We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register to chat with like-minded investors on our interactive forums.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Airtel Africa Plc | LSE:AAF | London | Ordinary Share | GB00BKDRYJ47 | ORD USD0.50 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.40 | -1.28% | 107.60 | 107.60 | 108.10 | 107.90 | 107.60 | 107.90 | 10,086 | 08:02:33 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Radiotelephone Communication | 5.27B | 663M | 0.1764 | 6.18 | 4.1B |
From Apr 2019 to Apr 2024
TIDMAAF
RNS Number : 1392R
Airtel Africa PLC
25 October 2019
Airtel Africa plc
Half yearly results, ended 30 September 2019
25(th) October 2019
Airtel Africa reports a strong set of results with sustained growth across voice data and mobile money
Key Highlights
-- Customer base grew by 10.4% to 104 Mn -- Revenue increased by 8.4% to $ 1,640 Mn in H1 with Q2 growth accelerating to 9.8%
-- In constant currency terms, revenue grew 11.4% in H1 and 12.6% in Q2. This was the 7thconsecutive quarter of double-digit constant currency growth. 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 Rest of Africa
-- Growth was broad based across all services, with revenue in Voice, Data and Mobile Money up by 3.2%, 37.8% and 46.5% respectively
-- Reported underlying EBITDA was $ 719 Mn in H1, up 10.9%, while constant currency underlying EBITDA growth was 13.7% over the same period
-- Underlying EBITDA margin in reported currency was 43.9% in H1, an increase of 100 bps, while there was an
Hot Features
Premium
increase of 90 bps in constant currency terms
-- Operating profit increased 8.6%
-- Free cash flow was $ 237 Mn, up by 28% in H1
-- EPS before exceptional items was $ 4.1c and Basic EPS was $ 6.3c
-- Net debt to EBITDA was 2.3x, compared to 5.1x as of September 2018
-- The board declared an interim dividend of $ 3c per share.
Alternative Performance Measures GAAP Measures
-------------------------------------------------------------------
Description Sep-19 Sep-18 Reported Constant Description Sep-19 Sep-18 Reported
--------------------------- --------------------
$ Mn $ Mn Change Change $ Mn $ Mn Change
% % %
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
Revenue 1,640 1,513 8.4% 11.4% Revenue 1,640 1,513 8.4%
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
Underlying Operating
EBITDA 719 649 10.9% 13.7% Profit 395 364 8.6%
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
Underlying 100 Profit Before
EBITDA Margin 43.9% 42.9% bps 90 bps Tax 316 122 158.4%
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
Profit After
Free Cash Flow 237 185 28.0% Tax 228 204 11.9%
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
EPS before
exceptional Basic EPS
items ($ cents) 4.1 6.1 (32.7%) ($ cents) 6.3 15.5 (59.4%)
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
EPS before
exceptional Basic EPS
items ($ cents)-Restated ($ cents)-Restated
(1) 3.7 1.9 96.8% (1) 5.7 4.8 18.6%
--------------------------- ------- ------- --------- --------- -------------------- ------- ------- ---------
(1) In July 2019, following the announcement of the Initial Public Offering, the company issued 676,406,927 new shares. EPS has been restated considering all the shares as at 30(th) September 2019 had been issued on 1(st) April 2018 for like for like comparison. (2) For a reconciliation between GAAP Measures and Alternative Performance Measures, refer to section "Reconciliation between GAAP and alternative performance measures on page no 40. (3) The difference between reported currency and constant currency growth rates is on account of currency movements with reference to the US dollar rate.
Raghunath Mandava, Chief Executive Officer, commented on the trading update:
"These figures underline the strength of our ability to consistently deliver growth across voice, data and mobile money. In the first 6 months of this financial year, we delivered revenue growth of 11.4% in constant currency terms, with even higher underlying EBITDA growth as we continued to improve our operating leverage and tight focus on costs. 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 7th quarter of double-digit growth with EBITDA margin expansion of over 90 basis points.
In July we reached an important milestone as we crossed 100 million customers across our footprint. Our 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 6 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 our Mobile Money business grew 46.5% in H1 and just above 50% in Q2, as a result of compelling customer propositions and the investments in our 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."
