 167 Adjustments for - Depreciation and amortisation 161 157 Finance income (2) (16) Finance cost 101 107 Share of profit of associate (0) (0) Non-operating adjustments - (72) Other adjustments 3 5 Operating cash flow before changes in w orking capital 374 348 Changes in w orking capital Increase in trade receivables (17) (5) (Increase)/decrease in inventories (3) 0 (Increase)/decrease in trade payables 4 (18) Increase in mobile money w allet balance 55 11 Increase in provisions 2 10 Increase in deferred revenue 1 4 Decrease in income received in advance (1) (7) Increase in other financial and non financial liabilities 4 6 (Increase)/decrease in other financial and non financial assets (10) 3 Net cash generated from operations before tax 409 352 Income tax paid (101) (58)
Net cash generated from operating activities (a) 308 294 Cash flow s from investing activities Purchase of property, plant and equipment and capital w ork-in-progress (207) (176) Purchase of intangible assets (8) (35) Interest received 8 4 Net cash used in investing activities (b) (207) (207) Cash flow s from financing activities Proceeds from sale of shares to non-controlling interests - 3 Purchase of ow n shares by ESOP trust (0) - Payment of share issue expenses - (4) Proceeds from borrow ings 96 43 Repayment of borrow ings (20) (95) Repayment of lease liabilities (54) (43) Interest and other finance charges paid (103) (107) Net cash used in financing activities (c) (81) (203) Increase in cash and cash equivalents during the period (a+b+c) 20 (116) Currency translation differences relating to cash and cash equivalents (4) (1)
Cash and cash equivalents as at beginning of the period 1,087 870 Cash and cash equivalents as at end of the period (1) 1,103 753
(1) Includes balance held under mobile money trust of USD 350m (June 2019: USD 249m) on behalf of mobile money customers which are not available for use by the group.
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7.2 Use of Alternative performance measures (APM) Financial Information
In presenting and discussing the Group’s reported financial position, operating results and cash flows, certain information is derived from amounts calculated in accordance with IFRS, but this information is not in itself an expressly permitted GAAP measure. Such Alternative performance measures (APM) should not be viewed in isolation as alternatives to the equivalent GAAP measures, if any.
A summary of Alternative performance measures (APM) included in this report, together with details where additional information and reconciliation to the nearest equivalent GAAP measure can be found, is shown below.
Location in this results announcement Alternative performance measures (APM) Equivalent GAAP measure for IFRS of reconciliation and further information
Earnings before Interest, Taxation, Depreciation and Operating profit Page 30 Amortization (EBITDA) Underlying Operating Expenses Expenses Page 31
Finance Cost (net) Finance Cost and Finance Income Page 31
Profit / (loss) before tax (before exceptional item) Profit / (Loss) Before Tax Page 31
Profit / (loss) after tax (before exceptional item) Profit / (loss) after tax Page 31
Cash Profit from Operations before Derivative & Profit from operating activities Page 32 Exchange (Gain)/Loss Effective tax rate and adjusted Effective tax rate Reported Tax Rate Page 32
Capital Expenditure (Capex) Refer glossary NA
Operating free cash flow Refer glossary NA
Capital Employed Refer glossary NA
7.2.1 Reconciliation between GAAP and Alternative performance measures (APM)
7.2.1.1: EBITDA and Margin
Quarter ended Particulars UoM Jun-20 Jun-19 Operating profit US$ Mn 210 186 Add: Depreciation and amortization US$ Mn 161 157 Charity and donation US$ Mn 4 2 Exceptional items US$ Mn - 3 EBITDA US$ Mn 375 348 Revenue US$ Mn 851 796 EBITDAMargin (%) US$ Mn 44.1% 43.7%
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7.2.1.2: Underlying Operating Expenditure
Quarter ended Particulars UoM Jun-20 Jun-19 Expenses US$ Mn 644 614 Less: Access charges US$ Mn (84) (90) Depreciation and amortization US$ Mn (161) (157) Charity and donation US$ Mn (4) (2) Exceptional items US$ Mn - (3) Underlying Operating Expenditure US$ Mn 395 362
7.2.1.3: Finance Cost (net)
Quarter Ended Particulars UOM Jun-20 Jun-19 Finance cost US$ Mn 101 107 Finance income US$ Mn (2) (16) Exceptional items US$ Mn - (9)
Finance cost (net) US$ Mn 99 82
7.2.1.4: Profit / (Loss) Before Tax
Quarter ended Particulars UoM Jun-20 Jun-19 Profit / (loss) for the year Before Tax US$ Mn 111 167 Exceptional items US$ Mn - (50) Profit / (loss) before tax (before exceptional item) US$ Mn 111 117
7.2.1.5: Profit / (Loss) After Tax
Quarter ended Particulars UoM Jun-20 Jun-19 Profit / (loss) after tax US$ Mn 57 132 Exceptional items US$ Mn (7) (64) Profit / (loss) after tax (before exceptional item) US$ Mn 50 68
7.2.1.6: Operating Free Cash Flow
Quarter ended Particulars UoM Jun-20 Jun-19 Net Cash Generated from Operating Activities US$ Mn 308 294 Add: Income tax paid US$ Mn 101 58 Cash Generation from Operation before tax US$ Mn 409 352 Less: Changes in working capital US$ Mn 34 5 Operating cash flow before changes in working capital US$ Mn 374 348
Other adjustments US$ Mn (3) (5) Charity and donation US$ Mn 4 2 Exceptional items US$ Mn - 3 EBITDA US$ Mn 375 348 Less: Capital Expenditure US$ Mn (66) (99) Operating Free Cash Flow US$ Mn 309 249
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7.2.1.7: Cash Profit from Operations before Derivative and Exchange Fluctuation
Amount in US$ Mn Quarter Ended Particulars UOM Jun-20 Jun-19 Operating profit US$ Mn 210 186 Finance cost (net) US$ Mn (99) (82) Depreciation and Amortisation US$ Mn 161 157 Derivatives and exchange (gain)/loss US$ Mn 22 3 Exceptional items US$ Mn - 3 Cash Profit from Operations before Derivative and US$ Mn 295 267 Exchange Fluctuation
7.2.1.8: Effective tax rate and adjusted Effective tax rate
Quarter Ended Jun-20 Jun-19 Particulars UoM Profit before Income tax Profit before Income tax Tax Rate % Tax Rate % taxation expense taxation expense Reported Effective tax rate US$ Mn 111 54 48.7% 167 35 20.6%
Adjusted for : Exceptional Items (provided below ) US$ Mn 7 (51) 14 Foreign exchange rate movements for non-DTA US$ Mn 15 (10) operating companies & holding companies One-off tax adjustment US$ Mn 2 5 Effective tax rate US$ Mn 126 63 49.7% 107 53 49.3% Deferred tax trigerred during the year US$ Mn (7) (14) Adjusted effective tax rate US$ Mn 126 56 44.4% 107 39 36.3% Exceptional items 1. Deferred tax asset recognition US$ Mn 7 14 2. Netw ork modernisation US$ Mn 9 (0) 3. Reversal of indemnities US$ Mn (72) 4. Share issue and IPO related expenses US$ Mn 3 5. Finance Cost US$ Mn 9 Total US$ Mn 7 (51) 14
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SECTION 8
NET DEBT AND COST SCHEDULES
8.1 Consolidated Schedule of Net Debt Amount in US$ Mn As at As at Particulars Jun 30, 2020 Mar 31, 2020 Long term borrow ing, net of current portion 1,615 2,424 Short-term borrow ings and current portion of long-term borrow ing 1,622 664
Less: Cash and Cash Equivalents 1,026 1,010 Net Debt excluding Lease Obligations 2,211 2,078 Lease Obligations 1,214 1,169
Net Debt including Lease Obligations 3,425 3,247
8.2 Consolidated Schedule of Net Finance Cost (in Reported Currency)
Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19
Interest on borrow ings and Finance charges 46 52 Interest on Lease Obligation 33 32 Investment (income)/ loss (2) (5) Finance cost excluding Derivatives and Forex 77 79 Add : Derivatives and exchange (gain)/ loss 22 3
Finance cost (net of Derivatives and Forex) 99 82
8.3 Consolidated Schedule of Operating Expenses (in Constant Currency)
Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19
Access charges 85 85 Cost of goods sold 37 29 License fee / spectrum charges (revenue share) 48 44 Netw ork operations costs 158 129 Employee benefits expense 67 52 Selling, general and adminstration expense 92 96 Operating Expenses 486 434
Closing currency rates as on March 31, 2020 considered for Constant currency.
