Report on the results for the second quarter and half year ended September 30, 2020
Airtel Africa plc
Airtel Africa
Oct 23, 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
RDC Holdings B.V. , Bharti Airtel Services B.V. , Bharti Airtel Tanzania Basis of preparation: - The results for the six months ended 30 B.V., Bharti Airtel Uganda Holdings B.V., Bharti Airtel Zambia Holdings September 2020 are unaudited and in the opinion of management, include all adjustments necessary for the fair presentation of the results B.V., Celtel (Mauritius) Holdings Limited, Airtel Congo RDC S.A., Celtel of the same period. The financial information has been prepared based Niger S.A., Channel Sea Management Company (Mauritius) Limited, on International Accounting Standard 34 (IAS 34) and apply the same Congo RDC Towers S.A., Gabon Towers S.A. (under dissolution), Indian accounting policies, presentation and methods of calculation as those Ocean Telecom Limited, Madagascar Towers S.A., Malawi Towers followed in the preparation of the Group’s annual consolidated financial Limited, Mobile Commerce Congo S.A., Montana International, statements for the year ended 31 March 2020 except to the extent Partnership Investments S.A.R.L, Société Malgache de Telephonie required/ prescribed by IAS 34. This report should be read in conjunction Cellulaire SA, Tanzania Towers Limited, Bharti Airtel Rwanda Holdings with audited consolidated financial statements and related notes for the year ended 31 March 2020. The comparative information has been Limited , Airtel Money Transfer Ltd, Airtel Money Tanzania Limited , Airtel drawn based on Airtel Africa plc’s Audited Consolidated Financial Mobile Commerce Nigeria Limited (incorporate w.e.f. August 31, 2017), Statements for the year ended 31 March 2020 prepared under Airtel Mobile Commerce Nigeria B.V.(incorporated w.e.f. 5th December, International Financial Reporting Standard (IFRS). 2018), Airtel Mobile Commerce (Seychelles) B.V. (incorporated w.e.f. 29th January, 2019), Airtel Mobile Commerce Congo B.V. (incorporated Use of certain Alternative performance measures (APM):- This result w.e.f. 29th January, 2019), Airtel Mobile Commerce Kenya B.V. announcement contains certain information on the Group’s results of (incorporated w.e.f. 29th January, 2019), Airtel Mobile Commerce operations and cash flows that have been derived from amounts Madagascar B.V. (incorporated w.e.f. 29th January, 2019), Airtel Mobile calculated in accordance with International Financial Reporting Standard Commerce Malawi B.V. (incorporated w.e.f. 29th January, 2019), Airtel (IFRS), but are not in themselves IFRS measures. They should not be Mobile Commerce Rwanda B.V. (incorporated w.e.f. 29th January, viewed in isolation as alternatives to the equivalent IFRS measures and 2019), Airtel Mobile Commerce Tchad B.V. (incorporated w.e.f. 29th should be read in conjunction with the equivalent IFRS measures. January, 2019), Airtel Mobile Commerce Uganda B.V. (incorporated w.e.f. 29th January, 2019), Airtel Mobile Commerce Zambia B.V. Further, disclosures are also provided under “7.2 Use of Alternative (incorporated w.e.f. 29th January, 2019), Airtel International LLP performance measures (APM) Financial Information” on page 34 (incorporated w.e.f. 27th March, 2019, Tigo Rwanda Limited (merged with Airtel Rwanda Ltd w.e.f. July 3, 2018), Airtel Money Trust, Safe Harbor: The IAS 34 financials considered for the purpose of this Seychelles Cable Systems Company Limited (Associate), Airtel Mobile report is unaudited. Commerce Gabon B.V., Airtel Mobile Commerce Niger B.V., Airtel Mobile Commerce DRC B.V. and Airtel Money Kenya Limited. Convenience translation: - We publish our financial statements in United States Dollars. All references herein to “US dollars”, “USD”, “$” Disclaimer: By reading this presentation you agree to be bound by the and “US$” are to United States dollars. Translation of income statement following conditions. items have been made from local currencies of Africa operating units to USD (unless otherwise indicated) using the respective monthly average The information contained in this presentation in relation to Airtel Africa rates. Translation of statement of financial position items has been made plc ("Airtel Africa") and its subsidiaries has been prepared solely for use using the closing rate. All amounts translated as described above are at this presentation. The presentation is not directed to, or intended for provided solely for the convenience of the reader, and no representation distribution to or use by, any person or entity that is a citizen or resident is made that the local currencies or USD amounts referred to herein could or located in any jurisdiction where such distribution, publication, have been or could be converted into USD or local currencies availability or use would be contrary to law or regulation or which would respectively, as the case may be, at any particular rate, the above rates require any registration or licensing within such jurisdiction. or at all. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding off. References in this presentation to "Airtel Africa", "Group", "we", "us" and "our" when denoting opinion refer to Airtel Africa plc and its subsidiaries. Others: In this report, the terms “we”, “us”, “our”, “ Airtel - Africa”, or “Africa”, unless otherwise specified or the context otherwise implies, refer Forward-looking statement to the Airtel Africa plc and its subsidiaries and its associate, Bharti Airtel This document contains certain forward-looking statements including International (Netherlands) B.V., Africa Towers N.V., Airtel (Seychelles) "forward-looking" statements made within the meaning of Section 21E of Limited, Airtel Congo S.A, Airtel Gabon S.A., Airtel Madagascar S.A., the United States Securities Exchange Act of 1934, regarding our Airtel Malawi plc, Airtel Mobile Commerce B.V., Airtel Mobile Commerce intentions, beliefs or current expectations concerning, amongst other Holdings B.V., Airtel Mobile Commerce Kenya Limited, Airtel Mobile things, our results of operations, financial condition, liquidity, prospects, Commerce Limited (Malawi), Airtel Mobile Commerce Madagascar S.A., growth, strategies and the economic and business circumstances Airtel Mobile Commerce Rwanda Limited, Airtel Mobile Commerce occurring from time to time in the countries and markets in which the (Seychelles) Limited, Airtel Mobile Commerce Tanzania Limited, Airtel Group operates. Mobile Commerce Tchad SARL, Airtel Mobile Commerce Uganda Limited, Airtel Mobile Commerce Zambia Limited , Airtel Money RDC S.A., Airtel Money Niger S.A., Airtel Money S.A. (Gabon), Airtel Networks These statements are often, but not always, made through the use of Kenya Limited, Airtel Networks Limited, Airtel Networks Zambia plc, Airtel words or phrases such as "believe," "anticipate," "could," "may," "would," Rwanda Limited, Airtel Tanzania plc (formerly known as Airtel Tanzania "should," "intend," "plan," "potential," "predict," "will," "expect," "estimate," Limited), Airtel Tchad S.A., Airtel Uganda Limited, Bharti Airtel Africa "project," "positioned," "strategy," "outlook", "target" and similar B.V., Bharti Airtel Chad Holdings B.V. , Bharti Airtel Congo Holdings B.V., expressions. Bharti Airtel Developers Forum Limited, Bharti Airtel Gabon Holdings B.V. , Bharti Airtel Kenya B.V., Bharti Airtel Kenya Holdings B.V., Bharti It is believed that the expectations reflected in this document are Airtel Madagascar Holdings B.V. , Bharti Airtel Malawi Holdings B.V. , reasonable, but they may be affected by a wide range of variables that Bharti Airtel Mali Holdings B.V., Bharti Airtel Niger Holdings B.V. , Bharti could cause actual results to differ materially from those currently Airtel Nigeria B.V. , Bharti Airtel Nigeria Holdings II B.V. , Bharti Airtel anticipated.
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All such forward-looking statements involve estimates and assumptions Financial data included in this document are presented in US$ rounded that are subject to risks, uncertainties and other factors that could cause to the nearest million. Therefore, discrepancies in the tables between actual future financial condition, performance and results to differ totals and the sums of the amounts listed may occur due to such materially from the plans, goals, expectations and results expressed in rounding. The percentages included in the tables throughout the the forward-looking statements and other financial and/or statistical data document are based on numbers calculated to the nearest $1,000 and within this communication. therefore minor rounding differences may results in the tables.
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 No statement in this communication is intended to be, nor should be related to the following: the impact of competition from illicit trade; the construed as, a profit forecast or a profit estimate and no statement in impact of adverse domestic or international legislation and regulation; this communication should be interpreted to mean that earnings per changes in domestic or international tax laws and rates; adverse litigation share of Airtel Africa for the current or any future financial periods would and dispute outcomes and the effect of such outcomes on Airtel Africa’s necessarily match, exceed or be lower than the historical published financial condition; changes or differences in domestic or international earnings per share of Airtel Africa. economic or political conditions; the ability to obtain price increases and the impact of price increases on consumer affordability thresholds; adverse decisions by domestic or international regulatory bodies; the Audience impact of market size reduction and consumer down-trading; The material in this presentation is provided for the purpose of giving translational and transactional foreign exchange rate exposure; the information about Airtel Africa and its subsidiaries to investors only and impact of serious injury, illness or death in the workplace; the ability to is not intended for general consumers. Airtel Africa, its directors, maintain credit ratings; the ability to develop, produce or market new employees, agents or advisers do not accept or assume responsibility to alternative products and to do so profitably; the ability to effectively any other person to whom this material is shown or into whose hands it implement strategic initiatives and actions taken to increase sales may come and any such responsibility or liability is expressly disclaimed. growth; the ability to enhance cash generation and pay dividends and changes in the market position, businesses, financial condition, results of operations or prospects of Airtel Africa.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. The forward- looking statements contained in this document reflect the knowledge and information available to Airtel Africa at the date of preparation of this document and Airtel Africa undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on such forward-looking statements. No statement in this communication is intended to be, nor should be construed as, a profit forecast or a profit estimate and no statement in this communication should be interpreted to mean that earnings per share of Airtel Africa plc for the current or any future financial periods would necessarily match, exceed or be lower than the historical published earnings per share of Airtel Africa plc.
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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 25
Section 7 Detailed Financial and Related Information 30
Section 8 Net Debt and Cost Schedules 37
Section 9 Trends and Ratio Analysis 39
Section 10 Key Accounting Policies 52
Section 11 Glossary 57
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SECTION 1
PERFORMANCE AT A GLANCE
Financial Year Ended Quarter Ended Particulars Unit IFRS IFRS 2020 2019 2018 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Operating Highlights Total Customer Base 000’s 110,604 98,851 89,262 116,371 111,461 110,604 107,140 103,881 Total Minutes on Netw ork Mn Min 250,080 207,334 159,549 80,375 71,891 68,870 65,086 60,795 Data MBs Mn MBs 710,510 392,631 237,563 293,919 279,541 219,015 189,798 162,394 Mobile Money Transaction Value US$ Mn 30,224 23,582 18,888 11,637 9,038 8,031 8,001 7,442 Netw ork Tow ers Nos 22,909 21,059 19,731 24,246 23,471 22,909 22,253 21,936 Total Employees Nos 3,363 3,075 3,273 3,453 3,432 3,363 3,286 3,184 No. of countries of operation Nos 14 14 14 14 14 14 14 14 Consolidated Financials (US$ Mn) Ongoing Operations (Reported Currency) Revenue US$ Mn 3,422 3,077 2,910 965 851 899 883 844 EBITDA US$ Mn 1,515 1,332 1,139 437 375 397 399 372 EBIT US$ Mn 905 796 600 269 210 244 245 219 Cash profit from operations before US$ Mn 1,210 1,001 786 357 295 325 326 293 Derivative and Exchange Fluctuations Profit before tax (before exceptional items) US$ Mn 533 441 158 177 111 97 167 153 Net Income (after NCI) US$ Mn 370 412 (138) 70 42 65 90 90 Capex US$ Mn 642 630 411 149 66 246 150 147 Operating Free Cash Flow (EBITDA - Capex) US$ Mn 873 702 728 287 309 151 249 225 Net Debt US$ Mn 3,247 4,005 7,755 3,459 3,425 3,247 3,233 3,191 Shareholder's Equity US$ Mn 3,388 2,626 (1,085) 3,407 3,304 3,388 3,529 3,556 Non-controlling interests ('NCI') US$ Mn (107) (196) (232) (89) (93) (107) (168) (171) Total Equity US$ Mn 3,281 2,429 (1,317) 3,318 3,211 3,281 3,361 3,385 Total Capital Employed US$ Mn 6,528 6,435 6,438 6,777 6,636 6,528 6,595 6,576 Key Ratios EBITDA Margin % 44.3% 43.3% 39.1% 45.3% 44.1% 44.1% 45.2% 44.1% EBIT Margin % 26.5% 25.9% 20.6% 27.8% 24.7% 27.2% 27.7% 25.9% Net Profit Margin % 10.8% 13.4% (4.7%) 7.3% 4.9% 7.2% 10.1% 10.6% Net Debt to EBITDA (LTM) Times 2.1 3.0 6.8 2.2 2.2 2.1 2.2 2.3 Net Debt to EBITDA (Annualised) Times 2.1 3.0 6.8 2.0 2.3 2.0 2.0 2.1 Interest Coverage ratio Times 5.1 3.9 3.5 5.8 5.1 5.5 5.4 4.8 Return on Equity (Pre-Tax) % 18.3% 15.3% 0.0% 17.0% 16.9% 18.3% 18.5% 16.0% Return on Equity (Post-Tax) % 10.9% 15.7% 0.0% 7.8% 8.7% 10.9% 11.0% 11.8% Return on Capital employed % 14.0% 12.4% 9.2% 14.6% 13.9% 13.7% 13.2% 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 six months ended 30 September 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 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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 965 844 14% 1,815 1,640 11% EBITDA 437 372 17% 812 719 13% EBITDA / Revenue 45.3% 44.1% 1.2 pp 44.7% 43.9% 0.8 pp EBIT 269 219 23% 479 416 15% Finance cost (net) 92 66 39% 191 148 29% Share of results of Associate (0) (0) (129%) (1) (0) (40%) Profit before tax (before exceptional items) 177 153 16% 288 270 7% Income tax expense 85 68 26% 146 116 26% Profit after tax (before exceptional items) 92 85 8% 142 154 (8%) Non Controlling Interest (before exceptional items) 17 6 166% 29 13 130% Net Income (before exceptional items) 75 79 (5%) 113 141 (20%) Exceptional Items (net of tax) 4 (11) 136% (3) (74) 96% Profit after tax (after exceptional items) 88 96 (9%) 145 228 (37%) Non Controlling Interest 18 6 207% 33 13 162% Net Income (after NCI) 70 90 (21%) 112 215 (48%) Capex 149 147 2% 216 246 (12%) Operating Free Cash Flow (EBITDA - Capex) 287 225 28% 596 473 26% Total Capital Employed 6,777 6,576 3% 6,777 6,576 3%
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2.1.2 Consolidated Summarized Statement of Operations – (in Constant Currency)
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 963 805 20% 1,818 1,562 16% EBITDA 436 353 24% 813 681 19% EBITDA / Revenue 45.3% 43.8% 1.5 pp 44.7% 43.6% 1.1 pp EBIT 269 205 31% 480 390 23% Capex 149 147 2% 216 246 (12%) Operating Free Cash Flow (EBITDA - Capex) 287 206 39% 597 435 37% Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
2.2 Consolidated - Summary of Statement of Financial Position (in Reported Currency) Amount in US$ Mn As at As at Particulars Sep 30, 2020 Mar 31, 2020 Assets Non-current assets 7,782 7,654 Current assets 1,830 1,671 Total assets 9,612 9,325
Liabilities Current liabilities 3,243 2,488 Non-current liabilities 3,051 3,556 Total liabilities 6,294 6,044
Net current liability (1,413) (817)
Net Assets 3,318 3,281
Equity Equity attributable to ow ners of the company 3,407 3,388 Non-controlling interests ('NCI') (89) (107) Total equity 3,318 3,281
