Data and mobile money drive first half growth at Airtel Africa

Airtel Africa reported sustained growth across its voice data and mobile money operations in its interim results on Friday, as its customer base grew by 10.4% to 104 million.

The FTSE 250 company said its revenue was ahead 8.4% year-on-year for the six months ended 30 September, to $1.64bn (£1.28bn), with the board claiming second quarter growth accelerated to 9.8%.

In constant currency terms, revenue was 11.4% in the first half and 12.6% in the second quarter, which Airtel said was the seventh consecutive quarter of double-digit constant currency growth.

It explained that the constant currency revenue growth of 11.4% was driven by double-digit growth in Nigeria and East Africa, partially offset by a slight decrease in its rest of Africa geography.

Growth was said to be “broad based” across all services, with revenue in voice, data and mobile money up by 3.2%, 37.8% and 46.5% respectively.

Airtel Africa’s reported underlying EBITDA was $719m for the first half, up 10.9%, while constant currency underlying EBITDA growth was 13.7% over the same period.

The company’s underlying EBITDA margin in reported currency was 43.9% in the first half - an increase of 100 basis points - while there was an increase of 90 basis points in constant currency terms.

Its operating profit was up 8.6%, while free cash flow grew 28% to $237m, and earnings per share before exceptional items was 4.1 US cents with basic earnings per share standing at 6.3 cents.

Airtel’s net debt-to-EBITDA ratio was 2.3x, compared to 5.1x as at September 2018, with the board declaring an interim dividend of three cents per share.

“These figures underline the strength of our ability to consistently deliver growth across voice, data and mobile money,” said chief executive officer Raghunath Mandava.

“This performance underlines our ability to consistently grow in double digits, powered by our growth engines of data and Airtel Money growing at 37% and 46% respectively.

“This is the seventh quarter of double-digit growth with EBITDA margin expansion of over 90 basis points.”

Mandava said that in July, the company reached an important milestone as it crossed 100 million customers across its footprint.

He said that strong customer growth, aided by distribution expansion, was a “key driver” behind voice revenue growth.

“Our investments ahead of the industry in LTE network along with our simple and intuitive customer journeys have helped grow data consumption by 81% and data revenue growth by 37.8%.

“Over the last six months we launched 4G services in Democratic Republic of Congo and Niger, and 4G sites now account for 58% of total sites.

“Now we are ready to launch in Tanzania, thereby making 4G services available across all our 14 countries.”

Revenue in the mobile money business grew 46.5% in the first half, and just above 50% in the second quarter, which Mandava said was the result of “compelling customer propositions” and investments in Airtel’s exclusive franchise stores and Kiosks.

“We have also announced exciting partnerships with Mastercard, Ecobank and Finablr which we believe will help to further support our growth aspiration and drive financial inclusion.

“The business continues to show positive momentum and we are confident we will continue to deliver sustained growth across voice, data and mobile money, underpinning our medium-term aspirations for revenue and profitable growth.”

As at 1055 BST, shares in Airtel Africa were up 1.07% at 56.6p.