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8.4 Consolidated Schedule of Depreciation and Amortization before exceptional item (in Constant Currency) Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19 Depreciation 139 122 Amortization 23 19
Depreciation and Amortization 162 142 Closing currency rates as on March 31, 2020 considered for Constant currency.
8.5 Consolidated Schedule of Income Tax before exceptional item (in Constant Currency) Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19 Current tax expense 47 29 Deferred tax expense / (income) 14 15 Income tax expense 61 44
Closing currency rates as on March 31, 2020 considered for Constant currency.
8.6 Consolidated Schedule of Operating Expenses (in Reported Currency)
Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19
Access charges 84 90 Cost of goods sold 37 30 License fee / spectrum charges (revenue share) 48 46 Netw ork operations costs 157 135 Employee benefits expense 66 54 Selling, general and adminstration expense 91 99
Operating Expenses 483 454
8.7 Consolidated Schedule of Depreciation and Amortization before exceptional item (in Reported Currency)
Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19 Depreciation 138 128 Amortization 23 20
Depreciation and Amortization 161 148
8.8 Consolidated Schedule of Income Tax before exceptional item (in Reported Currency) Amount in US$ Mn Quarter Ended Particulars Jun-20 Jun-19 Current tax expense 47 32 Deferred tax expense / (income) 14 16
Income tax expense 61 48
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SECTION 9
TRENDS AND RATIO ANALYSIS
9.1 Based on Statement of Operations
9.1.1 Consolidated Statement of Operations: (in Reported Currency)
Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Revenue 851 899 883 844 796 Access charges 84 94 98 94 90 Cost of goods sold 37 39 38 34 30 Net revenues 729 766 747 715 676 Operating Expenses (Excl Access Charges, cost of 310 321 308 302 286 goods sold and License Fee) Licence Fee 48 51 44 48 46 EBITDA 375 397 399 372 348 Cash Profit from operations before Derivative and 295 325 326 293 267 Exchange Flucations EBIT 210 244 245 219 198 Share of results of associate (0) (0) 0 (0) (0) Profit before Tax 111 97 167 153 117 Profit after Tax (before exceptional items) 50 70 73 85 68 Non Controlling Interest (before exceptional items) 12 12 10 6 6 Net Income (before exceptional items) 38 57 62 78 62 Exceptional items (net) (7) (7) (30) (11) (64) Profit after Tax (after exceptional items) 57 77 103 96 132 Non Controlling Interest 15 12 13 6 7 Net Income 42 65 90 90 125 Capex 66 246 150 147 99 Operating Free Cash Flow (EBITDA - Capex) 309 151 249 225 249 Total Capital Employed 6,636 6,528 6,595 6,576 6,687
Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 As a % of Revenue Access charges 9.9% 10.5% 11.1% 11.2% 11.3% Cost of goods sold 4.4% 4.3% 4.3% 4.1% 3.8% Net revenues 85.7% 85.2% 84.6% 84.7% 84.9% Operating Expenses (excluding access charges, 36.5% 35.7% 34.9% 35.8% 36.0% cost of goods sold and license fee) Licence Fee 5.6% 5.7% 5.0% 5.7% 5.7% EBITDA 44.1% 44.1% 45.2% 44.1% 43.7% Cash Profit from operations before Derivative and 34.6% 36.1% 36.9% 34.7% 33.5% Exchange Flucations EBIT 24.7% 27.2% 27.7% 25.9% 24.8% Share of results of associate (0.0%) (0.0%) 0.0% (0.0%) (0.0%) Profit before Tax 13.1% 10.8% 18.9% 18.1% 14.6% Profit after Tax (before exceptional items) 5.9% 7.8% 8.2% 10.0% 8.6% Non Controlling Interest (before exceptional items) 1.4% 1.4% 1.2% 0.8% 0.8% Net Income (before exceptional items) 4.5% 6.4% 7.0% 9.3% 7.8% Exceptional items (net) (0.8%) (0.8%) (3.4%) (1.3%) (8.0%) Profit after Tax (after exceptional items) 6.7% 8.6% 11.6% 11.3% 16.6% Non Controlling Interest 1.8% 1.4% 1.5% 0.7% 0.9% Net Income 4.9% 7.2% 10.1% 10.6% 15.7%
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9.1.2 Consolidated Statement of Operations: (in Constant Currency)
Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Revenue 856 870 845 805 757 Access charges 85 91 93 90 85 Cost of goods sold 37 37 36 32 29 Net revenues 733 742 716 683 643 Operating Expenses (Excl Access Charges, cost of 312 313 297 290 274 goods sold and License Fee) Licence Fee 48 50 43 46 44 EBITDA 377 382 380 353 329 Cash Profit from operations before Derivative and 296 310 307 274 248 Exchange Flucations EBIT 211 233 231 205 185 Share of results of associate (0) (0) 0 (0) (0) Profit before Tax (before exceptional items)* 134 163 159 128 107 Profit after Tax (before exceptional items) 73 136 69 64 63 Non Controlling Interest (before exceptional items) 12 13 10 6 6 Net Income (before exceptional items) 61 123 59 58 57 Exceptional items (net) (7) (8) (29) (11) (64) Profit after Tax (after exceptional items) 80 143 98 75 127 Non Controlling Interest 16 13 13 6 7 Net Income 64 130 85 69 120 Capex 66 246 150 147 99 Operating Free Cash Flow (EBITDA - Capex) 310 136 230 206 230 Total Capital Employed 6,636 6,528 6,595 6,576 6,687
Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 As a % of Revenue Access charges 9.9% 10.4% 11.1% 11.2% 11.3% Cost of goods sold 4.4% 4.3% 4.3% 4.0% 3.8% Net revenues 85.7% 85.3% 84.7% 84.8% 84.9% Operating Expenses (excluding access charges, 36.5% 36.0% 35.2% 36.1% 36.2% cost of goods sold and license fee) Licence Fee 5.6% 5.8% 5.1% 5.8% 5.8% EBITDA 44.0% 43.9% 44.9% 43.8% 43.4% Cash Profit from operations before Derivative and 34.6% 35.6% 36.3% 34.1% 32.8% Exchange Flucations EBIT 24.7% 26.8% 27.3% 25.5% 24.5% Share of results of associate (0.0%) (0.0%) 0.0% (0.0%) (0.0%) Profit before Tax 15.7% 18.7% 18.8% 15.9% 14.1% Profit after Tax (before exceptional items) 8.6% 15.6% 8.1% 8.0% 8.3% Non Controlling Interest (before exceptional items) 1.4% 1.5% 1.2% 0.8% 0.8% Net Income (before exceptional items) 7.1% 14.1% 7.0% 7.2% 7.5% Exceptional items (net) (0.8%) (0.9%) (3.5%) (1.3%) (8.5%) Profit after Tax (after exceptional items) 9.3% 16.5% 11.6% 9.3% 16.8% Non Controlling Interest 1.8% 1.5% 1.5% 0.7% 0.9% Net Income 7.5% 15.0% 10.1% 8.6% 15.9% *Derivative and Exchange fluctuation impact is excluded to calculate Profit before tax and Profit after tax in Constant Currency. Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex and Capital Employed.