Total Equity and liabilities 9,612 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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 377 327 15% 718 640 12% EBITDA 204 174 18% 386 341 13% EBITDA / Revenue 54.2% 53.1% 1.1 pp 53.8% 53.2% 0.6 pp EBIT 141 129 10% 271 252 8% Capex 67 62 8% 97 115 (15%) Operating Free Cash Flow 137 112 23% 289 226 28% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 379 307 23% 721 600 20% EBITDA 205 163 26% 388 319 22% EBITDA / Revenue 54.2% 53.1% 1.1 pp 53.8% 53.2% 0.6 pp EBIT 142 121 17% 272 236 16% Capex 67 62 8% 97 115 (15%) Operating Free Cash Flow 138 101 37% 290 204 43% (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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 355 301 18% 659 578 14% EBITDA 163 123 33% 292 233 25% EBITDA / Revenue 46.0% 40.7% 5.4 pp 44.3% 40.3% 4.0 pp EBIT 110 65 70% 184 116 59% Capex 62 30 106% 81 60 36% Operating Free Cash Flow 101 93 10% 211 173 22% (EBITDA - Capex)
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 358 284 26% 664 545 22% EBITDA 164 114 44% 293 217 35% EBITDA / Revenue 45.8% 40.2% 5.6 pp 44.2% 39.9% 4.3 pp EBIT 110 59 87% 185 106 74% Capex 62 30 106% 81 60 36% Operating Free Cash Flow 102 84 21% 212 157 35% (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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 236 217 9% 445 426 5% EBITDA 73 76 (4%) 146 140 4% EBITDA / Revenue 30.8% 34.9% -4.1 pp 32.8% 32.9% 0.0 pp EBIT 23 29 (20%) 47 47 1% Capex 20 54 (63%) 36 69 (48%) Operating Free Cash Flow 53 22 145% 110 71 55% (EBITDA - Capex)
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 230 216 6% 441 422 4% EBITDA 71 76 (6%) 145 139 4% EBITDA / Revenue 30.9% 35.0% -4.0 pp 32.9% 33.0% -0.1 pp EBIT 23 29 (21%) 47 47 (0%) Capex 20 54 (63%) 36 69 (48%) Operating Free Cash Flow 51 21 142% 109 71 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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3.2 Segment Wise Contribution (in Constant Currency)
Quarter Ended:
Amount in US$ Mn, except ratios Quarter Ended Sep-20 Region Revenue % of Total EBITDA % of Total Capex % of Total
Nigeria 379 39% 205 47% 67 45% East Africa 358 37% 164 38% 62 41% Francophone Africa 230 24% 71 16% 20 13% Total before Elimnation/Others 966 100% 440 101% 149 99% Eliminations / Others (3) (0%) (4) (1%) 1 1% Total 963 100% 436 100% 149 100% Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
Half Year Ended: Amount in US$ Mn, except ratios Half Year Ended Sep-20 Region Revenue % of Total EBITDA % of Total Capex % of Total
Nigeria 721 40% 388 48% 97 45% East Africa 664 37% 293 36% 81 38% Francophone Africa 441 24% 145 18% 36 17% Total before Elimnation/Others 1,826 100% 826 102% 215 100% Eliminations / Others (7) (0%) (13) (2%) 1 0%
Total 1,818 100% 813 100% 216 100% 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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 891 790 13% 1,689 1,540 10% EBITDA 392 335 17% 737 644 14% EBITDA / Revenue 44.0% 42.4% 1.6 pp 43.6% 41.8% 1.8 pp EBIT 228 186 23% 420 347 21% Capex 147 145 1% 211 241 (12%) Operating Free Cash Flow 245 189 29% 526 403 31% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 889 754 18% 1,692 1,468 15% EBITDA 392 317 24% 738 608 21% EBITDA / Revenue 44.1% 42.0% 2.0 pp 43.6% 41.5% 2.2 pp EBIT 229 174 31% 421 324 30% Capex 147 145 1% 211 241 (12%) Operating Free Cash Flow 245 172 43% 528 368 43% (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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 377 326 16% 718 637 13% EBITDA 204 172 19% 386 337 14% EBITDA / Revenue 54.2% 52.9% 1.4 pp 53.8% 53.0% 0.8 pp EBIT 142 127 11% 271 248 9% Capex 67 62 8% 97 115 (15%) Operating Free Cash Flow 137 110 25% 289 222 30% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 378 306 24% 721 597 21% EBITDA 205 162 27% 388 316 23% EBITDA / Revenue 54.2% 52.9% 1.4 pp 53.8% 53.0% 0.8 pp EBIT 142 120 19% 273 233 17% Capex 67 62 8% 97 115 (15%) Operating Free Cash Flow 138 99 39% 291 201 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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4.1.3 East Africa (Uganda, Zambia, Tanzania, Kenya, Malawi and Rwanda)
In Reported Currency
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 298 263 13% 562 507 11% EBITDA 128 99 30% 231 190 22% EBITDA / Revenue 43.1% 37.6% 5.4 pp 41.1% 37.5% 3.6 pp EBIT 76 42 81% 125 75 67% Capex 60 29 112% 78 58 35% Operating Free Cash Flow 68 70 (3%) 153 132 16% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 301 248 21% 566 478 18% EBITDA 129 92 40% 232 177 31% EBITDA / Revenue 42.9% 37.1% 5.8 pp 41.0% 36.9% 4.0 pp EBIT 76 38 100% 125 68 85% Capex 60 29 112% 78 58 35% Operating Free Cash Flow 69 63 8% 154 119 29% (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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 218 203 8% 414 398 4% EBITDA 60 64 (6%) 121 116 4% EBITDA / Revenue 27.5% 31.4% -3.9 pp 29.3% 29.2% 0.1 pp EBIT 10 16 (36%) 23 23 (2%) Capex 20 54 (64%) 35 68 (48%) Operating Free Cash Flow 40 9 335% 86 49 77% (EBITDA - Capex)
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 213 202 6% 410 395 4% EBITDA 59 63 (7%) 120 116 4% EBITDA / Revenue 27.6% 31.4% -3.9 pp 29.4% 29.3% 0.1 pp EBIT 10 16 (37%) 23 24 (3%) Capex 20 54 (64%) 35 68 (48%) Operating Free Cash Flow 39 9 333% 85 48 77% (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 Sep-20 Region Revenue % of Total EBITDA % of Total Capex % of Total Nigeria 378 43% 205 52% 67 46% East Africa 301 34% 129 33% 60 41% Francophone Africa 213 24% 59 15% 20 13% Total before Elimnation/Others 892 100% 393 100% 147 100% Eliminations / Others (3) (0%) (1) (0%) 0 0% Total 889 100% 392 100% 147 100%
Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
Half Year Ended:
Amount in US$ Mn, except ratios Half Year Ended Sep-20 Region Revenue % of Total EBITDA % of Total Capex % of Total Nigeria 721 43% 388 53% 97 46% East Africa 566 33% 232 31% 78 37% Francophone Africa 410 24% 120 16% 35 17% Total before Elimnation/Others 1,697 100% 740 100% 211 100% Eliminations / Others (5) (0%) (2) (0%) 0 0%
Total 1,692 100% 738 100% 211 100% 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 Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 100 78 28% 181 146 24% EBITDA 49 38 29% 88 70 25% EBITDA / Revenue 48.7% 48.2% 0.5 pp 48.6% 48.2% 0.5 pp EBIT 47 37 28% 83 67 23% Capex 2 2 13% 4 3 15% Operating Free Cash Flow 47 36 30% 84 67 26% (EBITDA - Capex)
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Revenue 100 74 34% 181 139 30% EBITDA 48 36 35% 88 67 31% EBITDA / Revenue 48.6% 48.4% 0.2 pp 48.6% 48.4% 0.2 pp EBIT 46 35 33% 83 64 29% Capex 2 2 13% 4 3 15% Operating Free Cash Flow 47 34 36% 84 64 32% (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 Sep-20 Products Revenue % of Total EBITDA % of Total Capex % of Total Mobile Services 889 92% 392 90% 147 98% Mobile Money 100 10% 48 11% 2 1% Total before Elimnation/Others 989 103% 440 101% 149 99% Eliminations / Others (26) (3%) (4) (1%) 1 1% Total 963 100% 436 100% 149 100%
Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
Half Year Ended:
Amount in US$ Mn, except ratios Half Year Ended Sep-20 Products Revenue % of Total EBITDA % of Total Capex % of Total Mobile Services 1,692 93% 738 91% 211 98% Mobile Money 181 10% 88 11% 4 2% Total before Elimnation/Others 1,873 103% 826 102% 215 100% Eliminations / Others (55) (3%) (13) (2%) 1 0% Total 1,818 100% 813 100% 216 100%
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 Constant Currency.
5.1 Operational Performance (Quarter Ended)
5.1.1 Consolidated Operational Performance
Q-on-Q Y-on-Y Parameters Unit Sep-20 Jun-20 Sep-19 Change Change Customer Base 000's 116,371 111,461 4.4% 103,881 12.0% Net Additions 000's 4,910 857 473.1% 4,211 16.6% Monthly Churn % 5.3% 5.7% -0.4 pp 4.5% 0.8 pp Average Revenue Per User (ARPU) US$ 2.8 2.6 8.8% 2.6 6.8% Voice Voice Revenue US$ Mn 517 456 13.4% 464 11.5% Minutes on the netw ork Mn 80,375 71,891 11.8% 60,795 32.2% Voice Average Revenue Per User (ARPU) US$ 1.5 1.4 9.6% 1.5 (0.4%) Voice Usage per customer min 235 218 8.1% 199 18.1% Data Data Revenue US$ Mn 283 267 6.0% 215 31.3% Data Customer Base 000's 39,596 36,972 7.1% 31,910 24.1% As % of Customer Base % 34.0% 33.2% 0.9 pp 30.7% 3.3 pp Total MBs on the netw ork Mn MBs 293,919 279,541 5.1% 162,394 81.0% Data Average Revenue Per User (ARPU) US$ 2.5 2.5 (0.4%) 2.3 6.9% Data Usage per customer MBs 2,576 2,607 (1.2%) 1,748 47.3%
Mobile Money Transaction Value US$ Mn 11,637 9,038 28.7% 7,442 56.4% Transaction Value per Sub US$ 199 164 21.4% 166 20.3% Mobile Money Revenue US$ Mn 100 81 22.3% 74 33.9% Active Customers 000's 20,120 18,529 8.6% 15,521 29.6% Mobile Money ARPU US$ 1.7 1.5 15.4% 1.7 3.0%
Network and Coverage Netw ork tow ers Nos 24,246 23,471 775 21,936 2,310 Owned Towers Nos 4,561 4,569 (8) 4,461 100 Leased Towers Nos 19,685 18,902 783 17,475 2,210 Of w hich Mobile Broadband tow ers Nos 22,250 21,171 1,079 18,274 3,976 Total Mobile Broadband Base stations Nos 63,705 51,963 11,742 40,187 23,518 Data Capacity TB/day 10,253 8,371 22.5% 6,146 66.8%
Revenue Per Site Per Month US$ 13,408 12,257 9.4% 12,361 8.5% 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 Sep-20 Jun-20 Sep-19 Change Change Customer Base 000's 44,054 42,513 3.6% 39,512 11.5% Net Additions 000's 1,541 757 103.7% 2,044 (24.6%) Monthly Churn % 6.1% 5.7% 0.4 pp 4.7% 1.4 pp Average Revenue Per User (ARPU) US$ 2.9 2.7 6.6% 2.7 9.4%
Voice Voice Revenue US$ Mn 217 198 9.8% 188 15.8% Minutes on the netw ork Mn 20,867 19,275 8.3% 15,687 33.0% Voice Average Revenue Per User (ARPU) US$ 1.7 1.6 5.9% 1.6 2.9% Voice Usage per customer min 161 154 4.5% 136 18.2% Data Data Revenue US$ Mn 135 122 10.5% 99 36.7% Data Customer Base 000's 19,003 17,334 9.6% 15,471 22.8% As % of Customer Base % 43.1% 40.8% 2.4 pp 39.2% 4.0 pp Total MBs on the netw ork Mn MBs 147,471 139,285 5.9% 80,247 83.8% Data Average Revenue Per User (ARPU) US$ 2.5 2.4 4.0% 2.2 14.4% Data Usage per customer MBs 2,743 2,752 (0.3%) 1,784 53.8%
Network and Coverage Netw ork tow ers Nos 10,347 9,802 545 8,878 1,469 Owned Towers Nos 199 204 (5) 261 (62) Leased Towers Nos 10,148 9,598 550 8,617 1,531 Of which Mobile Broadband towers Nos 10,002 9,326 676 7,695 2,307 Total Mobile Broadband Base stations Nos 30,091 19,258 10,833 13,209 16,882 Data Capacity TB/day 5,245 3,489 50.3% 2,343 123.9% Revenue Per Site Per Month US$ 12,500 11,904 5.0% 11,760 6.3%
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 Sep-20 Jun-20 Sep-19 Change Change Customer Base 000's 51,265 48,757 5.1% 45,007 13.9% Net Additions 000's 2,508 123 1,940.1% 1,955 28.2% Monthly Churn % 4.5% 5.7% -1.2 pp 3.8% 0.7 pp Average Revenue Per User (ARPU) US$ 2.4 2.1 12.8% 2.2 10.8%
Voice Voice Revenue US$ Mn 171 144 19.2% 146 17.2% Minutes on the netw ork Mn 51,335 45,107 13.8% 38,290 34.1% Voice Average Revenue Per User (ARPU) US$ 1.1 1.0 15.0% 1.1 3.0% Voice Usage per customer min 342 311 9.8% 290 17.9%
Data Data Revenue US$ Mn 89 86 3.0% 69 28.7% Data Customer Base 000's 14,924 14,041 6.3% 12,142 22.9% As % of Customer Base % 29.1% 28.8% 0.3 pp 27.0% 2.1 pp Total MBs on the netw ork Mn MBs 115,048 110,172 4.4% 66,644 72.6% Data Average Revenue Per User (ARPU) US$ 2.0 2.1 (4.2%) 2.0 3.0% Data Usage per customer MBs 2,632 2,711 (2.9%) 1,905 38.2%
Network and Coverage Netw ork tow ers Nos 9,193 9,039 154 8,678 515 Owned Towers Nos 2,544 2,535 9 2,421 123 Leased Towers Nos 6,649 6,504 145 6,257 392 Of which Mobile Broadband towers Nos 8,039 7,880 159 7,386 653 Total Mobile Broadband Base stations Nos 22,567 22,071 496 19,564 3,003 Data Capacity TB/day 3,426 3,355 2.1% 2,805 22.2% Revenue Per Site Per Month US$ 13,025 11,264 15.6% 10,937 19.1%
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 Sep-20 Jun-20 Sep-19 Change Change Customer Base 000's 21,052 20,190 4.3% 19,362 8.7% Net Additions 000's 862 (23) 3,908.1% 212 307.1% Monthly Churn % 5.5% 5.9% -0.4 pp 5.8% -0.3 pp Average Revenue Per User (ARPU) US$ 3.7 3.5 6.5% 3.7 (0.4%)
Voice Voice Revenue US$ Mn 131 117 11.7% 132 (0.9%) Minutes on the netw ork Mn 8,173 7,509 8.8% 6,818 19.9% Voice Average Revenue Per User (ARPU) US$ 2.1 1.9 9.0% 2.3 (7.2%) Voice Usage per customer min 132 125 6.2% 118 12.2%
Data Data Revenue US$ Mn 59 58 0.9% 47 23.6% Data Customer Base 000's 5,669 5,596 1.3% 4,297 31.9% As % of Customer Base % 26.9% 27.7% -0.8 pp 22.2% 4.7 pp Total MBs on the netw ork Mn MBs 31,400 30,083 4.4% 15,503 102.5% Data Average Revenue Per User (ARPU) US$ 3.5 3.6 (3.0%) 3.7 (4.1%) Data Usage per customer MBs 1,889 1,882 0.4% 1,202 57.2%
Network and Coverage Netw ork tow ers Nos 4,706 4,630 76 4,380 326 Owned Towers Nos 1,818 1,830 (12) 1,779 39 Leased Towers Nos 2,888 2,800 88 2,601 287 Of which Mobile Broadband towers Nos 4,209 3,965 244 3,193 1,016 Total Mobile Broadband Base stations Nos 11,047 10,634 413 7,414 3,633 Data Capacity TB/day 1,582 1,527 3.6% 999 58.4%
Revenue Per Site Per Month US$ 16,363 15,222 7.5% 16,575 (1.3%) 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 six months ended 30 September 2020 are peak of the pandemic in our footprint. Afterwards, social distancing unaudited and in the opinion of management, include all rules were eased, during the 3 months ended 30 September 2020, adjustments necessary for the fair presentation of the results and performance also improved as the business was largely of the same period. The financial information has been unaffected by COVID-19 and delivered revenue growth of 19.6% prepared based on International Accounting Standard 34 in constant currency. (IAS 34) and apply the same accounting policies, presentation and methods of calculation as those followed in In other parts of the world, a so called second wave has already the preparation of the Group’s annual consolidated financial started, with many governments reintroducing stricter social statements for the year ended 31 March 2020 except to the distancing rules, which were relaxed during the summer months. extent required/ prescribed by IAS 34. This report should be read in conjunction with audited consolidated financial As Africa lagged the spread of the first wave, it may also lag the statements and related notes for the year ended 31 March spread of a second wave. Despite the resilience demonstrated by 2020. The comparative information has been drawn based the business during the course of the first wave, we are constantly on Airtel Africa plc’s Audited Consolidated Financial monitoring how the situation is evolving to identify key risks and Statements for the year ended 31 March 2020 prepared put in place adequate mitigation plans to minimise any potential under International Financial Reporting Standard (IFRS). disruptions from the re-introduction of stricter social distancing rules. The information, apart from the extract of the Financial Statements in Section 7, is on underlying basis and GOVERNANCE: We have a dedicated executive COVID-19 exceptional items are shown separately. This enables an committee mandated to regularly identify risks, agree on action organic comparison of results with past periods. plans and monitor their execution. As an outcome of the committee’s role, the CEO and CFO have updated the Board on 6.2 Key company developments the risks and actions identified whenever relevant. This ensures a direct channel between local management and executive and non-