Key Financial information
Description UoM Half Year ended Quarter ended
----------------------- -------- ---------------------------------------- ----------------------------------------
Sep-19 Sep-18 Reported Constant Sep-19 Sep-18 Reported Constant
Currency Currency Currency Currency
Change Change Change Change
% % % %
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
P&L Summary
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Revenue Mn 1,640 1,513 8.4% 11.4% 844 769 9.8% 12.6%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Expenses Mn (931) (881) 5.7% 8.8% (478) (443) 8.0% 11.1%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Underlying EBITDA Mn 719 649 10.9% 13.7% 372 332 12.2% 14.6%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying EBITDA 100
Margin % 43.9% 42.9% bps 90 bps 44.1% 43.2% 96 bps 79 bps
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation $
& Amortization Mn (300) (253) 18.6% 21.9% (152) (125) 21.7% 24.7%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating Exceptional $
Items Mn (22) (30) (26.9%) (24.8%) (10) (12) (19.4%) (17.5%)
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating Profit $
(1) Mn 395 364 8.6% 11.1% 210 194 8.5% 10.3%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Net finance costs Mn (148) (218) (32.0%) (31.7%) (66) (143) (53.7%) (53.5%)
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Non-Operating $
Exceptional Items Mn 69 - 0.0% 0.0% 6 - 0.0% 0.0%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Profit Before $
Tax(2) Mn 316 122 158.4% 172.1% 150 42 258.5% 279.9%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Tax Mn (116) (64) 81.6% 99.0% (68) (18) 273.2% 287.4%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Tax - Exceptional $
items Mn 28 147 (81.2%) (81.1%) 14 30 (53.8%) (53.3%)
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Total Tax Charge Mn (88) 82 206.3% 201.3% (54) 12 533.4% 525.0%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Profit After $
Tax Mn 228 204 11.9% 11.8% 96 54 78.0% 83.6%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Non Controlling $
Interest Mn (13) (23) (44.0%) (44.0%) (6) 2 (361.6%) (361.6%)
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Profit attributable
to parent company
shareholder -
pre Exceptional $
items Mn 141 71 98.3% 96.4% 79 28 182.8% 203.2%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Profit attributable
to parent company $
shareholder Mn 215 181 18.6% 18.7% 90 56 58.9% 65.7%
----------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Basic EPS - pre $
Exceptional items Cents 4.1 6.1 (32.7%) 2.1 2.4 (13.0%)
Basic EPS - pre
Exceptional items $
-Restated(3) Cents 3.7 1.9 96.8% 2.1 0.7 178.7%
----------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Basic EPS Cents 6.3 15.5 (59.4%) 2.4 4.8 (50.4%)
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Weighted Average in
No of Shares Mn 3,413 1,168 192.3% 3,741 1,168 220.3%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Capex Mn 246 155 59.2% 147 106 38.9%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Free Cash Flow Mn 237 185 28.0% 166 84 96.7%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Net Debts Mn 3,191 6,439 3,191 6,439
----------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating KPIs
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 2.7 2.8 (1.3%) 1.5% 2.8 2.8 (0.1%) 2.4%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total customer
base Mn 103.9 94.1 10.4% 103.9 94.1 10.4%
----------------------- -------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base Mn 31.9 27.1 17.7% 31.9 27.1 17.7%
----------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Operating profit includes $ 7.7 Mn contributed by other income & CSR expense in 6 months ended September 2019 as compared to $ 14.4 Mn in the 6 months ended September 2018
(2) Profit Before Tax in 6 months ended September 2018 included a $ 24 Mn loss from associates and JVs and $ 8 Mn for quarter ended September 2018
(3) In July 2019, following the announcement of the Initial Public Offering, the company issued 676,406,927 new shares. EPS has been restated considering all the shares as at 30(th) September 2019 had been issued on 1(st) April 2018 for like for like comparison.
Financial review for the Half Year, ended 30 September 2019
GAAP Measures
Revenue
Revenue increased by 8.4%, with constant currency growth of 11.4% being partially offset by currency devaluation. Growth accelerated in the second quarter to 12.6% in constant currency as a result of improvement in performance of Rest of Africa. Constant currency revenue growth was largely driven by a 10.4% increase in the customer base, to 104 Mn, and ARPU growth of 1.5%. Double digit revenue growth in Nigeria and East Africa was partially offset by a decrease in Rest of Africa revenues. Across services, revenue growth in constant currency terms was positive with mobile Voice up 3.2%, Data up 37.8%, and Mobile Money up 46.5%.
Operating Profit
Operating profit increased by 8.6% as a result of strong revenue growth, while operating expenditures as percentage of revenue remained broadly flat. Operating profit in constant currency terms grew by 11.1%, partially offsetting the currency devaluation.
Finance Cost
Finance costs reduced by $ 70 Mn. A 23% decrease in interest costs, as a result of lower debt, and derivatives gains more than offset the impact from one-off benefits incurred in the prior year, higher costs related to the IPO and foreign exchange impact on debt.
Taxation
Total tax charge for the period was $ 88 Mn, as compared to a tax credit of $ 82 Mn in the same period last year as a result of one-off items which included deferred tax recognition in Nigeria for $ 116 Mn and a tax reversal of $ 27 Mn in the 6 months ended 30 September 2018.
Profit After Tax
Profit After Tax was $ 228 Mn, an increase of 11.9% driven by an increase in operating profit and lower finance costs partially offset by higher tax charges.
Basic Earnings Per Share
Basic EPS was $ 6.3c, down 59.4%, due to the increase in the number of shares issued. If all the shares as at 30(th) September 2019 had been issued on 1(st) April 2018, the restated Basic EPS for 6 months ended 30 September 2019 would have been $ 5.7c and 6 months ended 30th September 2018 would have been $ 4.8c.
Alternative Performance Measures
Underlying EBITDA
Underlying EBITDA was $ 719 Mn, up 10.9% largely driven by 13.7% constant currency growth, partially offset by currency devaluation. Underlying EBITDA margin was at 43.9%, an improvement of 100 bps as operating efficiencies in network expenses and other overheads partially offset by one-off impact from the quality of service charge in Gabon.