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9.2 Based on Segment Wise Statement of Operations
9.2.1 Nigeria
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 341 377 355 327 313 EBITDA 182 209 194 174 167 EBITDA / Revenue 53.3% 55.5% 54.7% 53.1% 53.3% EBIT 130 163 146 129 122 Capex 30 145 64 62 53 Operating Free Cash Flow (EBITDA - Capex) 152 64 130 112 113
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 343 359 334 307 293 EBITDA 183 199 183 163 156 EBITDA / Revenue 53.3% 55.5% 54.7% 53.1% 53.3% EBIT 130 154 138 121 114 Capex 30 145 64 62 53 Operating Free Cash Flow (EBITDA - Capex) 153 54 119 101 103 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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9.2.2 East Africa (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 305 310 313 301 277 EBITDA 129 125 127 123 111 EBITDA / Revenue 42.4% 40.3% 40.5% 40.7% 40.0% EBIT 74 70 70 65 51 Capex 19 61 61 30 30 Operating Free Cash Flow (EBITDA - Capex) 110 64 66 93 81
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 306 299 297 284 261 EBITDA 130 120 120 114 103 EBITDA / Revenue 42.3% 40.2% 40.2% 40.2% 39.5% EBIT 74 67 65 59 47 Capex 19 61 61 30 30
Operating Free Cash Flow (EBITDA - Capex) 110 60 59 84 73 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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9.2.3 Francophone Africa (DRC, Gabon, Congo B, Madagascar, Niger, Chad and Seychelles)
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 209 215 218 217 209 EBITDA 74 70 82 76 64 EBITDA / Revenue 35.1% 32.7% 37.5% 34.9% 30.8% EBIT 25 24 32 29 18 Capex 16 40 24 54 14 Operating Free Cash Flow (EBITDA - Capex) 58 31 57 22 50
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 211 215 217 216 206 EBITDA 74 70 81 76 64 EBITDA / Revenue 35.0% 32.7% 37.5% 35.0% 30.9% EBIT 24 24 32 29 18 Capex 16 40 24 54 14 Operating Free Cash Flow (EBITDA - Capex) 58 31 57 21 49 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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9.3 Based on Product Wise Statement of Operations
9.3.1 Mobile Services - Summarized Statement of Operations
9.3.1.1 Consolidated Mobile:
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 799 844 826 790 750 EBITDA 345 366 363 335 309 EBITDA / Revenue 43.2% 43.3% 43.9% 42.4% 41.2% EBIT 192 220 210 186 161 Capex 64 240 145 145 96 Operating Free Cash Flow (EBITDA - Capex) 281 125 217 189 213
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 803 816 791 754 714 EBITDA 347 351 345 317 291 EBITDA / Revenue 43.1% 43.0% 43.6% 42.0% 40.8% EBIT 192 209 198 174 150 Capex 64 240 145 145 96 Operating Free Cash Flow (EBITDA - Capex) 283 111 200 172 196 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
9.3.1.2 Nigeria Mobile Services
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 341 377 354 326 311 EBITDA 182 209 194 172 165 EBITDA / Revenue 53.3% 55.5% 54.7% 52.9% 53.1% EBIT 130 163 146 127 121 Capex 30 145 64 62 53
Operating Free Cash Flow (EBITDA - Capex) 152 64 130 110 112
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In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 343 359 333 306 291 EBITDA 183 199 182 162 155 EBITDA / Revenue 53.3% 55.5% 54.7% 52.9% 53.1% EBIT 130 154 137 120 113 Capex 30 145 64 62 53 Operating Free Cash Flow (EBITDA - Capex) 153 54 118 99 101 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
9.3.1.3 East Africa Mobile Services (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 264 268 272 263 244 EBITDA 103 100 101 99 91 EBITDA / Revenue 38.9% 37.2% 37.1% 37.6% 37.3% EBIT 50 46 45 42 33 Capex 18 56 57 29 29 Operating Free Cash Flow (EBITDA - Capex) 85 44 44 70 62
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 266 259 258 248 230 EBITDA 103 96 95 92 85 EBITDA / Revenue 38.8% 37.0% 36.8% 37.1% 36.7% EBIT 50 44 42 38 30 Capex 18 56 57 29 29 Operating Free Cash Flow (EBITDA - Capex) 85 40 38 63 55 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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9.3.1.4 Francophone Africa Mobile Services (DRC, Gabon, Congo B, Madagascar, Niger, Chad and Seychelles)
In Reported Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 196 200 202 203 196 EBITDA 62 58 68 64 53 EBITDA / Revenue 31.4% 28.7% 33.7% 31.4% 26.9% EBIT 13 11 18 16 7 Capex 16 39 24 54 13 Operating Free Cash Flow (EBITDA - Capex) 46 18 44 9 39
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 197 200 201 202 193 EBITDA 62 58 68 63 52 EBITDA / Revenue 31.3% 28.7% 33.7% 31.4% 27.0% EBIT 13 11 18 16 7 Capex 16 39 24 54 13 Operating Free Cash Flow (EBITDA - Capex) 46 18 43 9 39 Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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9.3.2 Mobile Money - Summarized Statement of Operations
9.3.2.1 Mobile Money:
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 81 83 82 78 68 EBITDA 39 39 40 38 33 EBITDA / Revenue 48.5% 47.3% 49.0% 48.2% 48.1% EBIT 37 36 39 37 31 Capex 2 5 4 2 2 Operating Free Cash Flow (EBITDA - Capex) 37 34 36 36 31
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Jun-20 Mar-20 Dec-19 Sep-19 Jun-19
Revenue 81 81 79 74 64 EBITDA 39 38 39 36 31 EBITDA / Revenue 48.5% 47.5% 49.2% 48.4% 48.3% EBIT 37 36 37 35 30 Capex 2 5 4 2 2 Operating Free Cash Flow (EBITDA - Capex) 37 33 35 34 29
Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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9.4 Operational Performance Trends (Quarter Ended)
9.4.1 Consolidated - Operational Performance
Parameters Unit Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Customer Base 000's 111,461 110,604 107,140 103,881 99,670 Net Additions 000's 857 3,464 3,258 4,211 819 Monthly Churn % 5.7% 5.3% 5.2% 4.5% 5.0% Average Revenue Per User (ARPU) US$ 2.6 2.7 2.7 2.6 2.5 Voice Voice Revenue US$ Mn 456 494 484 464 446 Minutes on the netw ork Mn 71,891 68,870 65,086 60,795 55,329 Voice Average Revenue Per User (ARPU) US$ 1.4 1.5 1.5 1.5 1.5 Voice Usage per customer min 218 211 206 199 186 Data Data Revenue US$ Mn 267 245 232 215 197 Data Customer Base 000's 36,972 35,443 32,887 31,910 30,001 As % of Customer Base % 33.2% 32.0% 30.7% 30.7% 30.1% Total MBs on the netw ork Mn MBs 279,541 219,015 189,798 162,394 139,303 Data Average Revenue Per User (ARPU) US$ 2.5 2.4 2.4 2.3 2.2 Data Usage per customer MBs 2,607 2,145 1,967 1,748 1,550 Mobile Money Transaction Value US$ Mn 9,038 8,031 8,001 7,442 6,751 Transaction Value per Subs US$ 164 155 166 166 153 Mobile Money Revenue US$ Mn 81 81 79 74 64 Active Customers 000's 18,529 18,294 16,634 15,521 14,600 Mobile Money ARPU US$ 1.5 1.6 1.6 1.7 1.5 Network and Coverage Netw ork tow ers Nos 23,471 22,909 22,253 21,936 21,385 Owned towers Nos 4,569 4,548 4,454 4,461 4,500 Leased towers Nos 18,902 18,361 17,799 17,475 16,885 Of w hich Mobile Broadband tow ers Nos 21,171 20,378 19,133 18,274 17,049 Total Mobile Broadband Base stations Nos 51,963 47,082 43,174 40,187 35,283 Data Capacity TB/day 8,371 7,572 6,780 6,146 5,300 Revenue Per site Per Month US$ 12,257 12,809 12,718 12,361 11,865 Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for constant currency.