executive directors to ensure actions are agreed and executed COVID-19 quickly. At the beginning of the pandemic, most governments in the SAFETY: Our priority is the health and wellbeing of our countries where we operate acted swiftly to implement and enforce employees, outsourced partners and customers, and we are restrictions on the movement of people at the very early stage of making every effort to ensure that our OPCOs have taken all the contagion. These swift actions coupled with a continent which necessary steps to ensure their safety. All offices have an agreed benefits from low population density, less frequent travel, and policy in place for remote working, working in shifts and social experience in dealing with contagious diseases has resulted in distancing practices, depending on the critical needs of individual lower infection rates in sub-Saharan Africa. In subsequent months functions. All employees continue to be on full pay and continue to some of these restrictions were eased with local economies receive full medical insurance cover which includes any diagnostic improving, although consumers still feel cautious about social and testing and associated physician visits related to COVID 19. We working habits. have also granted immediate paid medical leave for any employees diagnosed with COVID-19. During these times, the telecoms industry has emerged as a key and essential service for these economies, allowing customers to The outsourced staff in our call centres continue to work from work remotely, reduce their travels, keep them connected and home or in a shift rotation where necessary but following strict allow access to affordable entertainment. social distancing practices. They have all been given the option and equipment to either work from home or, if necessary, from the At Airtel Africa we worked to ensure the safety of our employees, office following strict social distancing practices and regulatory customers and partners and we have continued to work closely guidelines. Safety protective equipment and hand sanitisers have with governments, regulators, and suppliers to ensure our network also been made available within our shops to keep both our staff remained fully operational and customers could access our and customers safe. services, and continued to support the economies of these countries and the communities we serve. The safety of our customers is paramount to us. We have executed various social educational digital campaigns explaining A strong focus on execution and a strong risk management best practices during the COVID-19 outbreak, and the importance approach, coupled with the resilience of the telecom sector, of being safe. We have also made a number of sites across our contributed to delivering revenue growth of 13% in constant businesses accessible free of charge to give students continuous currency for the 3 months ended on 30 June 2020, which was the
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access to quality education. Our staff across all our OPCOs have meet our financial obligations. We have $2.4 bn in long-term bonds also generously contributed and sacrificed from their salaries a with the first repayment of €750 Mn due in May 2021. The next total of $362k which we have matched like for like as a company major bond repayment of $505 Mn is due in March 2023. In the and donated to the respective governments to support the last financial year, we extended the maturity of $254 Mn of loans communities where we operate. due in December 2020 and January 2021 by an average of 18 months to two years, further improving our liquidity position in this NETWORK and CAPEX: our network remains the main source for financial year. Additionally, we agreed longer payment terms up to many customers for social interactions, work and entertainment. around 12 months with strategic vendors in certain markets in The key business continuity plans we implemented at the start of order to continue invest in modernising the network while the pandemic ensured that both active and passive maintenance increasing liquidity. services could be safely carried out even when the movement of people was restricted. During the last 6 months, despite an We have identified several ways to retain cash, reduce costs and increase in data traffic of more than 40%, our network did not mitigate risks from COVID-19. We have continued to invest in experience any significant disruption. revenue driven expenditures while reducing discretionary spend. Additionally, we benefited from lower travel and facility expenses Our strategy of diversifying sourcing across four major providers during the period as a result of travel bans and work from home of network equipment is also protecting us from a company or practices. country-specific supply chain risk. We continued to invest in our network and our commitment to DISTRIBUTION: our priority was to ensure customers access to spend our planned $650 Mn to $700 Mn has not changed. Capex our services. When lockdown restrictions were implemented, we in the 6 months ended 30 September was $216 Mn, a reduction of increased stock levels of SIM cards and recharge vouchers to 12.4% compared to the comparable period in the prior year, ensure availability in our shops and ensure customers could buy however this was largely due the impact of import logistics during recharges whenever convenient. We also encouraged customers the pandemic period. In a worst-case scenario, we would be able to use digital methods of recharge, including through USSD, bank to reduce our capex budget significantly without compromising portals or our app. In April 2020 we launched the new MyAirtel network quality by prioritising expenditure. selfcare app in all 14 countries. Using the app, a customer can check Airtime or Bundles and purchase them using Airtel Money FOREIGN EXCHANGE: The global economic slowdown or any credit or debit cards. It also has Airtel Money features such combined with lower oil and commodity prices has resulted in as Send Money to Airtel and other operators, Pay Bills, Pay currencies devaluing across our markets, including the Nigerian Merchants, Scan and pay using Airtel’s or Mastercard’s QR codes naira, Kenyan shilling, Ugandan shilling and Zambian kwacha. By and virtual cards Airtel Money and E-Recharge to minimise the far our largest exposure is in Nigeria, which represents 40% of our impact of any possible disruption to our distribution network. As revenue and 48% of EBITDA. On a 12-month basis, we estimate lockdown restrictions were eased we expanded our distribution, in that a 1% Nigerian naira devaluation will have a negative $14 Mn line with our strategy, and we continued to carry a higher amount impact on revenue, $8 Mn on EBITDA and $7 Mn on finance costs. of stock to mitigate the risks possible future restrictions on the movement of people could have on our stock levels and the ability Other significant updates of customers to access our recharge vouchers. Dividend MOBILE MONEY: during the initial phase of the pandemic mobile revenue growth slowed down to 26.3% as the business was The Board approved a new progressive dividend policy as a result impacted by social distancing measures and non-essential service of the continued strong business performance, significant closures, reducing the ability of customers to deposit and withdraw opportunities to invest in future growth and the aim to continue to cash. Additionally, several governments asked mobile money reduce leverage. operators to waive fees on certain transactions, including person- to-person and merchant payments. Afterwards, in the 3 months The newly adopted dividend policy aims to grow the dividend ended 30 September 2020, as lockdown restrictions were eased annually by a mid to high single digit percentage from a base of $4 and most fees on transaction reinstated, revenue growth for the cents per share for FY 2021, until reported leverage (calculated as period was 33.9%, up 7.6% from the prior quarter. We also net debt to EBITDA) falls below 2.0x. continue to engage with governments and regulators to allow certain mobile money outlets to be classified as essential services At the point when reported leverage (calculated as net debt to so that customers can fully access mobile money services despite EBITDA) is below 2.0x, the Board will reassess the dividend policy restrictions on the movement of people. Mobile money represents in light of the growth outlook for the Group. 10% of the Group’s revenue. Additional spectrum LIQUIDITY: we continue to benefit from a strong financial position. Free cash flow increased 52% in the last 6 months and EBITDA In June 2020, Airtel Malawi plc was allocated a spectrum of 10 margin continued to improve by 0.8pp to 44.7%. Our net debt to MHz in the 2600 band. EBITDA ratio decreased to 2.2x, compared to the same period in the prior year (from 2.3x), and cash balances in conjunction with Abandonment of merger of Airtel Networks Kenya Limited nearly $700 Mn of committed undrawn facilities ensure we can with Telkom Kenya Limited
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In August 2020, Airtel Africa plc announced that its subsidiary transfer or remittance service providers will extensively enhance Airtel Networks Kenya Limited ("Airtel Kenya") and Telkom Kenya the customer access to the digital world. Limited ("Telkom") have decided to no longer pursue completion of the M&A transaction. The transaction was announced in (b) Partnership with Standard Charted Bank February 2019 and was subject to the satisfaction of various conditions precedent, including regulatory approvals. Despite In August 2020, Airtel Africa announced a strategic partnership Airtel Africa plc and Telkom’s respective endeavours to reach a with Standard Chartered Bank, a leading international banking successful closure, the transaction has gone through a very group, to drive financial inclusion across key markets in Africa by lengthy process which has led the parties to reconsider their providing customers with increased access to mobile financial stance. services. Standard Chartered and Airtel Africa work together to co- create new, innovative products aimed at enhancing the Partnership with UNICEF accessibility of financial services and ultimately, better serve people across Africa. In line with this, Airtel Money's customers will In May 2020, Airtel Africa announced a partnership with UNICEF be able to make real-time online deposits and withdrawals from aimed at providing children with access to remote learning and Standard Chartered bank accounts, receive international money enabling access to cash assistance for their families via mobile transfers directly to their wallets, and access savings products cash transfers. Under this partnership, UNICEF and Airtel Africa amongst other services. will use mobile technology to benefit an estimated 133 Mn school age children currently affected by school closures in 13 countries (c) Partnership with Mastercard, Samsung and Asante across sub-Saharan Africa during the COVID-19 pandemic. In September 2020, Airtel Africa announced an expansion of its Mobile money partnership with Mastercard by launching a Pay-on-Demand payments platform and drive the digital economy across Africa. (a) Partnership with remittance leading institutions This Pay-on-Demand platform enables safe, secure, and convenient consumer financing via Samsung devices with an Airtel Africa entered into several strategic partnerships with embedded Knox security platform, through Airtel Africa’s network. MoneyGram, Mukuru and WorldRemit. Through these The partnership facilitates usage-based payments and builds partnerships, more than 20 Mn Airtel Money customers in 12 creditworthiness. countries can transfer and receive funds across the globe directly from and into their mobile money wallets on their phone. Mobile These partnerships align with the Group’s strategy of expanding money service alliances with these leading international money 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 half year ended September 30, 2020
Customer base grew by 12.0% to 116.4 Mn Revenue on reported basis increased by 10.7% to $1,815 Mn, with Q2 revenue growth of 14.3% Revenue growth in constant currency was 16.4% in H1, and 19.6% in Q2. Growth was recorded across all regions: Nigeria up 20.2%, East Africa up 21.9% and Francophone Africa up 4.4%, and services, with voice revenue up by 7.0%, data by 33.4% and mobile money by 30.4% EBITDA increased 12.8% to $812 Mn while constant currency EBITDA growth was 19.3% Reported EBITDA margin was 44.7%, up by 0.8pp (1.1pp in constant currency) Operating profit increased by 19.5% to $472 Mn, an increase of 28.3% in constant currency Free cash flow was $319 Mn compared to $210 Mn in the same period last year Basic EPS was $3.0¢, down 52.9% largely as a result of exceptional items and a one-off derivative gain incurred in the prior year. Excluding these one-off benefits basic EPS would be up 19%. EPS before exceptional items was $3.0¢ The board declared an interim dividend of $1.5¢ per share in line with the new progressive dividend policy to focus on growth opportunities and faster deleveraging. The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a base of $4 cents per share for FY 2021, until reported leverage falls below 2.0x
Key Highlights – For the Quarter ended September 30, 2020
Reported revenue increased by 14.3% to $ 965 Mn, with constant currency growth of 19.6%. Revenue growth of 19.6% in constant currency was driven by growth across all regions: Nigeria up 23.1%, East Africa up 26.0% and Francophone Africa up 6.4%. Growth was broad based across all services with revenue in Voice, Data and Mobile Money up by 11.5%, 31.3% and 33.9% respectively Reported EBITDA was $ 437 Mn, up 17.5%, while constant currency EBITDA growth was 23.8% EBITDA margin in reported currency was 45.3%, an increase of 1.2pp, while increase of 1.5pp in constant currency terms
Results for the half year ended on September 30, 2020
6.4.1 Airtel Africa Consolidated
These results, which include the impact of the COVID-19 impact, of 16.4% was largely driven by the customer base growth of demonstrate that Airtel Africa is a highly resilient business with an 12.0%, to 116.4 Mn and ARPU growth of 4.3% in constant effective strategy, delivering strong growth in both customer base currency. Revenue growth was recorded across all the regions: and revenue and expansion of EBITDA margin. This performance Nigeria up 20.2%, East Africa up 21.9% and Francophone Africa continues to be underpinned by a strong focus on the execution of up 4.4%. Revenue growth was broad based across all segments: our strategy which is capturing growth opportunities in a fast- voice up 7.0%, data up 33.4% and mobile money up 30.4% in growing region that is vastly underpenetrated in terms of mobile constant currency terms. and banking services. As a result, we were able to deliver double- Reported operating profit for the half year was $472 Mn, up by digit revenue growth of 15.3% in mobile services (9.7% on a 19.5%, as a result of strong revenue growth and lower operating reported basis) and 30.4% growth in mobile money (24.3% on a expenditures in proportion to revenue. Operating profit in constant reported basis). currency grew by 28.3%. Basic EPS was at $3.0 cents, down by 52.9%, as a result of higher Net finance costs increased by $43 Mn, driven by higher other other finance costs due to a $46 Mn derivative gain in the prior finance costs which more than offset the reduced interest costs of period, an increase in tax charges due to higher operating profit $8.7 Mn as a result of lower debt. Increase in other finance costs and withholding tax on dividends and the recognition in the prior was primarily driven by $46 Mn of derivative gains which occurred year of one-off gain of $72 Mn related to the expired indemnity to in the comparable period in the prior year. certain pre-IPO investors which was accounted for as an exceptional item. Excluding exceptional items and the one-off $46 Total tax charges for the period amounted to $136 Mn as Mn derivative gain basic eps would be up 19%. compared to $88 Mn in the comparable period last year. This was due to higher operating profit and withholding tax on OPCO In the 6 months, ended 30 September 2020, revenue on a reported dividends. The H1’20 also benefited from higher deferred tax credit basis increased by 10.7%, with constant currency growth of 16.4% recognition of $27 Mn as compared to $9.6 Mn in H1’21. partially offset by currency devaluation, mainly in Nigeria (6.5%), Zambia (51%) and Kenya (4.5%). As restrictions on movement of Profit after tax was $145 Mn, down by 36.6%, largely as a result of people eased in Q2’21, reported revenue growth accelerated to the recognition in the prior year of one-off gain of $72 Mn related 14.3% and 19.6% in constant currency. Constant currency growth to the expired indemnity to certain pre-IPO investors, as well as
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higher finance costs and tax in the current period. Excluding 6.4.3 Segment Wise – Africa benefit of exceptional items and one-off derivative gain of $46 Mn in prior period, profit after tax has increased by 31.8%. 6.4.3.1 Nigeria
