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Airtel Africa Revenues Surge 16.40 percent Amidst COVID-19 Concerns

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Airtel Africa has generated more money from operations as operating leverage improved, while customer base growth was largely driven by expansion of its distribution network and the expansion of network infrastructure.

For the first nine months through September 2020, Airtel Africa’s sales spiked by 16.40 percent to $1.81 billion, thanks to gradual easing of the economy after several months of lockdown imposed by the government to contain the spread of the coronavirus.

A breakdown of the figure shows revenue growth was recorded across all the regions: Nigeria up 20.2 percent, East Africa up 21.9 percent and Francophone Africa up 4.4 percent.

Airtel Africa’s earnings before interest taxation, depreciation, and amortization (EBITDA), were up 19.30 percent in to $812 million as at September, thanks to revenue growth and efficiency in operating expenses.

Operating profit followed the similar growth trajectory as it increased by 28.30 percent to $472 million in the period under review from $395 million the previous year.

The telecoms giant is taking advantage of the continent’s underpenetrated mobile market, burgeoning young population, and unbanked population to magnify earnings.

The Group’s strategy is to invest in its network by expanding 4G coverage and building capacity to cater for the future needs of its customers and to continue providing them with high-speed data.

“The first half of our fiscal year included the peak impact of the COVID-19 pandemic in the countries where we operate, as lockdown measures were swiftly implemented to stem the initial spread of contagion,” said Raghunath Mandava, chief executive officer, Airtel Africa.

“In these unprecedented times, the telecoms industry has emerged as a key and essential service for these economies, allowing customers to work remotely, reduce their travels, keep them connected and allow access to affordable entertainment,” said Mandava.

Free cash flow was $319m, up by 52 percent largely due to the higher underlying EBITDA, $5m of reduced interest payments as a result of lower debt and $31m of lower capex partially offset by an increase of $49m in cash tax as a result of higher operating profit.

With improved leverage ratio as evidenced by a reduction in net debt to underlying EBITDA to 2.20 times from 2.30 times, Airtel Africa is not exposed to financial or bankruptcy risk.

The telecoms giant’s earnings cover its interest expense as times coverage ratio of 2.47 times is pretty much higher than the 2.50 times internationally accepted benchmark.

Airtel Africa has the ammunition in its entire arsenal to pay dividend, meet its obligation to creditors, and fund future expansion plans as free cash flow rose by 52 percent to $319 million.

The telecoms industry was the star performer in the just released GDP report by the National Bureau of Statistics (NBS), as operators benefitted from acceleration in data usage during the Covid-19 induced lockdown period.

The Board of the company has approved a new progressive dividend policy as a result of the continued strong business performance, significant opportunities to invest in future growth and the aim to continue to reduce leverage.

The company said the newly adopted dividend 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 (calculated as net debt to underlying EBITDA) falls below 2.0x.

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