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9.4.2 Nigeria - Operational Performance
Parameters Unit Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Customer Base 000's 42,513 41,757 39,855 39,512 37,468 Net Additions 000's 757 1,902 343 2,044 347 Monthly Churn % 5.7% 5.8% 6.8% 4.7% 5.3% Average Revenue Per User (ARPU) US$ 2.7 2.9 2.8 2.7 2.6 Voice Voice Revenue US$ Mn 198 222 205 188 185 Minutes on the netw ork Mn 19,275 20,447 18,812 15,687 15,809 Voice Average Revenue Per User (ARPU) US$ 1.6 1.8 1.7 1.6 1.7 Voice Usage per customer min 154 166 158 136 141 Data Data Revenue US$ Mn 122 114 109 99 88 Data Customer Base 000's 17,334 16,715 15,234 15,471 14,628 As % of Customer Base % 40.8% 40.0% 38.2% 39.2% 39.0% Total MBs on the netw ork Mn MBs 139,285 108,561 96,313 80,247 71,108 Data Average Revenue Per User (ARPU) US$ 2.4 2.4 2.4 2.2 2.0 Data Usage per customer MBs 2,752 2,252 2,105 1,784 1,626 Network and Coverage Netw ork tow ers Nos 9,802 9,352 8,924 8,878 8,523 Owned towers Nos 204 200 177 261 260 Leased towers Nos 9,598 9,152 8,747 8,617 8,263 Of w hich Mobile Broadband tow ers Nos 9,326 8,796 8,093 7,695 7,115 Total Mobile Broadband Base stations Nos 19,258 15,788 13,865 13,209 12,223 Data Capacity TB/day 3,489 2,980 2,486 2,343 2,176
Revenue Per site Per Month US$ 11,904 13,060 12,491 11,760 11,531 Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for constant currency.
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9.4.3 East Africa - Operational Performance (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
Parameters Unit Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Customer Base 000's 48,757 48,634 47,366 45,007 43,052 Net Additions 000's 123 1,268 2,359 1,955 194 Monthly Churn % 5.7% 4.7% 3.8% 3.8% 4.8% Average Revenue Per User (ARPU) US$ 2.1 2.1 2.2 2.2 2.0 Voice Voice Revenue US$ Mn 144 147 149 146 133 Minutes on the netw ork Mn 45,107 41,049 39,177 38,290 32,660 Voice Average Revenue Per User (ARPU) US$ 1.0 1.0 1.1 1.1 1.0 Voice Usage per customer min 311 285 284 290 254 Data Data Revenue US$ Mn 86 79 77 69 66 Data Customer Base 000's 14,041 13,322 12,903 12,142 11,219 As % of Customer Base % 28.8% 27.4% 27.2% 27.0% 26.1% Total MBs on the netw ork Mn MBs 110,172 85,983 74,285 66,644 55,875 Data Average Revenue Per User (ARPU) US$ 2.1 2.1 2.1 2.0 2.0 Data Usage per customer MBs 2,711 2,227 1,991 1,905 1,671 Network and Coverage Netw ork tow ers Nos 9,039 8,987 8,838 8,678 8,572 Owned towers Nos 2,535 2,499 2,475 2,421 2,468 Leased towers Nos 6,504 6,488 6,363 6,257 6,104 Of w hich Mobile Broadband tow ers Nos 7,880 7,809 7,542 7,386 6,888 Total Mobile Broadband Base stations Nos 22,071 21,162 20,340 19,564 16,903 Data Capacity TB/day 3,355 3,147 3,009 2,805 2,330 Revenue Per site Per Month US$ 11,264 11,156 11,261 10,937 10,171 Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for constant currency.
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9.4.4 Francophone Africa- Operational Performance (DRC, Gabon, Congo B, Madagascar, Niger, Chad and Seychelles)
Parameters Unit Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Customer Base 000's 20,190 20,213 19,919 19,362 19,150 Net Additions 000's (23) 294 557 212 278 Monthly Churn % 5.9% 6.0% 5.4% 5.8% 5.2% Average Revenue Per User (ARPU) US$ 3.5 3.6 3.7 3.7 3.6 Voice Voice Revenue US$ Mn 117 127 133 132 130 Minutes on the netw ork Mn 7,509 7,373 7,097 6,818 6,860 Voice Average Revenue Per User (ARPU) US$ 1.9 2.1 2.3 2.3 2.3 Voice Usage per customer min 125 122 121 118 121 Data Data Revenue US$ Mn 58 51 47 47 43 Data Customer Base 000's 5,596 5,405 4,749 4,297 4,154 As % of Customer Base % 27.7% 26.7% 23.8% 22.2% 21.7% Total MBs on the netw ork Mn MBs 30,083 24,471 19,200 15,503 12,320 Data Average Revenue Per User (ARPU) US$ 3.6 3.3 3.5 3.7 3.4 Data Usage per customer MBs 1,882 1,601 1,429 1,202 970 Network and Coverage Netw ork tow ers Nos 4,630 4,570 4,491 4,380 4,290 Owned towers Nos 1,830 1,849 1,802 1,779 1,772 Leased towers Nos 2,800 2,721 2,689 2,601 2,518 Of w hich Mobile Broadband tow ers Nos 3,965 3,773 3,498 3,193 3,046 Total Mobile Broadband Base stations Nos 10,634 10,132 8,969 7,414 6,157 Data Capacity TB/day 1,527 1,445 1,285 999 794 Revenue Per site Per Month US$ 15,222 15,806 16,255 16,575 16,080 Revenue & KPIs in Constant Currency rates. Closing currency rates as on March 31, 2020 considered for constant currency.
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SECTION 10
KEY ACCOUNTING POLICIES (AS PER IFRS)
Property, plant and equipment and capital work-in- consolidated statement of financial position until capitalised. Such progress cost comprises of purchase price (including non-refundable duties and taxes but excluding any trade discounts and rebates), and any An item is recognised as an asset, if and only if, it is probable that directly attributable cost. the future economic benefits associated with the item will flow to the Group and its cost can be measured reliably. PPE is initially Goodwill recognised at cost.