Basic EPS was at $3.0 cents, down by 52.9%, as a result of higher Constant currency revenue grew by 20.2% while in reported other finance costs due to a $46 Mn derivative gain in the prior currency revenue grew by 12.1% as a result of the Nigerian naira period, increase in tax charges due to higher operating profit and devaluation by 6.5% (YoY). Revenue growth in Q2’21 was 23.1% withholding tax on dividend, higher non-controlling interest, and as a result of the easing of restrictions on movement of people the recognition in the prior year of one-off gain of $72 Mn related which was implemented in the first quarter due the COVID-19 to the expired indemnity to certain pre-IPO investors which was pandemic. accounted for as an exceptional item. Excluding exceptional items and the one-off $46 Mn derivative gain basic eps would be up 19%. Voice revenue increased 11.4% to $413 Mn, this was driven by customer base increase of 11.5% which was partially offset by a Alternative performance measures 0.8% drop in voice ARPU. The customer base growth was driven by the expansion of our distribution network and the expansion of EBITDA amounted to $812 Mn, up by 12.8% in reported currency network infrastructure. Voice usage per customer increased by and 19.3% in constant currency. The EBITDA growth was driven 13.5%. On the other hand, the ARPU decline of 0.8% was a result by revenue growth of 16.4% and efficiency in operating expenses. of a change in the customer mix due to the COVID-19 pandemic Reported EBITDA margin was 44.7%, an improvement of 0.8pp, in first quarter. and 1.1pp in constant currency. Data revenue growth of 38.1% in constant currency was supported Foreign exchange had an adverse impact of $80 Mn on revenue by 22.8% growth in data customers and 17.4% growth in data and $39 Mn on EBITDA, largely driven by the devaluation of the ARPU. Data customer penetration was up by 4pp from the Nigerian naira and Zambian kwacha. previous period and reached 43.1% as of September 2020. The data customer base growth of 22.8% was a result of the expansion The effective tax rate was 47% broadly in line with the same period of 4G network, with 76% of total sites now on 4G. The total data in the prior year. The effective tax rate at 47% is higher than the usage on our network grew by 89.5%, almost double the previous weighted average statutory tax rate of approximately 33%, largely period. 4G data usage almost tripled and now contributes to 60% due to the profit mix between various OPCOs and higher of the total data usage. Data usage per customer was up by 61% withholding tax on OPCO dividends. The adjusted effective tax and the data revenue accounted for 35.7% of total revenue, up by rate was 44% compared to 37%, largely as a result of recognition 4.6pp from 31.1% in previous period. of higher deferred tax credit of $27 Mn in the prior period as against to $9.6 Mn during the half year ended 30 September 2020. EBITDA grew by 13.4% in reported currency, with constant currency growth of 21.5%. EBITDA margin improved by 0.6pp in An exceptional item gain of $3 Mn in September 2020 consisted constant currency as a result of opex efficiencies. In Q2’21, of deferred tax credit in Tanzania amounting to $9.6 Mn which was EBITDA grew by 25.7%, with margin improvement of 1.1pp, mainly partially offset by one-off costs of $6.7 Mn in Francophone Africa. as a result of the bad debt collection of Q1’21 from enterprise Exceptional items for the half year ended 30 September 2019 customers. mainly consisted of $72 Mn gain related to the expired indemnity Capital expenditure amounted to $97 Mn as against $115 Mn in to certain pre-IPO investors. previous period. Capex expenditure was lower during the period because of lockdown measures in April and May 2020. Free cash flow was $319 Mn, up by 52% largely due to the higher EBITDA, $5 Mn of reduced interest payments as a result of lower Operating free cash flow was $289 Mn, up by 42.6%, largely as a debt and $31 Mn of lower capex partially offset by an increase of result of double-digit EBITDA growth and slightly lower capital $49 Mn in cash tax as a result of higher operating profit. expenditure in first half of the year. 6.4.3.2 East Africa EPS before exceptional items was $3 cents, down by 27.2%, as a result of higher other finance costs due to the recognition of a $46 In East Africa, performance continued to be strong with 14.1% Mn derivative gain in the prior period, higher non-controlling revenue growth in reported currency and 21.9% in constant interest, and increase in tax charges due to the higher operating currency. Revenue growth in Q2’21 accelerated to 17.7% and profit and withholding tax on the dividend. Excluding the one-time constant currency growth of 26% was supported by growth in all derivative gain of $ 46 Mn, restated eps grew 19%. key business segments. Growth was broad-based across all services and all markets, as 5 out of 6 OPCOs delivered more than 6.4.2 Net Debt 20% revenue growth. Constant currency revenue growth was partially offset by the currency devaluation mainly in Zambia and Net debt to EBITDA decreased to 2.2x, as the increase in EBITDA Kenya. largely offset a slight increase in net debt. Voice revenue was $312 Mn, with double-digit growth of 12.8% in constant currency as a result of a 13.9% customer base growth and 20.1% growth of voice usage per customer, which was marginally offset by a 0.4% voice ARPU drop. Total minutes on
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the network were up by 36% led by an increase in voice usage per and reached 29.4%. Total data usage more than doubled and data customer. usage per customer was up 73.5%. Our expansion of 4G network and “More for More” bundle offerings resulted in a data customer Data revenue amounted to $174 Mn, up by 29.6% supported by base increase. The 4G data usage more than doubled and now data customer base growth of 22.9% and data ARPU increase of contributes to 50.6% of total data usage on network. 5.1%. Growth was recorded across all OPCOs, driven by the expansion of network infrastructure, with 68.6% of the sites now Mobile money revenue was $49 Mn, with constant currency growth on our 4G network as compared to 60% during the previous of 12.5% largely driven by a 31.9% increase in customer base period. Our mobile network in Zambia, Malawi and Uganda now supported by the expansion of our distribution network through consists of 100% of 4G sites. The total data usage on our network more agents, kiosks and Airtel Money branches. grew by 83.8% and 4G data usage almost tripled and now EBITDA margin of 32.8%, was broadly flat. In Q2’21, the decline contributes 44.6% to the total data usage. Data usage per in EBITDA margin was largely due to a $6 Mn settlement of indirect customer reached 2.6GB, up by 49.1% from 1.7GB per customer tax related to prior years. in previous period. Capital expenditure during the period was $36 Mn, lower due to During the period “Pay as you Go tariffs” in certain markets were increased network modernisation in the previous period. updated and this resulted in a revenue reallocation of bundle Operating free cash flow was at $110 Mn, up 54.5% as a result of products of voice and data in such tariffs. On a like for like basis an improvement in EBITDA and lower capital expenditure. voice and data revenue growth was 8.7% and 38% respectively. 6.4.4 Product wise Africa Mobile money revenue grew by 42.9% in constant currency, largely driven by growth in Zambia, Tanzania, Uganda and Malawi. 6.4.4.1 Mobile services: Revenue growth of 50.1% in Q2’21 was largely driven by the removal of certain restrictions on movement as a result of the Revenue increased by 9.7% on a reported basis and 15.3% COVID-19 pandemic and the reinstatement of P2P fees in the growth in constant currency, with both voice and data revenue majority of markets which were temporarily waived in the first contributing to mobile services revenue growth. quarter. The revenue growth of 42.9% was driven by a 29.5% increase in our customer base and a 23.9% growth in the Voice revenue in constant currency growth was 7%, driven by transaction value per customer, supported by the expansion of our customer base growth of 12%, as a result of the expansion of the distribution network. distribution network and network infrastructure, partially offset by a 4.1% drop in voice ARPU. Total minutes on the network were up EBITDA margin was 44.3%, an improvement of 4.0pp in reported 31.1% as a result of the increase in voice usage per customer by currency and 4.3pp in constant currency, as a result of accelerated 17.5%. ARPU declined by 4.1% in constant currency terms, largely growth in revenue and efficiency improvement in operating driven by a drop in interconnect charges across key markets in expenses. East Africa and Francophone Africa.
Capital expenditure during the period was $81 Mn as against $60 Data revenue increased 33.4% in constant currency, as a result of Mn in the previous period. Capex expenditure was higher during growth in our data customer base by 24.1%, an increase in data the period as a result of planned network expansion. ARPU and the accelerated 4G network rollout. Data customer Operating free cash flow was at $211 Mn, up by 34.9% as a result base was 34.0% of our total customer base, from 30.7% compared of improvement in EBITDA. to the previous period. Total data usage was up 90.1% driven by both a customer base increase of 24.1% and a 56.9% growth in 6.4.3.3 Francophone Africa data usage per customer. Total data usage per customer per month was 2.5GB, largely resulting from our 4G network Performance in Francophone Africa continued to improve, as expansion and popular data bundles offerings. Growing reported revenue was up 4.6% and constant currency growth was penetration on our 3G and 4G network resulted in data ARPU 4.4%. In Q2’21, reported currency growth of 8.6% benefitted from growth of 10.1%. 4G data usage almost tripled and now a 6.6% appreciation of the Central African and West Africa franc contributes 52.8% to the total data usage on the network. and 6.4% constant currency growth. Revenue growth of data, mobile money and other revenue was partially offset by a decline Data revenue now contributes 30.2% to the total revenue, up from in voice revenue. Performance across the region was mixed, with 26.4% in the previous period. growth in Democratic Republic of the Congo (DRC), Gabon and 6.4.4.2 Mobile Money Chad partially offset by revenue decline in other countries in the region. Reported mobile money revenue was $181 Mn, up 24.3%, with a Voice revenue decreased by 5.3%, largely due to a drop in constant currency growth of 30.4%. Revenue growth of 33.9% in interconnect charges in Gabon and Chad, and overall market Q2’21 benefitted from the easing of lockdown restrictions which weakness in some countries in the region caused by impacted the first quarter. Additionally, P2P fees, which were macroeconomic conditions. Total minutes on network grew by temporarily waived in the first quarter to support economies and 14.7% while voice usage per customer was up by 7.8%. communities, were mostly reinstated during Q2’21 in majority of markets. Data revenue increased by 29.2% in constant currency, supported by strong customer growth of 31.9% and data ARPU growth of The revenue growth of 30.4% was driven by a customer base 1.4%. Additionally, smartphone penetration increased by 4.7pp growth of 29.6% and a 45.7% growth in transaction value. Our
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distribution network continued to expand through the addition of and efficiencies in operating expense. EBITDA margin was at exclusive kiosks, Airtel Money branches and the mobile money 45.3%, an improvement of 1.5pp in constant currency. agent network. On reported basis, Profit after Tax before exceptional item was EBITDA amounted to $88 Mn, up by 25.5% in reported currency $ 92 Mn, an increase of 8% compared to the prior year. and 30.9% in constant currency. EBITDA margin was 48.6%, an Capital expenditure during the quarter was $ 149 Mn. increase of 0.5pp in reported currency and 0.2pp in constant currency. Total transaction value increased by 45.7% in constant Operating free cash flow during the quarter was at $ 287 Mn. currency, as a result of our customer base growth of 29.6% and a 14.5% growth in transaction value per customer per month. The 6.5.2 Segment Wise – Africa Q2’21 annualised transaction value reached $47 bn and mobile money revenue accounted for 10.3% of total revenue. 6.5.2.1 Nigeria
The mobile money customer base grew to 20.1 Mn, up 29.6% over Reported revenue in Nigeria grew by 15.2% whereas constant the previous period, with Airtel Money customers representing currency growth was 23.1%, which was partially offset by currency 17.3% of our total customers. Mobile money ARPU was up 2.4%, devaluation. The revenue growth was largely driven by voice driven by the increase in transaction values and a higher revenue growth of 15.8% and sustained growth in data with contribution from merchant payments, cash out and recharge of revenue up 36.7% in constant currency. mobile services through Airtel Money. Voice revenue growth of 15.8% was supported by 11.5% growth Results for the Quarter ended September 30, 2020 in customer base which was driven by expansion of our distribution network as well as network infrastructure. 6.5.1 Airtel Africa Consolidate Data revenue growth of 36.7% in constant currency was supported As on 30 Sep 2020, the group had an aggregate customer base of by 22.8% growth in data customers and 14.4% growth in data 116 Mn as compared to 104 Mn in the corresponding quarter last ARPU. Data customer penetration was up by 4pp from the year, an increase of 12.0%. Total minutes on network during the previous period and reached 43.1% as of September 2020. The quarter registered a growth of 32.2% to 80.4 bn as compared to data customer base growth of 22.8% was a result of the expansion 60.8 bn in the corresponding quarter last year. of 4G network, with 76% of total sites now on 4G. The total data usage on our network grew by 83.8%. 4G data usage now Data customers increased by 7.7 Mn to 39.6 Mn as compared to contributes to 60% of the total data usage. Data usage per 31.9 Mn in the corresponding quarter last year. Increase in data customer was up by 53.8%. subscribers was mainly led by increase in smartphone penetration, up 2.7pp to 33.2%, and expansion of 4G network (70% of the total EBITDA margin in constant currency at 54.2%, increased by 1.1pp sites are now on 4G). Total MBs on the network grew by 81.0% to as a result of revenue growth and efficiencies in operating 293.9 bn MBs as compared to 162.4 bn MBs in the corresponding expenses. quarter last year. Data usage per customer during the quarter was at 2,576 MBs as compared to 1,748 MBs in the corresponding During the period, capital expenditure was $ 67 Mn. quarter last year, an increase of 47.3%. Operating Free Cash Flow was $ 138 Mn, up 37%, largely as a Mobile Money revenue in constant currency grew by 33.9% driven result of double-digit EBITDA growth. by customer growth of 29.6% and transaction value growth of 6.5.2.2 East Africa 56.4%. The Group continued to expand the distribution network through kiosks, mini shops and dedicated Airtel Money branches. Reported revenue in East Africa grew by 17.7%, whereas constant It also introduced additional mobile money services, including currency growth was 26.0%, which was partially offset by currency merchant and commercial payments, benefits transfers, loans and devaluation. Revenue growth of 26.0% in constant currency was savings, building international money transfer services through driven by growth across all services with voice revenue up by partnerships. Mobile money business now serves over 20 Mn 17.2%, data revenue up by 28.7% and mobile money revenue up mobile money customers, representing 17.3% of our total by 50.1%. customers and almost 27.8% excluding Nigeria. Voice revenue was up by 17.2%, largely driven by customer Reported revenue grew by 14.3%, whereas constant currency growth of 13.9% and voice usage per customer up by 17.9%. revenue grew by 19.6%, which was partially offset by currency devaluation. Constant currency revenue growth was largely driven Data revenue increased 28.7%, driven by the increase in data by 12.0% increase in the customer base, to 116.4 Mn, and a customer base, up 22.9% and increase in data usage per increase in ARPU by 6.8% to $ 2.8. Revenue growth was recorded customer, up 38.2%. Growth was recorded across all OPCOs, across all the regions: Nigeria up 23.1%, East Africa up 26.0% and driven by the expansion of network infrastructure, with 68.6% of Francophone Africa up 6.4% and services with voice revenue up the sites now on our 4G network as compared to 60% during the 11.5%, data revenue up 31.3% and mobile money revenue up previous period. Our mobile network in Zambia, Malawi and 33.9% in constant currency terms. Uganda now consists of 100% of 4G sites.
