Airtel’s Africa business reports net profit of $178 million in Q1FY23, a 25% on-year jump

Airtel’s Africa business reported a net profit of $178 million in the fiscal first quarter of 2023, a 25% on-year jump, but a 26% fall sequentially, due to higher costs and also barring of outgoing calls for customers who had not yet registered their National Identification Numbers in Nigeria.

Revenue for the quarter ended June 2022 rose 13%-on year and 2.8% sequentially in reported currency, to $1.257 billion, the company said Thursday. Average revenue per user (ARPU) was up 0.6% on quarter and 4.4% on year, at $2.9.

In a statement, Segun Ogunsanya, chief executive officer at Airtel Africa, said that the telco has improved its margins amid “strong earnings growth. I am also particularly pleased with our ongoing strengthening of the balance sheet which continued after the period ended, with early repayment of $450 million of debt at Group level”.

But the company said it faced headwinds from outbound voice call barring for customers who had not yet registered their National Identification Numbers in Nigeria and the loss of site sharing revenue in those operating companies where it recently sold towers. “Inflation is also having an impact on our cost base, particularly on energy costs, but our continued efficiency drives have ensured that we have still been able to increase our margins, albeit at a slightly slower rate,” the company said.

Airtel Africa’s net finance costs in the June 2022 quarter increased by 55% on-year and 34.8% sequentially to $151 million.

“Net finance costs increased by $54 million, as a result of $51 million higher foreign exchange and derivative losses and $6 million higher interest on lease obligations, partially offset by lower interest costs due to debt reduction (including the repayment of $505m bonds in March 2022),” the company said in its quarterly report.

The company’s net debt fell 13.5% on-year but increased 3.9% sequentially to $3.056 billion in the quarter ended June 2023.

“Our balance sheet has continued to be de-risked through a reduction of HoldCo debt to $1 billion, from $1.9 billion in the prior period; and the increased localisation of our debt into the OpCos, such that our HoldCo debt is significantly lower than gross OpCo debt of $3 billion (including lease obligations),” the company added.

Airtel Africa’s customer base across 14 markets in the continent rose 2.4% on-quarter and 8.9% on-year to 131.6 million, with 3.1 million net additions. The active mobile money base grew 19.7% on-year and 5.6% sequentially to 27.6 million, while mobile money ARPU grew 5.9% on-year and 5% on-quarter to $2.

The company, after receiving a full payment service bank (PSB) license in Nigeria, has started operations initially at selected retail touchpoints, and operations are now being expanded gradually across the country.

“This marks the beginning of our journey to revolutionise the financial services landscape in Nigeria, to help further digitise the Nigerian economy, and to help bank the unbanked by reaching the millions of Nigerians who do not currently have access to financial services by delivering current and savings accounts, payment and remittance services, debit and prepayment cards and more sophisticated services,” the company said.

Airtel’s Kenya unit has also announced on July 15 that it has purchased 60 MHz of additional spectrum of 2600 MHz band, which will support its 4G expansion for both mobile data and fixed wireless home broadband capability and will allow for future 5G rollout. Kenya is one of the largest markets by revenue for the company

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