Goodwill represents the cost of the acquired businesses in excess The initial cost of PPE comprises its purchase price (including non- of the fair value of identifiable net assets acquired. Goodwill is not refundable duties and taxes but excluding any trade discounts and amortised; however, it is tested for impairment and carried at cost rebates), and any directly attributable cost of bringing the asset to less any accumulated impairment losses. The gains/ (losses) on its working condition and location for its intended use. Further, it the disposal of a cash-generating unit (‘CGU’) include the carrying includes assets installed on the premises of customers as the amount of goodwill relating to the CGU sold (in case goodwill has associated risks, rewards and control remain with the Group. been allocated to Group of CGUs; it is determined on the basis of
the relative fair value of the operations sold). Subsequent to initial recognition, PPE is stated at cost less Goodwill is tested for impairment, at least annually or earlier, in accumulated depreciation and any impairment losses. When case circumstances indicate that their carrying value may exceed significant parts of PPE are required to be replaced at regular the recoverable amount (higher of fair value less costs of sell and intervals, the Group recognises such parts as separate component the value -in- use). For the purpose of impairment testing, the of assets. When an item of PPE is replaced, then its carrying goodwill is allocated to a cash-generating-unit (‘CGU’) or group of amount is de-recognised from the consolidated statement of CGUs (‘CGUs’) which are expected to benefit from the acquisition- financial position and cost of the new item of PPE is recognised. related synergies and represent the lowest level within the entity
at which the goodwill is monitored for internal management The expenditures that are incurred after an item of PPE has been purposes, but not higher than an operating segment. A CGU is the ready to use, such as repairs and maintenance, are normally smallest identifiable group of assets that generates cash inflows charged to the consolidated statement of comprehensive income that are largely independent of the cash inflows from other assets in the period in which such costs are incurred. However, in or group of assets. situations where the said expenditure can be measured reliably, and is probable that future economic benefits associated with it will Impairment occurs when the carrying value of a CGU/CGUs flow to the Group, it is included in the asset’s carrying value or as including the goodwill, exceeds the estimated recoverable amount a separate asset, as appropriate. of the CGU/CGUs. The recoverable amount of a CGU/CGUs is the
higher of its fair value less costs to sell and its value in use. Value- Depreciation on PPE is computed using the straight-line method in-use is the present value of future cash flows expected to be over the estimated useful lives. Freehold land is not depreciated derived from the CGU/CGUs. as it has an unlimited useful life. The Group has established the estimated range of useful lives for different categories of PPE as The total impairment loss of a CGU/CGUs is allocated first to follows: reduce the carrying value of goodwill allocated to that CGU/CGUs Asset Categories Years Period of lease or 10-20 years, and then to the other assets of that CGU/CGUs - on pro-rata basis Leasehold improvement as applicable, w hichever is less of the carrying value of each asset. Buildings 20 Plant and equipment Other Intangible assets - Netw ork equipment (including passive 3 - 25 infrastructure) Identifiable intangible assets are recognised when the Group Computer equipment 3-5 controls the asset, it is probable that future economic benefits Furniture & fixture and office equipment 1-5 attributed to the asset will flow to the Group and the cost of the Vehicles 3-5 asset can be measured reliably. The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted appropriately, at-least as at each The intangible assets that are acquired in a business combination reporting date so as to ensure that the method and period of are recognised at fair value as on acquisition date. Other intangible depreciation are consistent with the expected pattern of economic assets are recognised at cost. These assets having a definite benefits from these assets. The effect of any change in the useful life are carried at cost less accumulated amortisation and estimated useful lives, residual values and / or depreciation any impairment losses. Amortisation is computed using the method are accounted prospectively, and accordingly, the straight-line method over the expected useful life of intangible depreciation is calculated over the PPE’s remaining revised useful assets. life. The cost and the accumulated depreciation for PPE sold, scrapped, retired or otherwise disposed of are de-recognised from The Group has established the estimated useful lives of different the consolidated statement of financial position and the resulting categories of intangible assets as follows: gains / (losses) are included in the consolidated statement of comprehensive income within other expenses / other income. a. Licenses (including spectrum)
PPE in the course of construction is carried at cost, less any Acquired licenses and spectrum are amortised commencing from accumulated impairment and presented separately as capital the date when the related network is available for intended use in work-in-progress (CWIP) including capital advances in the
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the relevant jurisdiction. The useful lives range from two to twenty- be readily determined, the Group uses its incremental borrowing five years. rate. Lease liabilities include the net present value of fixed In addition, the Group also incurs a fee on licenses/spectrum that payments (including in-substance fixed payments), variable lease is calculated based on the revenue amount of the period. Such payments that are based on consumer price index (‘CPI’), the revenue-share based fee is recognised as a cost in the exercise price of a purchase option if the lessee is reasonably consolidated statement of comprehensive income when incurred. certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the lessee b. Software: Software are amortised over the period of the exercising that option. license, generally not exceeding three years. c. Other acquired intangible assets: Other acquired intangible Subsequently, the lease liability is measured at amortised cost assets include the following: using the effective interest method. It is remeasured when there is a change in future lease payments including due to changes in CPI Customer relationships: Over the estimated life of such or if the Group changes its assessment of whether it will exercise relationships which ranges from one year to five years. a purchase, extension or termination option or when the lease contract is modified and the lease modification is not accounted The useful lives and amortisation method are reviewed, and for as a separate lease. The corresponding adjustment is made to adjusted appropriately, at least at each financial year end so as to the carrying amount of the right-of-use asset, or is recorded in ensure that the method and period of amortisation are consistent profit or loss if the carrying amount of the related right-of-use asset with the expected pattern of economic benefits from these assets. has been reduced to zero. The effect of any change in the estimated useful lives and / or amortisation method is accounted prospectively, and accordingly, Right-of-use assets are measured at cost comprising the amount the amortisation is calculated over the remaining revised useful of the initial measurement of lease liability, any lease payments life. made at or before the commencement date less any lease incentives received, any initial direct costs, and restoration costs. Further, the cost of intangible assets under development includes the amount of spectrum allotted to the Group and related costs for Subsequent to initial recognition, right-of-use assets are stated at which services are yet to be rolled out and are presented cost less accumulated depreciation and any impairment losses separately in the consolidated statement of financial position. and adjusted for certain re-measurements of the lease liability. Depreciation is computed using the straight-line method from the commencement date to the end of the useful life of the underlying Investment in Associates asset or the end of the lease term, whichever is shorter. The estimated useful lives of right-of-use assets are determined on the An associate is an entity over which the Group has significant same basis as those of the underlying property and equipment. influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not In the consolidated statement of financial position, the right-of-use control or joint control over those policies. assets and lease liabilities are presented separately.