For the quarter, EBITDA in reported currency was $ 437 Mn, up Mobile Money revenue increased by 50.1% supported by increase 17.5% and 23.8% in constant currency terms. EBITDA growth in customer base by 29.5% and transaction value per customer up largely driven by revenue growth of 19.6% in constant currency by 26.9%. Revenue growth of 50.1% in Q2’21 was largely driven by the removal of certain restrictions on movement as a result of
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the COVID-19 pandemic and the reinstatement of P2P charges in 6.5.3 Product wise Africa majority of markets which were temporarily waived off during the first quarter. We continued to expand our Mobile Money 6.5.3.1 Mobile services distribution network (Agents, Kiosks and Airtel Money Branches). Reported mobile services revenue was up by 12.8%, with 17.9% EBITDA margin in constant currency at 45.8%, improved by 5.6pp growth in constant currency, with both voice and data revenue as a result of revenue growth and cost efficiencies. contributing to mobile services revenue growth.
Capital expenditure during the period was $ 62 Mn. Voice revenue in constant currency grew by 11.5%, driven by Operating free cash flow was at $ 102 Mn, up by 21.4% as a result customer base growth of 12%, as a result of the expansion of the of improvement in EBITDA. distribution network and network infrastructure, partially offset by 0.4% drop in voice ARPU in constant currency. Total minutes on 6.5.2.3 Francophone Africa the grew by 32.2% as a result of the increase in voice usage per customer by 18.1%. Reported revenue grew by 8.6%, whereas constant currency growth was 6.4%. Revenue growth was largely driven by data, Data revenue grew by 31.3% in constant currency, supported by mobile money and other revenue partially offset by a decline in data customer base growth of 24.1%, increase in data ARPU and voice revenue. the accelerated 4G network rollout. Data customer base was 34.0% of our total customer base, from 30.7% compared to the Voice revenue decreased by 0.9% largely due to a reduction in previous period. Total data usage was up by 81.0% driven by both interconnect charges in few markets as well as decrease in customer base increase of 24.1% and 47.3% growth in data usage international and roaming revenue. Total minutes on network grew per customer. by 19.9% while voice usage per customer was up by 12.2%. 6.5.3.2 Mobile Money Data revenue grew by 23.6% in constant currency, supported by data customer base growth of 31.9%. Additionally, smartphone Reported mobile money revenue was $100 Mn, up 27.9%, with a penetration increased by 4.7 pp to reach 29.4%. Total data usage constant currency growth of 33.9%. more than doubled and data usage per customer was up 57.2%. The revenue growth of 33.9% was driven by a customer base Mobile money revenue grew by 8.9% largely driven by 31.9% growth of 29.6% and a 56.4% growth in transaction value. Our growth in mobile money customer base supported by the distribution network continued to expand through the addition of expansion of our distribution network through increase in agents, exclusive kiosks, Airtel Money branches and the mobile money kiosks and Airtel Money branches. agent network.
EBITDA margin in constant currency at 30.9%, decreased by The mobile money customer base grew to 20.1 Mn, up 29.6% over 4.0pp. The decline in EBITDA margin was largely due to a $6m the previous period, with Airtel Money customers representing settlement of indirect tax related to prior years. 17.3% of our total customers. Mobile money ARPU was up 3.0%, Capital expenditure during the period was $20 Mn, driven by the increase in transaction values and a higher contribution from merchant payments, cash out and recharge of mobile services through Airtel Money.
EBITDA amounted to $49 Mn, an increase of 29.3% in reported currency and 34.6% in constant currency. EBITDA margin was at 48.6%, an increase of 0.2 pp in constant currency.
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SECTION 7
DETAILED FINANCIAL AND RELATED INFORMATION
7.1 Summarized extracts from interim unaudited condensed consolidated financial statements prepared under IAS 34 for the second quarter and half year ended 30 September 2020 and audited consolidated financial statements for the year ended 31 March 2020 prepared in accordance with IFRS.
7.1.1 Consolidated Statement of Comprehensive Income Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Income Revenue 965 844 14.3% 1,815 1,640 11% Other income 5 7 (24%) 8 11 (21%) 970 851 14% 1,823 1,651 10% Expenses Netw ork operating expenses 174 156 11% 330 297 11% Access Charges 93 94 (2%) 177 184 (4%) License fee / spectrum usage charges 47 48 (1%) 95 94 2% Employee benefits expense 77 61 26% 142 111 28% Sales and marketing expenses 47 46 2% 86 83 4% Impairment loss/(reversal) on financial assets (2) (3) 21% 3 2 90% Other expenses 105 76 38% 190 166 15% Depreciation and amortisation 167 162 3% 328 319 3% 708 641 10% 1,351 1,256 8% Operating profit 262 210 25% 472 395 20%
Finance costs 94 90 5% 196 197 (1%) Finance income (2) (32) 94% (4) (49) 91% Non-operating income - 2 (100%) - (70) 100% Share of profit of associate (0) (0) (129%) (1) (0) (40%) Profit before tax 170 150 13% 281 316 (11%) Tax expense 82 54 53% 136 88 56%
Profit for the period 88 96 (9%) 145 228 (37%)
Profit before tax (as presented above) 170 150 13% 281 316 (11%) Add: Exceptional items (net) 7 3 92% 7 (46) 114% Underlying profit before tax 177 153 15% 288 270 7%
Profit after tax (as presented above) 88 96 (9%) 145 228 (37%) Add: Exceptional items (net) 4 (11) 136% (3) (74) 96% Underlying profit after tax 92 85 7% 142 154 (8%) Exceptional items are included within their respective heads
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7.1.2 Consolidated Statement of Comprehensive Income Amount in US$ Mn, except ratios Quarter Ended Half Year Ended Particulars Y-on-Y Y-on-Y Sep-20 Sep-19 Sep-20 Sep-19 Change Change Other comprehensive income ('OCI') Items to be reclassified subsequently to profit or loss: Net gain/(loss) due to foreign currency translation differences 39 7 428% 29 (24) 221% Net( loss)/gain on net investments hedge (8) 7 (209%) (11) 7 (257%) Net loss on cash flow hedge - (1) 100% - (3) 100% 31 13 145% 18 (20) 190% Items not to be reclassified subsequently to profit or loss: Re-measurement loss on defined benefit plans (1) (0) (39%) (1) (1) 28% Tax credit on above 0 - 0 0 (90%) (1) (0) (39%) (1) (1) 28%
Other comprehensive income/(loss) for the period 30 13 141% 17 (21) 183%
Total comprehensive income for the period 118 109 9% 162 207 (22%)
Profit for the period attributable to: 88 96 (9%) 145 228 (37%) Ow ners of the Company 70 90 (21%) 112 215 (48%) Non-controlling interests 18 6 207% 33 13 162% Other comprehensive income/(loss) for the period attributable to: 30 13 143% 17 (21) 181% Ow ners of the Company 32 13 154% 19 (21) 191% Non-controlling interests (2) (0) (352%) (2) (0) (286%) Total comprehensive income for the period attributable to: 118 109 8% 162 207 (22%) Ow ners of the Company 102 103 (1%) 131 194 (33%) Non-controlling interests 16 6 152% 31 13 151%
Earnings per share Basic 1.9c 2.4c 3.0c 6.3c Diluted 1.9c 2.4c 3.0c 6.3c
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7.1.3 Consolidated Summarized Financial Position Amount in US$ Mn As at As at Particulars Sep 30, 2020 Mar 31, 2020 Assets Non-current assets Property, plant and equipment 1,941 1,832 Capital w ork-in-progress 183 259 Right of use assets 730 639 Goodw ill 3,960 3,943 Other intangible assets 482 456 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 0 1 Income tax assets (net) 28 39 Deferred tax assets (net) 314 333 Other non-current assets 102 112 7,782 7,654 Current assets Inventories 6 3 Financial Assets - Derivative instruments 6 10 - Trade receivables 138 132 - Cash and cash equivalents 1,072 1,010 - Other Bank balance 7 6 - Balance held under mobile money trust 376 295 - Others 62 66 Other current assets 163 149 1,830 1,671 Total Assets 9,612 9,325
Current liabilities Financial Liabilities - Borrow ings 359 235 - Current maturities of long-term borrow ings 1,103 429 - Lease liabilities 222 199 - Derivative instruments 4 3 - Trade payables 431 416 - Mobile money w allet balance 372 292 - Others 298 461 Provisions 72 70 Deferred revenue 134 124 Current tax liabilities (net) 110 144 Other current liabilities 138 115 3,243 2,488 Net current liability (1,413) (817)
Non-current liabilities Financial Liabilities - Borrow ings 1,859 2,446 - Lease liabilities 1,008 970 - Derivative instruments 4 4 - Others 63 15 Provisions 25 23 Deferred tax liabilities (net) 66 69 Other non-current liabilities 26 29 3,051 3,556 Total liabilities 6,294 6,044
Net Assets 3,318 3,281 Equity Share capital 3,420 3,420 Retained earnings 2,803 2,805 Other reserve (2,816) (2,837) Equity attributable to ow ners of the company 3,407 3,388 Non-controlling interests ('NCI') (89) (107) Total equity 3,318 3,281
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7.1.4 Consolidated Summarized Statement of Cash Flows
Half Year Ended Particulars Sep-20 Sep-19 Cash flow s from operating activities Profit before tax 281 316 Adjustments for - Depreciation and amortisation 328 319 Finance income (4) (49) Finance cost 196 197 Share of profit of associate (1) (0) Non-operating adjustments - (70) Other adjustments 5 (7) Operating cash flow before changes in w orking capital 805 707 Changes in w orking capital Increase in trade receivables (0) (12) (Increase)/decrease in inventories (3) 0 Decrease in trade payables (7) (20) Increase in mobile money w allet balance 80 27 (Increase)/decrease in provisions (0) 1 Increase in deferred revenue 9 8 Decrease in income received in advance (1) (8) Decrease in other financial and non financial liabilities (0) (9) Increase in other financial and non financial assets (21) (2) Net cash generated from operations before tax 862 692 Income taxes paid (118) (69)
