Airtel Africa Plc’s revenue rose by 19.40 percent for the year ended March 2021, bolstered by strong contribution from its Nigeria operations as investors continue to swoop its shares on the optimism that the stellar performance will be sustained.
The telecommunications giant reported that its customer base was up 6.90 percent to 118.2 million with increased penetration across mobile data, but customer base growth has been slow due to sim registration restriction in Nigeria.
A breakdown of the top line shows revenue increased by 19.4 percent in constant currency for the year that ended March 2021 to $3.88 billion from $3.42 billion the previous year.
Voice revenue was up 11 percent to $2.08 billion in the year ended March 2021 from $1.97 billion the previous year.The double-digit growth in voice data was largely driven by network coverage and distribution expansion.
Also, data revenue spiked by 31.20 percent to $1.15 billion, largely driven by driven by 4G and fibre investments
The Nigerian operations have been pivotal to the Group’s success, contributing to earnings. Airtel Africa continues to leverage on the country’s growing young population that crave for consumption to underpin cash flows.
Interestingly, Nigeria alone accounts for 40 percent of Group revenue, with the proliferation of smartphones accelerating demand for voice data.
The coronavirus pandemic was boon for the telecoms giant as a lockdown imposed by the government to curb the virus underpinned data usage, thanks to a surge in video and teleconferencing.
Raghunath Mandava, chief executive officer of Airtel Africa, laid bare the company’s strategic plan for the mobile money business, adding that they will soon welcome two minority investors- The Rise Fund and Mastercard- in agreed transactions which value the segment at $2.65 billion.
“We have also agreed to sell more of our tower portfolio, yielding yet more cash for the business,” said Mandava.
“In these times, our purpose of transforming lives has never been more critical. It has always meant more than simply providing mobile and financial services; it is about our drive to create a sustainable futureThe combination of bringing connectivity to underpenetrated mobile markets and improving financial inclusion through banking the unbanked, across our territories of operation, together provide us with a sizeable runway of sustainable profitable growth potential, and one we remain very confident of delivering, ” adds Mandava.
The telecoms giant’s strong growth in mobile money was underpinned by increased distribution and product offering, and its products are increasingly making an inroad across the continent.
Network population coverage increased by 2.1 percent, reaching 76.1 percent. The distribution channels are expandingly sprawling, thanks to mix of exclusive and multi-brand outlets.
There are additional 15,000 kiosks and mini shops, taking the total to 37,800. Airtel money branches almost double to 10,000 plus, with more than 200,000 active outlets.
Airtel Africa is using its mobile money business to bring banking services to the unbanked, especially in the rural areas.
Some of the company’s innovative products include: merchant payments; bulk transfers; Top ups/recharges; bank to wallet/wallet to bank; international money transfers; micro loans and savings.
The world most unbanked African countries are: Morocco, with 71 percent of a population of 36.50 million unbanked; Egypt with 67 percent of a population of 102.30 million without a bank account; Nigeria, with 60 percent of a population of 200 million unbanked, and Kenya, with 44 percent of a population of 53.80 million without a bank account.
Airtel is making money from its core operations and it has enough cash left to cover finance cost as earning before interest and taxation and amortization (EBIDTA) increased by 25.20 percent to $1.79 billion at year end March 2021.
Operating profit was up 32.80 percent to $1.11 billion as at March 2021 from $901 million the previous year.
Notably, the company is sitting on a pile of cash, which means it has the financial strength to fund its expansion plans across Africa, settle debt, and pay divided to shareholders.
Operating free cash flow spiked by 34.90 percent on a reported currency basis to $1.17 billion as at the year ended March 2021, from $873 million the previous year.
Free cash flow followed the same growth trajectory as it spiked by 42.80 percent to $647 billion in the period under review from $453 billion as at March 2020.
Interestingly, the telecoms giant is efficient in converting sales to cash to generate higher revenue as cash margin increased to 30.15 percent as at year ended March 2021 from 25.51 percent the previous year.
Return on capital employed increased to 16.50 percent in the period under review from 14 percent the previous year; this means the company is efficient in generating profit from the capital that it has put to use,
Airtel Africa has enough earnings to cover interest expense and it has a strong balance sheet and working capital.
For instance, operating profit of $1.19 billion covers finance cost of $423 million 2.64 times, according to MoneyCentral calculations.
The company will reward its owners from distributable profit as the board of directors have approved final dividend of 2.50 cents per share, making the total dividend for full year 4.0 cents per share.