Investment in associate is accounted for using equity method; from When a contract includes lease and non-lease components, the the date on which the Group starts exercising significant influence Group allocates the consideration in the contract on the basis of over the associate. the relative stand-alone prices of each lease component and the aggregate stand-alone price of the non-lease components. At each reporting date, the Group determines whether there is objective evidence that the investment is impaired. If there is such Short-term leases evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of investment and its The Group has elected not to recognise right-of-use assets and carrying value. lease liabilities for short term leases that have a lease term of 12 months or less. The Group recognises the lease payments Leases associated with these leases as an expense on a straight-line basis over the lease term. At inception of a contract, the Group assesses a contract as, or containing, a lease if the contract conveys the right to control the b. Group as a lessor use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to Whenever the terms of the lease transfer substantially all the risks control the use of an identified asset, the Group assesses whether and rewards of ownership to the lessee, the contract is classified the contract involves the use of an identified asset, the Group has as a finance lease. All other leases are classified as operating the right to obtain substantially all of the economic benefits from leases. use of the asset throughout the period of use; and the Group has the right to direct the use of the asset. Amounts due from lessees under a finance lease are recognised as receivables at an amount equal to the net investment in the a. Group as a lessee leased assets. Finance lease income is allocated to the periods so as to reflect a constant periodic rate of return on the net investment The Group recognises a right-of-use asset and a corresponding outstanding in respect of the finance lease. lease liability with respect to all lease agreements in which it is the lessee in the consolidated statement of financial position. The Rental income from operating leases is recognised on a straight- lease liability is initially measured at the present value of the lease line basis over the term of the relevant lease. Initial direct costs payments that are not paid at the commencement date, incurred in negotiating and arranging an operating lease are added discounted by using the rate implicit in the lease. If this rate cannot to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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When a contract includes lease and non-lease components, the in equity and is recognised (on the basis as discussed in the above Group applies IFRS 15 to allocate the consideration under the paragraph) when the forecast transaction is ultimately recognised contract to each component. in the profit and loss. However, at any point of time, when a forecast transaction is no longer expected to occur, the cumulative The Group enters into ‘Indefeasible right to use’ (‘IRU’) gains / (losses) that were reported in equity is immediately arrangements wherein the right to use the assets is given over the transferred to the profit and loss within finance income / finance substantial part of the asset life. However, as the title to the assets costs. and the significant risks associated with the operation and maintenance of these assets remains with the Group, such iii. Net investment hedge arrangements are recognised as operating lease. The contracted price is recognised as revenue during the tenure of the agreement. The Group hedges its net investment in certain foreign Unearned IRU revenue received in advance is presented as subsidiaries. Accordingly, any foreign exchange differences on the deferred revenue within liabilities in the consolidated statement of hedging instrument (e.g. borrowings) relating to the effective financial position. portion of the hedge is recognised in other comprehensive income as foreign currency translation reserve (‘FCTR’) – within other Derivative financial instruments components of equity, so as to offset the change in the value of the net investment being hedged. The ineffective portion of the Derivative financial instruments, including separated embedded gain or loss on these hedges is immediately recognised in profit or derivatives that are not designated as hedging instruments in a loss. The amounts accumulated in equity are included in the profit hedging relationship are classified as financial instruments at fair and loss when the foreign operation is disposed or partially value through profit or loss. Such derivative financial instruments disposed. are initially recognised at fair value. They are subsequently measured at their fair value, with changes in fair value being Revenue recognised in profit or loss within finance income / finance costs. Revenue is recognised upon transfer of control of promised products or services to the customer at the consideration which Hedging activities the Group has received or expects to receive in exchange of those products or services, net of any taxes / duties and discounts. When i. Fair value hedge determining the consideration to which the Group is entitled for providing promised products or services via intermediaries, the Group assesses whether the intermediary is a principal or agent Some of the Group’s entities use derivative financial instruments in the onward sale to the end customer. To the extent that the (e.g. interest rate / currency swaps) to manage / mitigate their intermediary is considered a principal, the consideration to which exposure to the risk of change in fair value of the borrowings. The the Group is entitled is determined to be that received from the Group designates certain interest swaps to hedge the risk of intermediary. To the extent that the intermediary is considered an changes in fair value of recognised borrowings attributable to the agent, the consideration to which the Group is entitled is hedged interest rate risk. The effective and ineffective portion of determined to be the amount received from the customer; the changes in the fair value of derivatives that are designated and discount provided to the intermediary is recognised as a cost of qualify as fair value hedges are recorded in profit and loss within sale. finance income / finance costs, together with any changes in the fair value of the hedged liability that is attributable to the hedged The Group has entered into certain multiple-element revenue risk. If the hedge no longer meets the criteria for hedge accounting, arrangements which involve the delivery or performance of the adjustment to the carrying amount of the hedged item is multiple products, services or rights to use assets. At the inception amortised to profit or loss over the period to remaining maturity of of the arrangement, all the deliverables therein are evaluated to the hedged item. determine whether they represent distinct performance obligations, and if so, they are accounted for separately. ii. Cash flow hedge Total consideration related to the multiple element arrangements Some of the Group’s entities use derivative financial instruments is allocated to each performance obligation based on their relative (e.g. foreign currency forwards, options, swaps) to manage their standalone selling prices. The stand-alone selling prices are exposure to foreign exchange and price risk. Further, the Group determined based on the prices at which the Group sells designates certain derivative financial instruments (or its equipment and network services separately. components) as hedging instruments for hedging the exchange rate fluctuation risk attributable to either a recognised item or a Revenue is recognised when, or as, each distinct performance highly probable forecast transaction (‘Cash flow hedge’). The obligation is satisfied. The main categories of revenue and the effective portion of changes in the fair value of derivative financial basis of recognition are as follows: instruments (or its components) that are designated and qualify as cash flow hedges, are recognised in other comprehensive income a. Service revenue and held as cash flow hedge reserve (‘CFHR’) – within other components of equity. Any gains / (losses) relating to the Service revenue is derived from the provision of ineffective portion, are recognised immediately in profit or loss telecommunication services and mobile money services to within finance income / finance costs. The amounts accumulated customers. The majority of the customers of the Group subscribe in equity are re-classified to the profit and loss in the periods when to the services on a pre-paid basis. the hedged item affects profit / (loss). Telecommunication service revenues mainly pertain to usage, When a hedging instrument expires or is sold, or when a cash flow subscription charges for voice, data, messaging and value added hedge no longer meets the criteria for hedge accounting, any services and customer onboarding charges, which include cumulative gains / (losses) existing in equity at that time remains activation charges.
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Telecommunication services (comprising voice, data and SMS) are considered to represent a single performance obligation as all Alternative performance measures (APM)- Exceptional are provided over the Group’s network and transmitted as data items representing a digital signal on the network. The transmission consumes network bandwidth and therefore, irrespective of the Management exercises judgment in determining the adjustments nature of the communication, the customer ultimately receives to apply to IFRS measurements in order to derive APMs which access to the network and the right to consume network provide additional useful information on the underlying trends, bandwidth. performance and position of the Group. This assessment covers the nature of the item being one-off or non-routine, whether the Customers pay in advance for services of the Group, these cash cause of occurrence was within the Group’s control or not and the amounts are recognised in deferred income on the consolidated scale of impact of that item on reported performance in statement of financial position and transferred to the consolidated accordance with the exceptional items policy. income statement when the service obligation has been performed/when the usage of services becomes remote. To monitor the performance, the Group uses the following APMs: ‘Underlying profit before tax’ representing profit before tax for The Group recognises revenue from these services over time as the period excluding the impact of exceptional items, they are provided. Revenue is recognised based on actual units of ‘Underlying profit after tax’ representing profit after tax for the telecommunication services provided during the reporting period period excluding the impact of exceptional items and tax on as a proportion of the total units of telecommunication services to exceptional items. be provided. Exceptional items refer to items of income or expense within the Subscription charges are recognised over the subscription pack consolidated statement of comprehensive income which are of validity period. Customer onboarding revenue is recognised upon such size, nature or incidence that their exclusion is considered successful onboarding of customer i.e. upfront. necessary to explain the performance of the Group and improve the comparability between periods. Reversals of previous Revenues recognised in excess of amounts invoiced are classified exceptional items are also considered as exceptional items. When as unbilled revenue. If amounts invoiced / collected from a applicable, these items include network modernisation, share customer are in excess of revenue recognised, a deferred revenue issue expenses, restructuring costs, impairments, initial / advance income is recognised. recognition of deferred tax assets, impact of mergers etc.