Net cash generated from operating activities (a) 744 623 Cash flow s from investing activities Purchase of property, plant and equipment and capital w ork-in-progress (359) (349) Purchase of intangible assets (8) (35) Interest received 10 14 Net cash used in investing activities (b) (357) (370) Cash flow s from financing activities Proceeds from issue of shares to Airtel Africa plc shareholders - 680 Proceeds from sale of shares to non-controlling interests - 3 Acquisition of non-controlling interests (0) - Purchase of ow n shares by ESOP trust (0) - Payment of share issue expenses - (16) Proceeds from borrow ings 253 144 Repayment of borrow ings (121) (319) Repayment of lease liabilities (109) (89) Dividend paid to non-controlling interests (6) - Dividend paid to Company's shareholders (113) - Interest and other finance charges paid (167) (176) Share stabilisation proceeds - 7 Proceeds from cancellation of derivatives - 122 Net cash (used) in/generated from financing activities (c) (263) 356 Increase in cash and cash equivalents during the period (a+b+c) 124 609 Currency translation differences relating to cash and cash equivalents (3) 3
Cash and cash equivalents as at beginning of the period 1,087 870 Cash and cash equivalents as at end of the period (1) 1,208 1,482
(1) Includes balance held under mobile money trust of USD 376 Mn (September 2019: USD 265 Mn) 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 34 Amortization (EBITDA) Underlying Operating Expenses Expenses Page 35
Finance Cost (net) Finance Cost and Finance Income Page 35
Profit / (loss) before tax (before exceptional item) Profit / (Loss) Before Tax Page 35
Profit / (loss) after tax (before exceptional item) Profit / (loss) after tax Page 35
Cash Profit from Operations before Derivative & Profit from operating activities Page 36 Exchange (Gain)/Loss Effective tax rate and adjusted Effective tax rate Reported Tax Rate Page 36
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
Half year ended Particulars UoM Sep-20 Sep-19 Operating profit US$ Mn 472 395 Add: Depreciation and amortization US$ Mn 328 319 Charity and donation US$ Mn 5 3 Exceptional items US$ Mn 7 2 EBITDA US$ Mn 812 719 Revenue US$ Mn 1,815 1,640 EBITDAMargin (%) US$ Mn 44.7% 43.9%
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7.2.1.2: Underlying Operating Expenditure
Half year ended Particulars UoM Sep-20 Sep-19 Expenses US$ Mn 1,351 1,256 Less: Access charges US$ Mn (177) (184) Depreciation and amortization US$ Mn (328) (319) Charity and donation US$ Mn (5) (3) Exceptional items US$ Mn (7) (2) Underlying Operating Expenditure US$ Mn 834 748
7.2.1.3: Finance Cost (net)
Half Year Ended Particulars UOM Sep-20 Sep-19 Finance cost US$ Mn 196 197 Finance income US$ Mn (4) (49) Exceptional items US$ Mn 0 0
Finance cost (net) US$ Mn 191 148
7.2.1.4: Profit / (Loss) Before Tax
Half year ended Particulars UoM Sep-20 Sep-19 Profit / (loss) for the year Before Tax US$ Mn 281 316 Exceptional items US$ Mn 7 (46) Profit / (loss) before tax (before exceptional item) US$ Mn 288 270
7.2.1.5: Profit / (Loss) After Tax
Half year ended Particulars UoM Sep-20 Sep-19 Profit / (loss) after tax US$ Mn 145 228 Exceptional items US$ Mn (3) (74) Profit / (loss) after tax (before exceptional item) US$ Mn 142 154
7.2.1.6: Operating Free Cash Flow
Half year ended Particulars UoM Sep-20 Sep-19 Net Cash Generated from Operating Activities US$ Mn 744 623 Add: Income tax paid US$ Mn 118 69 Cash Generation from Operation before tax US$ Mn 862 692 Less: Changes in working capital US$ Mn 56 (15) Operating cash flow before changes in working capital US$ Mn 805 707
Other adjustments US$ Mn (5) 7 Charity and donation US$ Mn 5 3 Exceptional items US$ Mn 7 2 EBITDA US$ Mn 812 719 Less: Capital Expenditure US$ Mn (216) (246) Operating Free Cash Flow US$ Mn 596 473
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7.2.1.7: Cash Profit from Operations before Derivative and Exchange Fluctuation
Half Year Ended Particulars UOM Sep-20 Sep-19 Operating profit US$ Mn 472 395 Finance cost (net) US$ Mn (191) (148) Depreciation and Amortisation US$ Mn 328 319 Derivatives and exchange (gain)/loss US$ Mn 35 (9) Exceptional items US$ Mn 7 3 Cash Profit from Operations before Derivative and US$ Mn 651 559 Exchange Fluctuation
7.2.1.8: Effective tax rate and adjusted Effective tax rate
Half year ended Sep-20 Sep-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 281 136 48.5% 316 88 27.7%
Adjusted for : Exceptional Items (provided below ) US$ Mn 7 10 (46) 28 Foreign exchange rate movements for non-DTA US$ Mn 36 (28) operating companies & holding companies One-off tax adjustment US$ Mn 6 1 Effective tax rate US$ Mn 324 152 46.9% 242 117 48.2% Deferred tax trigerred during the year US$ Mn (10) (27) Adjusted effective tax rate US$ Mn 324 142 43.9% 242 90 37.0% Exceptional items 1. Deferred tax asset recognition US$ Mn (10) (27) 2. Netw ork modernisation US$ Mn 19 (1) 3. Employee restructuring US$ Mn 7 4. Reversal of indemnities US$ Mn (72) 5. Share issue and IPO related expenses US$ Mn 6 6. Finance Cost US$ Mn 1 Total US$ Mn 7 (10) (46) (28)
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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 Sep 30, 2020 Mar 31, 2020 Long term borrow ing, net of current portion 1,839 2,424 Short-term borrow ings and current portion of long-term borrow ing 1,462 664
Less: Cash and Cash Equivalents 1,072 1,010 Net Debt excluding Lease Obligations 2,229 2,078 Lease Obligations 1,230 1,169
Net Debt including Lease Obligations 3,459 3,247
8.2 Consolidated Schedule of Net Finance Cost (in Reported Currency)
Amount in US$ Mn Quarter Ended Half Year Ended Particulars Sep-20 Sep-19 Sep-20 Sep-19
Interest on borrow ings and Finance charges 48 55 94 108 Interest on Lease Obligation 33 32 67 64 Investment (income)/ loss (2) (9) (5) (15) Finance cost excluding Derivatives and Forex 79 78 156 157 Add : Derivatives and exchange (gain)/ loss 14 (12) 35 (9)
Finance cost (net of Derivatives and Forex) 92 66 191 148
8.3 Consolidated Schedule of Operating Expenses (in Constant Currency)
Amount in US$ Mn Quarter Ended Half Year Ended Particulars Sep-20 Sep-19 Sep-20 Sep-19
Access charges 93 90 178 175 Cost of goods sold 48 32 85 61 License fee / spectrum charges (revenue share) 47 46 95 91 Netw ork operations costs 174 145 332 274 Employee benefits expense 72 64 138 115 Selling, general and adminstration expense 99 82 190 178 Operating Expenses 533 460 1,019 895
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 Half Year Ended Particulars Sep-20 Sep-19 Sep-20 Sep-19 Depreciation 137 126 276 248 Amortization 29 20 52 40
Depreciation and Amortization 166 146 328 288 Closing currency rates as on March 31, 2020 considered for Constant currency.
8.5 Consolidated Schedule of Operating Expenses (in Reported Currency)
Amount in US$ Mn Quarter Ended Half Year Ended Particulars Sep-20 Sep-19 Sep-20 Sep-19
Access charges 93 94 177 184 Cost of goods sold 48 34 85 65 License fee / spectrum charges (revenue share) 47 48 95 94 Netw ork operations costs 174 152 331 287 Employee benefits expense 72 65 138 119 Selling, general and adminstration expense 99 86 190 185
Operating Expenses 534 480 1,017 934
8.6 Consolidated Schedule of Depreciation and Amortization before exceptional item (in Reported Currency)
Amount in US$ Mn Quarter Ended Half Year Ended Particulars Sep-20 Sep-19 Sep-20 Sep-19 Depreciation 138 131 276 259 Amortization 29 21 52 42
Depreciation and Amortization 167 152 328 300
8.7 Consolidated Schedule of Income Tax before exceptional item (in Reported Currency) Amount in US$ Mn Quarter Ended Half Year Ended Particulars Sep-20 Sep-19 Sep-20 Sep-19 Current tax expense 55 39 102 71 Deferred tax expense / (income) 30 28 44 44
Income tax expense 85 68 146 116
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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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Revenue 965 851 899 883 844 Access charges 93 84 94 98 94 Cost of goods sold 48 37 39 38 34 Net revenues 824 729 766 747 715 Operating Expenses (Excl Access Charges, cost of 345 310 321 308 302 goods sold and License Fee) Licence Fee 47 48 51 44 48 EBITDA 437 375 397 399 372 Cash Profit from operations before Derivative and 357 295 325 326 293 Exchange Fluctuations EBIT 269 210 244 245 219 Share of results of associate (0) (0) (0) 0 (0) Profit before Tax 177 111 97 167 153 Profit after Tax (before exceptional items) 92 50 70 73 85 Non Controlling Interest (before exceptional items) 17 12 12 10 6 Net Income (before exceptional items) 75 38 57 62 79 Exceptional items (net) 4 (7) (7) (30) (11) Profit after Tax (after exceptional items) 88 57 77 103 96 Non Controlling Interest 18 15 12 13 6 Net Income 70 42 65 90 90 Capex 149 66 246 150 147 Operating Free Cash Flow (EBITDA - Capex) 287 309 151 249 225 Total Capital Employed 6,777 6,636 6,528 6,595 6,576
Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 As a % of Revenue Access charges 9.6% 9.9% 10.5% 11.1% 11.2% Cost of goods sold 5.0% 4.4% 4.3% 4.3% 4.1% Net revenues 85.4% 85.7% 85.2% 84.6% 84.7% Operating Expenses (excluding access charges, 35.7% 36.5% 35.7% 34.9% 35.8% cost of goods sold and license fee) Licence Fee 4.9% 5.6% 5.7% 5.0% 5.7% EBITDA 45.3% 44.1% 44.1% 45.2% 44.1% Cash Profit from operations before Derivative and 37.0% 34.6% 36.1% 36.9% 34.7% Exchange Flucations EBIT 27.8% 24.7% 27.2% 27.7% 25.9% Share of results of associate (0.0%) (0.0%) (0.0%) 0.0% (0.0%) Profit before Tax 18.3% 13.1% 10.8% 18.9% 18.1% Profit after Tax (before exceptional items) 9.5% 5.9% 7.8% 8.2% 10.0% Non Controlling Interest (before exceptional items) 1.7% 1.4% 1.4% 1.2% 0.7% Net Income (before exceptional items) 7.7% 4.5% 6.4% 7.0% 9.3% Exceptional items (net) 0.4% (0.8%) (0.8%) (3.4%) (1.3%) Profit after Tax (after exceptional items) 9.1% 6.7% 8.6% 11.6% 11.3% Non Controlling Interest 1.8% 1.8% 1.4% 1.5% 0.7% Net Income 7.3% 4.9% 7.2% 10.1% 10.6%
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9.1.2 Consolidated Statement of Operations: (in Constant Currency)
Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Revenue 963 856 870 845 805 Access charges 93 85 91 93 90 Cost of goods sold 48 37 37 36 32 Net revenues 822 733 742 716 683 Operating Expenses (Excl Access Charges, cost of 343 312 313 297 290 goods sold and License Fee) Licence Fee 47 48 50 43 46 EBITDA 436 377 382 380 353 EBIT 269 211 233 231 205 Capex 149 66 246 150 147 Operating Free Cash Flow (EBITDA - Capex) 287 310 136 230 206
Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 As a % of Revenue Access charges 9.7% 9.9% 10.4% 11.1% 11.2% Cost of goods sold 5.0% 4.4% 4.3% 4.3% 4.0% Net revenues 85.4% 85.7% 85.3% 84.7% 84.8% Operating Expenses (excluding access charges, 35.7% 36.5% 36.0% 35.2% 36.1% cost of goods sold and license fee) Licence Fee 4.9% 5.6% 5.8% 5.1% 5.8% EBITDA 45.3% 44.0% 43.9% 44.9% 43.8% EBIT 27.9% 24.7% 26.8% 27.3% 25.5%
Closing currency rates as on March 31, 2020 considered for Constant currency. Reported currency rates considered for Capex.
