Airtel Africa Half Year Results Call

In its recent Half Year Results call for the period ending March 2025, Airtel Africa showcased strong performance with a 20% revenue growth in constant currency and a 13.5% increase in EBITDA, reaching $1.1 billion. Led by Sunil Taldar, the company announced a 9% hike in its final dividend despite facing currency devaluation challenges, particularly in Nigeria. Airtel Africa's focus on expanding its mobile money and enterprise segments, alongside strategic investments in network infrastructure, has contributed to this growth. The company's Refresh strategy aims to enhance customer experience and financial inclusion in a market with significant growth opportunity.

Key Takeaways

• Airtel Africa reported a 20% revenue growth in constant currency and a 13.5% EBITDA increase.
• The company launched a cost optimization initiative, leading to improved EBITDA margins of 46.5%.
• Airtel Africa is focusing on its Refresh strategy to enhance customer experience and financial inclusion.
• Mobile money customers grew by 13%, with transaction values up by 30%.
• The final dividend increased by 9%, and the interim dividend was declared at 2.6 cents per share.
• Operating free cash flow declined by 22% to $771 million, and leverage increased to 2.3x due to a rise in lease liabilities.
• Airtel Africa is prioritizing investment in network capacity and reducing dollar debt exposure.

Company Outlook

• Airtel Africa plans to maintain capital expenditure guidance of $725 million to $750 million for the current year.
• The company is committed to strengthening its balance sheet and continuing investments in its business.
• Airtel Africa is reducing foreign currency exposure and has repaid $809 million in foreign currency debt.

Bearish Highlights

• Operating free cash flow saw a 22% decline to $771 million.
• Increased leverage to 2.3x due to a $1.2 billion rise in lease liabilities from the ATC tower lease renewal.
• Margins declined to 45.8%.

Bullish Highlights

• Revenue growth in Nigeria accelerated to 36% in constant currency, driven by demand for data services.
• The mobile money ecosystem's annualized transaction value reached $128 billion.
• The enterprise segment is supported by the activation of the 2Africa submarine cable and data center construction.

Misses

• Despite revenue growth, the company faced challenges from currency devaluation, particularly in Nigeria.
• EBITDA margins saw a slight decline compared to previous margin levels.

Q&A Highlights

• The company is exploring an IPO for its mobile money business within the next four years, depending on market conditions.
• Fixed wireless services in Nigeria are contributing significantly to revenue growth.
• Airtel Africa is actively engaging with the Nigerian Communications Commission to seek price hikes to offset inflation pressures.

Airtel Africa's Half Year Results call demonstrated resilience amidst macroeconomic pressures, with significant revenue and EBITDA growth. The company's strategic focus on enhancing customer experience through its Refresh strategy and expanding its mobile money and enterprise segments has yielded strong customer growth. Despite challenges like currency devaluation in Nigeria, Airtel Africa has improved its EBITDA margins and reaffirmed its dividend policy, signaling confidence in its financial health and commitment to shareholders.

Investment in network capacity remains a priority, with over 2,800 new sites and 3,500 kilometers of fiber deployed last year. Airtel Africa's proactive approach to cost optimization and investments in renewable energy highlight its adaptability in a dynamic market. The company's performance in Nigeria, with accelerated service revenue growth, underscores its strong market position and potential for further expansion. Overall, Airtel Africa is well-positioned to capitalize on growing digital and financial service demands across Africa.

Full transcript – None (AAFRF) Q2 2025:

Operator: Good day, ladies and gentlemen and welcome to the Airtel Africa’s Half Year Results for year ended March 2025. [Operator Instructions] Please note that this call is being recorded… (continues with operator's and Sunil Taldar's remarks as detailed in the transcript).