Service revenues also includes revenue from interconnection / roaming charges for usage of the Group’s network by other Foreign currency transactions operators for voice, data, messaging and signaling services. These are recognised upon transfer of control of services being a. Functional and presentation currency transferred over time. The items included in financial statements of each of the Group’s Revenues from long distance operations comprise of voice entities are measured using the currency of primary economic services and bandwidth services (including installation), which are environment in which the entity operates (i.e. ‘functional recognised on provision of services and over the period of currency’). respective arrangements. The financial statements are presented in US Dollar which is the functional and presentation currency of the company. The Group has interconnect agreements with local and foreign operators. This allows customers from either network to originate b. Transactions and balances or terminate calls to each others’ network. Revenue is earned and recognised as per bilateral agreements when other operators’ calls Transactions in foreign currencies are initially recorded in the are terminated to the Group’s network i.e. the service is rendered. relevant functional currency at the rates prevailing at the date of the transaction. As part of the mobile money services, the Group earns commission from merchants for facilitating recharges, bill Monetary assets and liabilities denominated in foreign currencies payments and other merchant payments. It also earns are translated into the functional currency at the closing exchange commissions on transfer of monies from one customer wallet to rate prevailing as at the reporting date with the resulting foreign another. Such commissions are recognised as revenue on exchange differences, on subsequent re-statement / settlement, provision of these services by the Group. recognised in the consolidated statement of comprehensive income within finance costs / finance income. Non-monetary Costs to obtain or fulfil a contract with a customer assets and liabilities denominated in foreign currencies are The company has estimated that the historic average customer life translated into the functional currency using the exchange rate is longer than 12 months and believes that its churn rate provides prevalent, at the date of initial recognition (in case they are the best indicator of anticipated average customer life and has measured at historical cost) or at the date when the fair value is changed its policy on cost deferral recognition in these financial determined (in case they are measured at fair value) – with the statements. Accordingly, the company has deferred such costs resulting foreign exchange difference, on subsequent re- over expected average customer life. statement / settlement, recognised in the profit and loss, except to the extent that it relates to items recognised in the other b. Equipment sales comprehensive income or directly in equity.
Equipment sales mainly pertain to sale of telecommunication The equity items denominated in foreign currencies are translated equipment and related accessories for which revenue is at historical exchange rate. recognised when the control of equipment is transferred to the customer i.e. transferred at a point in time.
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c. Foreign operations Deferred tax assets are recognised only to the extent that it is The assets and liabilities of foreign operations (including the probable that future taxable profit will be available against which goodwill and fair value adjustments arising on the acquisition of the temporary differences can be utilised. Moreover, deferred tax foreign entities) are translated into US Dollar at the exchange rates is recognised on temporary differences arising on investments in prevailing at the reporting date whereas their statements of profit subsidiaries and associate - unless the timing of the reversal of the and loss are translated into US Dollar at monthly average temporary difference can be controlled and it is probable that the exchange rates and the equity is recorded at the historical rate. temporary difference will not reverse in the foreseeable future. The resulting exchange differences arising on the translation are recognised in other comprehensive income and held in foreign Deferred tax assets, recognised and unrecognised, are reviewed currency translation reserve (‘FCTR’), a component of equity. On at each reporting date and assessed for recoverability based on disposal of a foreign operation (that is, disposal involving loss of best estimates of future taxable profits. control), the component of other comprehensive income relating to that particular foreign operation is reclassified to profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset Income-taxes is realised or the deferred income tax liability is settled.
The income tax expense comprises of current and deferred Income tax assets and liabilities are off-set against each other and income tax. Income tax is recognised in the profit and loss, except the resultant net amount is presented in the consolidated to the extent that it relates to items recognised in the same or a statement of financial position, if and only when, (a) the Group different period, outside profit or loss, in other comprehensive currently has a legally enforceable right to set-off the current income or directly in equity, in which case the related income tax income tax assets and liabilities, and (b) when it relate to income is also recognised accordingly. tax levied by the same taxation authority and where there is an intention to settle the current income tax balances on net basis. a. Current tax
Current tax is calculated on the basis of the tax rates, laws and Transactions with non-controlling interests regulations, which have been enacted or substantively enacted as at the reporting date in the respective countries where the Group A change in the ownership interest of a subsidiary, without a entities operate and generate taxable income. The payment made change of control, is accounted for as a transaction with equity in excess / (shortfall) of the respective Group entities’ income tax holders. Any difference between the amount of the adjustment to obligation for the period are recognised in the consolidated non-controlling interests and any consideration exchanged is statement of financial position under non-current income tax recognised in ‘transactions with NCI reserve’, within equity. assets / liabilities.
Provisions Any interest, related to accrued liabilities for potential tax Provisions are recognised when the Group has a present assessments are not included in Income tax charge or (credit), but obligation (legal or constructive) as a result of a past event, it is are rather recognised within finance costs. probable that an outflow of resources will be required to settle the
obligation, and the amount of the obligation can be reliably A provision is recognised for those matters for which the tax estimated. determination is uncertain but it is considered probable that there Provisions are measured at the present value of the expenditures will be a future outflow of funds to a tax authority. The provisions expected to be required to settle the relevant obligation, using a are measured at the best estimate of the amount expected to pre-tax rate that reflects current market assessments of the time become payable or based on expected value approach, as value of money (if the impact of discounting is significant) and the applicable. The assessment is based on the judgement of tax risks specific to the obligation. The increase in the provision due professionals within the company supported by previous to un-winding of discount over passage of time is recognised within experience in respect of such activities and in certain cases based finance costs. on specialist independent tax advice.
Contingencies b. Deferred tax
A disclosure for a contingent liability is made when there is a Deferred tax is recognised, using the liability method, on possible obligation or a present obligation that may, but probably temporary differences arising between the tax bases of assets and will not, require an outflow of resources. When there is a possible liabilities and their carrying values. However, deferred tax is not obligation or a present obligation in respect of which the likelihood recognised if it arises from initial recognition of an asset or liability of outflow of resources is remote, no provision or disclosure is in a transaction other than a business combination that at the time made. Contingent assets are not recognised unless virtually of the transaction affects neither accounting nor taxable profit or certain and disclosed only where an inflow of economic benefits is loss. Further, deferred tax liabilities are not recognised if they arise probable. from the initial recognition of goodwill. Provisions Transactions with non-controlling interests Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is A change in the ownership interest of a subsidiary, without a probable that an outflow of resources will be required to settle the change of control, is accounted for as a transaction with equity obligation, and the amount of the obligation can be reliably holders. Any difference between the amount of the adjustment to estimated. non-controlling interests and any consideration exchanged is Provisions are measured at the present value of the expenditures recognized in ‘transactions with NCI reserve’, within equity. expected to be required to settle the relevant obligation, using a pre-tax rate that reflects current market assessments of the time
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value of money (if the impact of discounting is significant) and the risks specific to the obligation. The increase in the provision due to un-winding of discount over passage of time is recognised within finance costs. The group carries provisions for legal, tax and regulatory matters, asset retirement obligations and employee benefits
Contingencies
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are not recognised unless virtually certain and disclosed only where an inflow of economic benefits is probable.
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SECTION 11
GLOSSARY
Technical and Industry Terms
Company Related
Average Customers Average customers are derived by computing the average of the monthly average customers for the relevant period.
Average Revenue per Average revenue per user per month, which is derived by dividing total revenue during the relevant period by user (ARPU) the average number of customers and dividing the result by the number of months in the relevant period.
Basic Earnings Per Share Basic Earnings Per Share is computed by dividing the profit for the period attributable to the owners of the parent by the weighted average number of shares outstanding during the period.
Capital Expenditure It is not a GAAP measure and is defined as investment in capital work in progress (CWIP) gross fixed assets (Capex) (tangible and intangible excluding spectrum/licence) and excluding provision on capital work in progress (CWIP).
Capital Employed Capital Employed is defined as sum of equity attributable to equity holders of parent, Non-controlling interests ('NCI') and net debt. The definition has been revised to include Non-controlling interests ('NCI') and the related KPIs have been reinstated for all the reported periods.
Cash Profit from It is not a GAAP measure and is defined as profit from operating activities before depreciation, amortization and Operations before exceptional items adjusted for finance cost (net of finance income) before adjusting for derivative and exchange Derivative and Exchange (gain)/ loss. Fluctuation
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 number of months in the relevant period.