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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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 377 341 377 355 327 EBITDA 204 182 209 194 174 EBITDA / Revenue 54.2% 53.3% 55.5% 54.7% 53.1% EBIT 141 130 163 146 129 Capex 67 30 145 64 62 Operating Free Cash Flow (EBITDA - Capex) 137 152 64 130 112
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 379 343 359 334 307 EBITDA 205 183 199 183 163 EBITDA / Revenue 54.2% 53.3% 55.5% 54.7% 53.1% EBIT 142 130 154 138 121 Capex 67 30 145 64 62 Operating Free Cash Flow (EBITDA - Capex) 138 153 54 119 101 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 355 305 310 313 301 EBITDA 163 129 125 127 123 EBITDA / Revenue 46.0% 42.4% 40.3% 40.5% 40.7% EBIT 110 74 70 70 65 Capex 62 19 61 61 30 Operating Free Cash Flow (EBITDA - Capex) 101 110 64 66 93
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 358 306 299 297 284 EBITDA 164 130 120 120 114 EBITDA / Revenue 45.8% 42.3% 40.2% 40.2% 40.2% EBIT 110 74 67 65 59 Capex 62 19 61 61 30
Operating Free Cash Flow (EBITDA - Capex) 102 110 60 59 84 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 236 209 215 218 217 EBITDA 73 74 70 82 76 EBITDA / Revenue 30.8% 35.1% 32.7% 37.5% 34.9% EBIT 23 25 24 32 29 Capex 20 16 40 24 54 Operating Free Cash Flow (EBITDA - Capex) 53 58 31 57 22
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 230 211 215 217 216 EBITDA 71 74 70 81 76 EBITDA / Revenue 30.9% 35.0% 32.7% 37.5% 35.0% EBIT 23 24 24 32 29 Capex 20 16 40 24 54 Operating Free Cash Flow (EBITDA - Capex) 51 58 31 57 21 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 891 799 844 826 790 EBITDA 392 345 366 363 335 EBITDA / Revenue 44.0% 43.2% 43.3% 43.9% 42.4% EBIT 228 192 220 210 186 Capex 147 64 240 145 145 Operating Free Cash Flow (EBITDA - Capex) 245 281 125 217 189
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 889 803 816 791 754 EBITDA 392 347 351 345 317 EBITDA / Revenue 44.1% 43.1% 43.0% 43.6% 42.0% EBIT 229 192 209 198 174 Capex 147 64 240 145 145 Operating Free Cash Flow (EBITDA - Capex) 245 283 111 200 172 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 377 341 377 354 326 EBITDA 204 182 209 194 172 EBITDA / Revenue 54.2% 53.3% 55.5% 54.7% 52.9% EBIT 142 130 163 146 127 Capex 67 30 145 64 62
Operating Free Cash Flow (EBITDA - Capex) 137 152 64 130 110
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In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 378 343 359 333 306 EBITDA 205 183 199 182 162 EBITDA / Revenue 54.2% 53.3% 55.5% 54.7% 52.9% EBIT 142 130 154 137 120 Capex 67 30 145 64 62 Operating Free Cash Flow (EBITDA - Capex) 138 153 54 118 99 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 298 264 268 272 263 EBITDA 128 103 100 101 99 EBITDA / Revenue 43.1% 38.9% 37.2% 37.1% 37.6% EBIT 76 50 46 45 42 Capex 60 18 56 57 29 Operating Free Cash Flow (EBITDA - Capex) 68 85 44 44 70
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 301 266 259 258 248 EBITDA 129 103 96 95 92 EBITDA / Revenue 42.9% 38.8% 37.0% 36.8% 37.1% EBIT 76 50 44 42 38 Capex 60 18 56 57 29 Operating Free Cash Flow (EBITDA - Capex) 69 85 40 38 63 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 218 196 200 202 203 EBITDA 60 62 58 68 64 EBITDA / Revenue 27.5% 31.4% 28.7% 33.7% 31.4% EBIT 10 13 11 18 16 Capex 20 16 39 24 54 Operating Free Cash Flow (EBITDA - Capex) 40 46 18 44 9
In Constant Currency Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 213 197 200 201 202 EBITDA 59 62 58 68 63 EBITDA / Revenue 27.6% 31.3% 28.7% 33.7% 31.4% EBIT 10 13 11 18 16 Capex 20 16 39 24 54 Operating Free Cash Flow (EBITDA - Capex) 39 46 18 43 9 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 100 81 83 82 78 EBITDA 49 39 39 40 38 EBITDA / Revenue 48.7% 48.5% 47.3% 49.0% 48.2% EBIT 47 37 36 39 37 Capex 2 2 5 4 2 Operating Free Cash Flow (EBITDA - Capex) 47 37 34 36 36
In Constant Currency
Amount in US$ Mn, except ratios Quarter Ended Particulars Sep-20 Jun-20 Mar-20 Dec-19 Sep-19
Revenue 100 81 81 79 74 EBITDA 48 39 38 39 36 EBITDA / Revenue 48.6% 48.5% 47.5% 49.2% 48.4% EBIT 46 37 36 37 35 Capex 2 2 5 4 2 Operating Free Cash Flow (EBITDA - Capex) 47 37 33 35 34
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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Customer Base 000's 116,371 111,461 110,604 107,140 103,881 Net Additions 000's 4,910 857 3,464 3,258 4,211 Monthly Churn % 5.3% 5.7% 5.3% 5.2% 4.5% Average Revenue Per User (ARPU) US$ 2.8 2.6 2.7 2.7 2.6 Voice Voice Revenue US$ Mn 517 456 494 484 464 Minutes on the netw ork Mn 80,375 71,891 68,870 65,086 60,795 Voice Average Revenue Per User (ARPU) US$ 1.5 1.4 1.5 1.5 1.5 Voice Usage per customer min 235 218 211 206 199 Data Data Revenue US$ Mn 283 267 245 232 215 Data Customer Base 000's 39,596 36,972 35,443 32,887 31,910 As % of Customer Base % 34.0% 33.2% 32.0% 30.7% 30.7% Total MBs on the netw ork Mn MBs 293,919 279,541 219,015 189,798 162,394 Data Average Revenue Per User (ARPU) US$ 2.5 2.5 2.4 2.4 2.3 Data Usage per customer MBs 2,576 2,607 2,145 1,967 1,748 Mobile Money Transaction Value US$ Mn 11,637 9,038 8,031 8,001 7,442 Transaction Value per Subs US$ 199 164 155 166 166 Mobile Money Revenue US$ Mn 100 81 81 79 74 Active Customers 000's 20,120 18,529 18,294 16,634 15,521 Mobile Money ARPU US$ 1.7 1.5 1.6 1.6 1.7 Network and Coverage Netw ork tow ers Nos 24,246 23,471 22,909 22,253 21,936 Owned towers Nos 4,561 4,569 4,548 4,454 4,461 Leased towers Nos 19,685 18,902 18,361 17,799 17,475 Of w hich Mobile Broadband tow ers Nos 22,250 21,171 20,378 19,133 18,274 Total Mobile Broadband Base stations Nos 63,705 51,963 47,082 43,174 40,187 Data Capacity TB/day 10,253 8,371 7,572 6,780 6,146
Revenue Per site Per Month US$ 13,408 12,257 12,809 12,718 12,361 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Customer Base 000's 44,054 42,513 41,757 39,855 39,512 Net Additions 000's 1,541 757 1,902 343 2,044 Monthly Churn % 6.1% 5.7% 5.8% 6.8% 4.7% Average Revenue Per User (ARPU) US$ 2.9 2.7 2.9 2.8 2.7 Voice Voice Revenue US$ Mn 217 198 222 205 188 Minutes on the netw ork Mn 20,867 19,275 20,447 18,812 15,687 Voice Average Revenue Per User (ARPU) US$ 1.7 1.6 1.8 1.7 1.6 Voice Usage per customer min 161 154 166 158 136 Data Data Revenue US$ Mn 135 122 114 109 99 Data Customer Base 000's 19,003 17,334 16,715 15,234 15,471 As % of Customer Base % 43.1% 40.8% 40.0% 38.2% 39.2% Total MBs on the netw ork Mn MBs 147,471 139,285 108,561 96,313 80,247 Data Average Revenue Per User (ARPU) US$ 2.5 2.4 2.4 2.4 2.2 Data Usage per customer MBs 2,743 2,752 2,252 2,105 1,784 Network and Coverage Netw ork tow ers Nos 10,347 9,802 9,352 8,924 8,878 Owned towers Nos 199 204 200 177 261 Leased towers Nos 10,148 9,598 9,152 8,747 8,617 Of w hich Mobile Broadband tow ers Nos 10,002 9,326 8,796 8,093 7,695 Total Mobile Broadband Base stations Nos 30,091 19,258 15,788 13,865 13,209 Data Capacity TB/day 5,245 3,489 2,980 2,486 2,343
Revenue Per site Per Month US$ 12,500 11,904 13,060 12,491 11,760 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Customer Base 000's 51,265 48,757 48,634 47,366 45,007 Net Additions 000's 2,508 123 1,268 2,359 1,955 Monthly Churn % 4.5% 5.7% 4.7% 3.8% 3.8% Average Revenue Per User (ARPU) US$ 2.4 2.1 2.1 2.2 2.2 Voice Voice Revenue US$ Mn 171 144 147 149 146 Minutes on the netw ork Mn 51,335 45,107 41,049 39,177 38,290 Voice Average Revenue Per User (ARPU) US$ 1.1 1.0 1.0 1.1 1.1 Voice Usage per customer min 342 311 285 284 290 Data Data Revenue US$ Mn 89 86 79 77 69 Data Customer Base 000's 14,924 14,041 13,322 12,903 12,142 As % of Customer Base % 29.1% 28.8% 27.4% 27.2% 27.0% Total MBs on the netw ork Mn MBs 115,048 110,172 85,983 74,285 66,644 Data Average Revenue Per User (ARPU) US$ 2.0 2.1 2.1 2.1 2.0 Data Usage per customer MBs 2,632 2,711 2,227 1,991 1,905 Network and Coverage Netw ork tow ers Nos 9,193 9,039 8,987 8,838 8,678 Owned towers Nos 2,544 2,535 2,499 2,475 2,421 Leased towers Nos 6,649 6,504 6,488 6,363 6,257 Of w hich Mobile Broadband tow ers Nos 8,039 7,880 7,809 7,542 7,386 Total Mobile Broadband Base stations Nos 22,567 22,071 21,162 20,340 19,564 Data Capacity TB/day 3,426 3,355 3,147 3,009 2,805
Revenue Per site Per Month US$ 13,025 11,264 11,156 11,261 10,937 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 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Customer Base 000's 21,052 20,190 20,213 19,919 19,362 Net Additions 000's 862 (23) 294 557 212 Monthly Churn % 5.5% 5.9% 6.0% 5.4% 5.8% Average Revenue Per User (ARPU) US$ 3.7 3.5 3.6 3.7 3.7 Voice Voice Revenue US$ Mn 131 117 127 133 132 Minutes on the netw ork Mn 8,173 7,509 7,373 7,097 6,818 Voice Average Revenue Per User (ARPU) US$ 2.1 1.9 2.1 2.3 2.3 Voice Usage per customer min 132 125 122 121 118 Data Data Revenue US$ Mn 59 58 51 47 47 Data Customer Base 000's 5,669 5,596 5,405 4,749 4,297 As % of Customer Base % 26.9% 27.7% 26.7% 23.8% 22.2% Total MBs on the netw ork Mn MBs 31,400 30,083 24,471 19,200 15,503 Data Average Revenue Per User (ARPU) US$ 3.5 3.6 3.3 3.5 3.7 Data Usage per customer MBs 1,889 1,882 1,601 1,429 1,202 Network and Coverage Netw ork tow ers Nos 4,706 4,630 4,570 4,491 4,380 Owned towers Nos 1,818 1,830 1,849 1,802 1,779 Leased towers Nos 2,888 2,800 2,721 2,689 2,601 Of w hich Mobile Broadband tow ers Nos 4,209 3,965 3,773 3,498 3,193 Total Mobile Broadband Base stations Nos 11,047 10,634 10,132 8,969 7,414 Data Capacity TB/day 1,582 1,527 1,445 1,285 999
Revenue Per site Per Month US$ 16,363 15,222 15,806 16,255 16,575 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- cost comprises of purchase price (including non-refundable duties progress and taxes but excluding any trade discounts and rebates), and any directly attributable cost. An item is recognised as an asset, if and only if, it is probable that the future economic benefits associated with the item will flow to Goodwill the Group and its cost can be measured reliably. PPE is initially recognised at cost. Goodwill represents the cost of the acquired businesses in excess
of the fair value of identifiable net assets acquired. Goodwill is not The initial cost of PPE comprises its purchase price (including non- amortised; however, it is tested for impairment and carried at cost refundable duties and taxes but excluding any trade discounts and less any accumulated impairment losses. The gains/ (losses) on rebates), and any directly attributable cost of bringing the asset to the disposal of a cash-generating unit (‘CGU’) include the carrying its working condition and location for its intended use. Further, it amount of goodwill relating to the CGU sold (in case goodwill has includes assets installed on the premises of customers as the been allocated to Group of CGUs; it is determined on the basis of associated risks, rewards and control remain with the Group. the relative fair value of the operations sold).
Goodwill is tested for impairment, at least annually or earlier, in Subsequent to initial recognition, PPE is stated at cost less case circumstances indicate that their carrying value may exceed accumulated depreciation and any impairment losses. When the recoverable amount (higher of fair value less costs of sell and significant parts of PPE are required to be replaced at regular the value -in- use). For the purpose of impairment testing, the intervals, the Group recognises such parts as separate component goodwill is allocated to a cash-generating-unit (‘CGU’) or group of of assets. When an item of PPE is replaced, then its carrying CGUs (‘CGUs’) which are expected to benefit from the acquisition- amount is de-recognised from the consolidated statement of related synergies and represent the lowest level within the entity financial position and cost of the new item of PPE is recognised. at which the goodwill is monitored for internal management
purposes, but not higher than an operating segment. A CGU is the The expenditures that are incurred after an item of PPE has been smallest identifiable group of assets that generates cash inflows ready to use, such as repairs and maintenance, are normally that are largely independent of the cash inflows from other assets charged to the consolidated statement of comprehensive income or group of assets. in the period in which such costs are incurred. However, in situations where the said expenditure can be measured reliably, Impairment occurs when the carrying value of a CGU/CGUs and is probable that future economic benefits associated with it will including the goodwill, exceeds the estimated recoverable amount flow to the Group, it is included in the asset’s carrying value or as of the CGU/CGUs. The recoverable amount of a CGU/CGUs is the a separate asset, as appropriate. higher of its fair value less costs to sell and its value in use. Value-
in-use is the present value of future cash flows expected to be Depreciation on PPE is computed using the straight-line method derived from the CGU/CGUs. over the estimated useful lives. Freehold land is not depreciated as it has an unlimited useful life. The Group has established the The total impairment loss of a CGU/CGUs is allocated first to estimated range of useful lives for different categories of PPE as reduce the carrying value of goodwill allocated to that CGU/CGUs follows: and then to the other assets of that CGU/CGUs - on pro-rata basis Asset Categories Years Period of lease or 10-20 years, of the carrying value of each asset. Leasehold improvement as applicable, w hichever is less Buildings 20 Other Intangible assets Plant and equipment - Netw ork equipment (including passive Identifiable intangible assets are recognised when the Group 3 - 25 infrastructure) controls the asset, it is probable that future economic benefits Computer equipment 3-5 attributed to the asset will flow to the Group and the cost of the Furniture & fixture and office equipment 1-5 asset can be measured reliably. Vehicles 3-5 The useful lives, residual values and depreciation method of PPE The intangible assets that are acquired in a business combination are reviewed, and adjusted appropriately, at-least as at each are recognised at fair value as on acquisition date. Other intangible reporting date so as to ensure that the method and period of assets are recognised at cost. These assets having a definite depreciation are consistent with the expected pattern of economic useful life are carried at cost less accumulated amortisation and benefits from these assets. The effect of any change in the any impairment losses. Amortisation is computed using the estimated useful lives, residual values and / or depreciation straight-line method over the expected useful life of intangible method are accounted prospectively, and accordingly, the assets. depreciation is calculated over the PPE’s remaining revised useful life. The cost and the accumulated depreciation for PPE sold, The Group has established the estimated useful lives of different scrapped, retired or otherwise disposed of are de-recognised from categories of intangible assets as follows: the consolidated statement of financial position and the resulting gains / (losses) are included in the consolidated statement of a. Licenses (including spectrum) comprehensive income within other expenses / other income. Acquired licenses and spectrum are amortised commencing from PPE in the course of construction is carried at cost, less any the date when the related network is available for intended use in accumulated impairment and presented separately as capital the relevant jurisdiction. The useful lives range from two to twenty- work-in-progress (CWIP) including capital advances in the five years. consolidated statement of financial position until capitalised. Such
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In addition, the Group also incurs a fee on licenses/spectrum that exercise price of a purchase option if the lessee is reasonably is calculated based on the revenue amount of the period. Such certain to exercise that option, and payments of penalties for revenue-share based fee is recognised as a cost in the terminating the lease, if the lease term reflects the lessee consolidated statement of comprehensive income when incurred. exercising that option. b. Software: Software are amortised over the period of the license, generally not exceeding three years. Subsequently, the lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is c. Other acquired intangible assets: Other acquired intangible a change in future lease payments including due to changes in CPI assets include the following: or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or when the lease Customer relationships: Over the estimated life of such contract is modified and the lease modification is not accounted relationships which ranges from one year to five years. for as a separate lease. The corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in The useful lives and amortisation method are reviewed, and profit or loss if the carrying amount of the related right-of-use asset adjusted appropriately, at least at each financial year end so as to has been reduced to zero. ensure that the method and period of amortisation are consistent with the expected pattern of economic benefits from these assets. Right-of-use assets are measured at cost comprising the amount The effect of any change in the estimated useful lives and / or of the initial measurement of lease liability, any lease payments amortisation method is accounted prospectively, and accordingly, made at or before the commencement date less any lease the amortisation is calculated over the remaining revised useful incentives received, any initial direct costs, and restoration costs. life. Subsequent to initial recognition, right-of-use assets are stated at Further, the cost of intangible assets under development includes cost less accumulated depreciation and any impairment losses the amount of spectrum allotted to the Group and related costs for and adjusted for certain re-measurements of the lease liability. which services are yet to be rolled out and are presented Depreciation is computed using the straight-line method from the separately in the consolidated statement of financial position. commencement date to the end of the useful life of the underlying asset or the end of the lease term, whichever is shorter. The estimated useful lives of right-of-use assets are determined on the Investment in Associates same basis as those of the underlying property and equipment.