Constant currency The Group has presented certain financial information that is calculated by translating the results for the current financial year and prior financial years at a fixed ‘constant currency’ exchange rate, which is done to measure the Organic performance of the Group.
Customer A customer is defined as a unique subscriber with a unique mobile telephone number who used any of Airtel’s services in the last 30 days.
Customer Base Total number of subscribers that used any of our services (voice calls, SMS, data usage or Airtel Money transaction) in the last 30 days.
Data Average Revenue Data ARPU is derived by dividing total data revenue during the relevant period by the average number of Data Per User (ARPU) customers and dividing the result by the number of months in the relevant period.
Data Capacity Total data capacity per day for the Region.
Data Customer Base Total subscribers who consumed at least 1MB on the Group’s GPRS, 3G or 4G network in the last 30 days.
Data customer It is computed by dividing the data customer base by total customer base. penetration It is calculated by dividing the total MBs consumed on the Group’s network during the relevant period by the Data Usage per average data customer base over the same period, and dividing the result by the number of months in the Customer relevant period.
Diluted Earnings per Diluted EPS is computed by adjusting, the profit for the year attributable to the shareholders and the weighted share 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 been actually 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 computed 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.
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EBITDA It is not a GAAP measure and is defined as operating profit before depreciation, amortisation, CSR cost and exceptional items.
EBITDA Margin It is not a GAAP measure and is computed by dividing EBITDA for the relevant period by total revenue for the relevant period.
EBIT It is not a GAAP measure and is defined as EBITDA adjusted for depreciation and amortization.
Free Cash Flow Free cash flow defined as Operating free cash flow less cash interest, cash tax and change in operating working capital.
Francophone Africa One of the Group’s segments called earlier `Rest of Africa`.
Interest Coverage Ratio EBITDA for the relevant period divided by interest on borrowing for the relevant period.
Lease Obligation Lease obligation represents the present value of the future lease payment obligation for assets taken on finance lease.
Mobile Broadband Base It includes all the 3G and 4G Base stations deployed across all technologies/spectrum bands. stations
Mobile Money active Total number of subscribers who has done any Mobile Money usage event in last 30 days. customers
Mobile Money ARPU Mobile Money ARPU, which is derived by dividing total Mobile Money revenue during the relevant period by the average number of Mobile Money customers and dividing the result by the number of months in the relevant period.
Mobile Money It is defined as value of any financial transaction performed on Mobile Money platform. transaction value
Mobile Money It is computed by dividing the total Mobile Money transaction value on Group’s Mobile Money platform during transaction value per the relevant period by the average number of Mobile Money customers and dividing the result by number of customer per month months in the relevant period.
Mobile service Mobile service is defined as the core Telecom services provided by the Group and excludes Mobile Money services.
Network Towers/Sites Comprises of base transmission system (BTS) which holds the radio transceivers (TRXs) that define a cell and coordinates the radio links protocols with the mobile device. It includes all the ground based, roof top and in building solutions as at the end of the period.
Net Debt It is not a GAAP measure and is defined as the long-term borrowings, short term borrowings and leased liability less cash and cash equivalents.
Net Debt to EBITDA It is not a GAAP measure and is computed by dividing Net Debt as at the end of the relevant period by EBITDA (LTM) for preceding last 12 months (from the end of the relevant period). This is also referred to as leverage ratio.
Net Debt to EBITDA It is not a GAAP measure and is computed by dividing net debt as at the end of the relevant period by EBITDA (Annualized) for the relevant period (annualized).
Net Revenue It is not a GAAP measure and is defined as total revenue adjusted for IUC (Interconnection Usage charges) charges, cost of goods sold and Airtel Money commission.
Net profit margin It is computed by dividing Cash Profit From Operations before Derivative and Exchange Fluctuation by total revenue.
Operating company Operating company is defined as business units providing telecommunication services and mobile money services across the Group’s footprint.
Operating Profit It is a GAAP measure and is computed as revenue less operating expenditure including depreciation & amortisation and operating exceptional items.
Operating Free Cash flow It is computed by subtracting Capital Expenditure from EBITDA.
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Profit / (Loss) after It is not a GAAP measure and is defined as Profit / (Loss) before taxation adjusted for current tax expense. current tax expense
Reported currency Reported currency is the currency where actual periodic exchange rates are used to translate the local currency financial statements of OPCO into US dollar. Under Reported currency the assets and liabilities are translated into US dollar at the exchange rates prevailing at the reporting date whereas the statements of profit and loss are translated into US dollar at monthly average exchange rates.
Return On Capital For the full year ended, ROCE is computed by dividing the earnings before interest and tax for the period by Employed (ROCE) average (of opening and closing) capital employed. Capital employed used for ROCE is defined as sum of Total Equity and Net Debt. For the quarterly computation, it is computed by dividing the earnings before interest and
tax for the preceding (last) 12 months from the end of the relevant period by average capital employed. Average
capital employed is calculated by considering average of quarterly average for the preceding (last) four quarters from the end of the relevant period.
Return on Equity (ROE)- For the full year ended, it is computed by dividing profit before tax (including exceptional item) for the period by Pre-Tax the closing Total Equity. For the quarterly computations, it is computed by dividing profit before tax (including exceptional items) for the preceding last 12 months from the end of the relevant period by the closing Total Equity for the relevant period.
Return on Equity (ROE)- For the full year ended, it is computed by dividing net profit for the period by the closing Equity attributable to Post-Tax equity holders of parent. For the quarterly computations, it is computed by dividing net profit for the preceding last 12 months from the end of the relevant period by the closing Equity attributable to equity holders of parent.
Revenue per Site per Revenue per Site per month is computed by: dividing the total revenues, excluding sale of goods (if any) during month the relevant period by the average sites; and dividing the result by the number of months in the relevant period.
Smartphone Smartphone is defined as mobile phone with interactive touch screen that allows the user to access internet apart from making calls and sending text messages.
Smartphone Penetration It is computed by dividing the smartphone devices by total customer.
Total Employees Total on-roll employees as at the end of respective period.
Total MBs on Network Total MBs consumed (uploaded & downloaded) by customers on the Group’s GPRS, 3G and 4G network during the relevant period.
Voice Minutes on Duration in minutes for which a customer uses the Group’s network. It is typically expressed over a period of Network one month. It includes incoming, outgoing and in-roaming minutes.
Voice Minutes of Usage It is computed by dividing the total voice minutes of usage on Group’s network during the relevant period by the per Customer per month average number of customers and dividing the result by number of months in the relevant period.
Abbreviations
2G Second-Generation Technology
3G Third - Generation Technology
4G Fourth - Generation Technology
ARPU Average revenue per user bn Billion
EBITDA Earnings Before Interest, Tax, Depreciation and Amortization
EPS Earnings Per Share
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GAAP Generally Accepted Accounting Principles
GB Gigabyte
Group The Airtel Africa plc, together with its subsidiary undertakings referred to as the ‘Group’
IAS International Accounting Standards
IFRS International Financial Reporting Standards
KPIs Key performance indicators
KYC Know Your Customer
LTM Last twelve months
MB Megabyte
MI Minority Interest (Non-Controlling Interest)
Mn Million
OpCo Operating company pp Percentage points
P2P Person to Person
PPE Property, Plant and equipment
SMS Short Messaging Service
TB Terabyte
UoM Unit of measure
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Written correspondence to be sent to: Airtel Africa Investor Relations E-mail address: [email protected] Website: https://airtel.africa/investors Tel: (+44) 20 7493 9315
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