An associate is an entity over which the Group has significant In the consolidated statement of financial position, the right-of-use influence. Significant influence is the power to participate in the assets and lease liabilities are presented separately. financial and operating policy decisions of the investee but is not control or joint control over those policies. When a contract includes lease and non-lease components, the Group allocates the consideration in the contract on the basis of Investment in associate is accounted for using equity method; from the relative stand-alone prices of each lease component and the the date on which the Group starts exercising significant influence aggregate stand-alone price of the non-lease components. over the associate. Short-term leases At each reporting date, the Group determines whether there is objective evidence that the investment is impaired. If there is such The Group has elected not to recognise right-of-use assets and evidence, the Group calculates the amount of impairment as the lease liabilities for short term leases that have a lease term of 12 difference between the recoverable amount of investment and its months or less. The Group recognises the lease payments carrying value. associated with these leases as an expense on a straight-line basis over the lease term. Leases b. Group as a lessor At inception of a contract, the Group assesses a contract as, or containing, a lease if the contract conveys the right to control the Whenever the terms of the lease transfer substantially all the risks use of an identified asset for a period of time in exchange for and rewards of ownership to the lessee, the contract is classified consideration. To assess whether a contract conveys the right to as a finance lease. All other leases are classified as operating control the use of an identified asset, the Group assesses whether leases. the contract involves the use of an identified asset, the Group has the right to obtain substantially all of the economic benefits from Amounts due from lessees under a finance lease are recognised use of the asset throughout the period of use; and the Group has as receivables at an amount equal to the net investment in the the right to direct the use of the asset. leased assets. Finance lease income is allocated to the periods so as to reflect a constant periodic rate of return on the net investment a. Group as a lessee outstanding in respect of the finance lease.
The Group recognises a right-of-use asset and a corresponding Rental income from operating leases is recognised on a straight- lease liability with respect to all lease agreements in which it is the line basis over the term of the relevant lease. Initial direct costs lessee in the consolidated statement of financial position. The incurred in negotiating and arranging an operating lease are added lease liability is initially measured at the present value of the lease to the carrying amount of the leased asset and recognised on a payments that are not paid at the commencement date, straight line basis over the lease term. discounted by using the rate implicit in the lease. If this rate cannot When a contract includes lease and non-lease components, the be readily determined, the Group uses its incremental borrowing Group applies IFRS 15 to allocate the consideration under the rate. Lease liabilities include the net present value of fixed contract to each component. payments (including in-substance fixed payments), variable lease payments that are based on consumer price index (‘CPI’), the
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The Group enters into ‘Indefeasible right to use’ (‘IRU’) transferred to the profit and loss within finance income / finance arrangements wherein the right to use the assets is given over the costs. substantial part of the asset life. However, as the title to the assets and the significant risks associated with the operation and iii. Net investment hedge maintenance of these assets remains with the Group, such arrangements are recognised as operating lease. The contracted The Group hedges its net investment in certain foreign price is recognised as revenue during the tenure of the agreement. subsidiaries. Accordingly, any foreign exchange differences on the Unearned IRU revenue received in advance is presented as hedging instrument (e.g. borrowings) relating to the effective deferred revenue within liabilities in the consolidated statement of portion of the hedge is recognised in other comprehensive income financial position. as foreign currency translation reserve (‘FCTR’) – within other components of equity, so as to offset the change in the value of Derivative financial instruments the net investment being hedged. The ineffective portion of the gain or loss on these hedges is immediately recognised in profit or Derivative financial instruments, including separated embedded loss. The amounts accumulated in equity are included in the profit derivatives that are not designated as hedging instruments in a and loss when the foreign operation is disposed or partially hedging relationship are classified as financial instruments at fair disposed. value through profit or loss. Such derivative financial instruments are initially recognised at fair value. They are subsequently Revenue measured at their fair value, with changes in fair value being 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 the Group has received or expects to receive in exchange of those Hedging activities products or services, net of any taxes / duties and discounts. When determining the consideration to which the Group is entitled for i. Fair value hedge providing promised products or services via intermediaries, the Group assesses whether the intermediary is a principal or agent in the onward sale to the end customer. To the extent that the Some of the Group’s entities use derivative financial instruments intermediary is considered a principal, the consideration to which (e.g. interest rate / currency swaps) to manage / mitigate their the Group is entitled is determined to be that received from the exposure to the risk of change in fair value of the borrowings. The intermediary. To the extent that the intermediary is considered an Group designates certain interest swaps to hedge the risk of agent, the consideration to which the Group is entitled is changes in fair value of recognised borrowings attributable to the determined to be the amount received from the customer; the hedged interest rate risk. The effective and ineffective portion of discount provided to the intermediary is recognised as a cost of changes in the fair value of derivatives that are designated and sale. qualify as fair value hedges are recorded in profit and loss within finance income / finance costs, together with any changes in the The Group has entered into certain multiple-element revenue fair value of the hedged liability that is attributable to the hedged arrangements which involve the delivery or performance of risk. If the hedge no longer meets the criteria for hedge accounting, multiple products, services or rights to use assets. At the inception the adjustment to the carrying amount of the hedged item is of the arrangement, all the deliverables therein are evaluated to amortised to profit or loss over the period to remaining maturity of determine whether they represent distinct performance the hedged item. obligations, and if so, they are accounted for separately. ii. Cash flow hedge Total consideration related to the multiple element arrangements is allocated to each performance obligation based on their relative Some of the Group’s entities use derivative financial instruments standalone selling prices. The stand-alone selling prices are (e.g. foreign currency forwards, options, swaps) to manage their determined based on the prices at which the Group sells exposure to foreign exchange and price risk. Further, the Group equipment and network services separately. designates certain derivative financial instruments (or its components) as hedging instruments for hedging the exchange Revenue is recognised when, or as, each distinct performance rate fluctuation risk attributable to either a recognised item or a obligation is satisfied. The main categories of revenue and the highly probable forecast transaction (‘Cash flow hedge’). The basis of recognition are as follows: effective portion of changes in the fair value of derivative financial instruments (or its components) that are designated and qualify as a. Service revenue cash flow hedges, are recognised in other comprehensive income and held as cash flow hedge reserve (‘CFHR’) – within other Service revenue is derived from the provision of components of equity. Any gains / (losses) relating to the telecommunication services and mobile money services to ineffective portion, are recognised immediately in profit or loss customers. The majority of the customers of the Group subscribe within finance income / finance costs. The amounts accumulated to the services on a pre-paid basis. in equity are re-classified to the profit and loss in the periods when the hedged item affects profit / (loss). Telecommunication service revenues mainly pertain to usage, subscription charges for voice, data, messaging and value added When a hedging instrument expires or is sold, or when a cash flow services and customer onboarding charges, which include hedge no longer meets the criteria for hedge accounting, any activation charges. cumulative gains / (losses) existing in equity at that time remains in equity and is recognised (on the basis as discussed in the above Telecommunication services (comprising voice, data and SMS) paragraph) when the forecast transaction is ultimately recognised are considered to represent a single performance obligation as all in the profit and loss. However, at any point of time, when a are provided over the Group’s network and transmitted as data forecast transaction is no longer expected to occur, the cumulative representing a digital signal on the network. The transmission gains / (losses) that were reported in equity is immediately consumes network bandwidth and therefore, irrespective of the nature of the communication, the customer ultimately receives
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access to the network and the right to consume network performance and position of the Group. This assessment covers bandwidth. the nature of the item being one-off or non-routine, whether the cause of occurrence was within the Group’s control or not and the Customers pay in advance for services of the Group, these cash scale of impact of that item on reported performance in amounts are recognised in deferred income on the consolidated accordance with the exceptional items policy. statement of financial position and transferred to the consolidated income statement when the service obligation has been To monitor the performance, the Group uses the following APMs: performed/when the usage of services becomes remote. ‘Underlying profit before tax’ representing profit before tax for the period excluding the impact of exceptional items, The Group recognises revenue from these services over time as ‘Underlying profit after tax’ representing profit after tax for the they are provided. Revenue is recognised based on actual units of period excluding the impact of exceptional items and tax on telecommunication services provided during the reporting period exceptional items. as a proportion of the total units of telecommunication services to be provided. Exceptional items refer to items of income or expense within the consolidated statement of comprehensive income which are of Subscription charges are recognised over the subscription pack such size, nature or incidence that their exclusion is considered validity period. Customer onboarding revenue is recognised upon necessary to explain the performance of the Group and improve successful onboarding of customer i.e. upfront. the comparability between periods. Reversals of previous exceptional items are also considered as exceptional items. When Revenues recognised in excess of amounts invoiced are classified applicable, these items include network modernisation, share as unbilled revenue. If amounts invoiced / collected from a issue expenses, restructuring costs, impairments, initial customer are in excess of revenue recognised, a deferred revenue recognition of deferred tax assets, impact of mergers etc. / advance income is recognised.
Service revenues also includes revenue from interconnection / Foreign currency transactions roaming charges for usage of the Group’s network by other operators for voice, data, messaging and signaling services. a. Functional and presentation currency These are recognised upon transfer of control of services being transferred over time. The items included in financial statements of each of the Group’s entities are measured using the currency of primary economic Revenues from long distance operations comprise of voice environment in which the entity operates (i.e. ‘functional services and bandwidth services (including installation), which are currency’). recognised on provision of services and over the period of The financial statements are presented in US Dollar which is the respective arrangements. functional and presentation currency of the company.
The Group has interconnect agreements with local and foreign b. Transactions and balances operators. This allows customers from either network to originate or terminate calls to each others’ network. Revenue is earned and Transactions in foreign currencies are initially recorded in the recognised as per bilateral agreements when other operators’ calls relevant functional currency at the rates prevailing at the date of are terminated to the Group’s network i.e. the service is rendered. the transaction.
As part of the mobile money services, the Group earns Monetary assets and liabilities denominated in foreign currencies commission from merchants for facilitating recharges, bill are translated into the functional currency at the closing exchange payments and other merchant payments. It also earns rate prevailing as at the reporting date with the resulting foreign commissions on transfer of monies from one customer wallet to exchange differences, on subsequent re-statement / settlement, another. Such commissions are recognised as revenue on recognised in the consolidated statement of comprehensive provision of these services by the Group. income within finance costs / finance income. Non-monetary assets and liabilities denominated in foreign currencies are Costs to obtain or fulfil a contract with a customer translated into the functional currency using the exchange rate The company has estimated that the historic average customer life prevalent, at the date of initial recognition (in case they are is longer than 12 months and believes that its churn rate provides measured at historical cost) or at the date when the fair value is the best indicator of anticipated average customer life and has determined (in case they are measured at fair value) – with the changed its policy on cost deferral recognition in these financial resulting foreign exchange difference, on subsequent re- statements. Accordingly, the company has deferred such costs statement / settlement, recognised in the profit and loss, except to over expected average customer life. the extent that it relates to items recognised in the other comprehensive income or directly in equity. b. Equipment sales The equity items denominated in foreign currencies are translated Equipment sales mainly pertain to sale of telecommunication at historical exchange rate. equipment and related accessories for which revenue is recognised when the control of equipment is transferred to the customer i.e. transferred at a point in time. c. Foreign operations
Alternative performance measures (APM)- Exceptional The assets and liabilities of foreign operations (including the items goodwill and fair value adjustments arising on the acquisition of foreign entities) are translated into US Dollar at the exchange rates Management exercises judgment in determining the adjustments prevailing at the reporting date whereas their statements of profit to apply to IFRS measurements in order to derive APMs which and loss are translated into US Dollar at monthly average provide additional useful information on the underlying trends, exchange rates and the equity is recorded at the historical rate.
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The resulting exchange differences arising on the translation are is recognised on temporary differences arising on investments in recognised in other comprehensive income and held in foreign subsidiaries and associate - unless the timing of the reversal of the currency translation reserve (‘FCTR’), a component of equity. On temporary difference can be controlled and it is probable that the disposal of a foreign operation (that is, disposal involving loss of temporary difference will not reverse in the foreseeable future. control), the component of other comprehensive income relating to that particular foreign operation is reclassified to profit or loss. Deferred tax assets, recognised and unrecognised, are reviewed at each reporting date and assessed for recoverability based on best estimates of future taxable profits. Income-taxes Deferred tax is determined using tax rates (and laws) that have The income tax expense comprises of current and deferred been enacted or substantively enacted by the reporting date and income tax. Income tax is recognised in the profit and loss, except are expected to apply when the related deferred income tax asset to the extent that it relates to items recognised in the same or a is realised or the deferred income tax liability is settled. different period, outside profit or loss, in other comprehensive income or directly in equity, in which case the related income tax Income tax assets and liabilities are off-set against each other and is also recognised accordingly. the resultant net amount is presented in the consolidated statement of financial position, if and only when, (a) the Group a. Current tax currently has a legally enforceable right to set-off the current income tax assets and liabilities, and (b) when it relate to income Current tax is calculated on the basis of the tax rates, laws and tax levied by the same taxation authority and where there is an regulations, which have been enacted or substantively enacted as intention to settle the current income tax balances on net basis. at the reporting date in the respective countries where the Group entities operate and generate taxable income. The payment made in excess / (shortfall) of the respective Group entities’ income tax Transactions with non-controlling interests obligation for the period are recognised in the consolidated statement of financial position under non-current income tax A change in the ownership interest of a subsidiary, without a assets / liabilities. change of control, is accounted for as a transaction with equity
holders. Any difference between the amount of the adjustment to Any interest, related to accrued liabilities for potential tax non-controlling interests and any consideration exchanged is assessments are not included in Income tax charge or (credit), but recognised in ‘transactions with NCI reserve’, within equity. are rather recognised within finance costs.
Provisions A provision is recognised for those matters for which the tax Provisions are recognised when the Group has a present determination is uncertain but it is considered probable that there obligation (legal or constructive) as a result of a past event, it is will be a future outflow of funds to a tax authority. The provisions probable that an outflow of resources will be required to settle the are measured at the best estimate of the amount expected to obligation, and the amount of the obligation can be reliably become payable or based on expected value approach, as estimated. applicable. The assessment is based on the judgement of tax Provisions are measured at the present value of the expenditures professionals within the company supported by previous expected to be required to settle the relevant obligation, using a experience in respect of such activities and in certain cases based pre-tax rate that reflects current market assessments of the time on specialist independent tax advice. value of money (if the impact of discounting is significant) and the
risks specific to the obligation. The increase in the provision due b. Deferred tax to un-winding of discount over passage of time is recognised within
finance costs. Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and Contingencies liabilities and their carrying values. However, deferred tax is not recognised if it arises from initial recognition of an asset or liability A disclosure for a contingent liability is made when there is a in a transaction other than a business combination that at the time possible obligation or a present obligation that may, but probably of the transaction affects neither accounting nor taxable profit or will not, require an outflow of resources. When there is a possible loss. Further, deferred tax liabilities are not recognised if they arise obligation or a present obligation in respect of which the likelihood from the initial recognition of goodwill. of outflow of resources is remote, no provision or disclosure is
made. Contingent assets are not recognised unless virtually Deferred tax assets are recognised only to the extent that it is certain and disclosed only where an inflow of economic benefits is probable that future taxable profit will be available against which probable. the temporary differences can be utilised. Moreover, deferred tax
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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.
EBITDA It is not a GAAP measure and is defined as operating profit before depreciation, amortisation, CSR cost and exceptional items.
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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 have 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 including revenue from tower operation services provided by the Group and excludes Airtel 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.
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
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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
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
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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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