Foreign exchange has an adverse impact of $ 43 Mn on revenues and $ 17 Mn on underlying EBITDA, largely driven by the devaluation of the Zambian Kwacha and Central African Franc. The currency exchange rates in other markets remained broadly stable compared to the same period last year
Tax
The adjusted effective tax rate for the current period was 37.1% as compared to 47% in the same period of the last year. The adjusted effective tax rate is lower compared to last financial year primarily on account of deferred tax asset recognition in Rest of Africa.
The adjusted effective tax rate is higher than the weighted average statutory tax rate of 33% largely due to the profit mix between various countries.
Exceptional Items
Exceptional items of $ 74 Mn for the half year ended 30 September 2019, mainly consisted of a $ 72 Mn gain related to the expired indemnity to certain pre-IPO investors as disclosed in the registration document published on 28 May 2019.
Free cash flow
Free cash flow was $ 237 Mn, up by 28%, underlying EBITDA increase was partially offset by capex increase, due to network modernization as well as roll out of additional sites, and reduction in working capital. Higher tax payments, largely as a result of higher operating profit, were offset by lower interest payments due to lower debt.
Earnings per share before exceptional items
Earnings per share before exceptional items was $ 4.1c, down 32.7%, as a result of an increase in the number of shares issued. However, if these shares had been issued on 1(st) April 2018, the restated EPS before exceptional items for 6 months ended 30 September 2019 would have been $ 3.7c and $ 1.9c cents for the 6 months ended 30th September 2018.
Net Debt and Leverage
Net debt reduced to $ 3,191 Mn in September 2019 compared to $ 6,439 Mn in September 2018. The reduction in net debt is a result of bond repayments of $ 2.2 Bn and an increase in cash from the net IPO proceeds of $ 670 Mn. As a result, leverage reduced to 2.3x as of September 2019 as compared to 5.1x as of September 2018 basis LTM EBITDA.
Other significant updates
Dividend
The Board approved an interim dividend of $ 3c per ordinary share. The proposed interim dividend will be paid on 29 November 2019 to shareholders who are on the register of members at close of business on 15 November 2019 (the Record Date). Further details will be announced by the Company in due course.
IPO
On 28 June 2019 the Airtel Africa announced the successful pricing of its Initial Public Offering at 80 pence (NGN 363) per Share. The Offer comprised 676,406,927 new Shares (being the total of 637,178,959 new Shares in respect of the global offer to institutional investors in various jurisdictions outside of Nigeria and 39,227,968 new Shares in respect of the offer to qualified institutional investors and high net worth investors in Nigeria.
Unconditional trading of the Shares commenced on the London Stock Exchange on 3 July 2019 and commenced on the Nigerian Stock Exchange on 9 July 2019.
FTSE 250 inclusion
On 9 September 2019 it was announced that Airtel Africa plc would be added to the FTSE 250 index as from 23 September 2019.
Mastercard partnership
On 9 October 2019 the Group announced a partnership with Mastercard which will give Airtel Money customers the ability to make online payments globally via a virtual Airtel Money Mastercard. In addition, Airtel Money customers, even those using a feature phone, will also be able to make in-person payments at outlets via Quick Response (QR) codes. To date, there are over 1 Mn merchant locations across Africa that accept Mastercard QR payments, approximately 700,000 of which are in Nigeria, Airtel Africa's largest market and where the company has already applied for a payment service bank license.
Ecobank partnership
On 21 October 2019 the Group announced a partnership with Ecobank which will allow millions of Airtel Money and Ecobank customers across Africa to improve their access to mobile financial services and carry out a variety of mobile transactions.
FINABLR partnership
On 22 October 2019 the Group announced partnership with Finablr which will enable Airtel Money customers to receive money directly to their phones, in their Airtel Money wallets, from more than 160 countries around the world. Money will be able to be sent conveniently and affordably through either the Finablr agent network in 160 countries, the Finablr online portal, an Airtel Money mobile app or the Airtel Africa online portal. Once the funds have been received on their handsets, Airtel Money customers have the choice to cash out in nearly 300,000 Airtel Money outlets and agents across Africa, make peer to peer payments, or pay bills and merchants Airtel Africa will shortly begin a marketing programme targeted at African communities abroad.
Regulatory Updates
The Group obtained a spectrum of 20 MHz in 2600 MHz band in Nigeria, an additional spectrum of 5 MHz in 1800 MHz band in Chad and 10 MHz in 2100 MHz band in Malawi during the period.
Nigeria Payment Bank License:
Application for Payment Service Bank (PSB) License and Super-Agent License has been filed with Central Bank of Nigeria (CBN). Approval of the brand name was received in July 2019.
Regulatory development related to Bharti Airtel Limited
On 24 October 2019, The Honourable Supreme Court of India delivered an adverse judgment impacting the Telecoms Service Providers in India including the Group's Parent company Bharti Airtel Limited. An assessment of this matter and whether it results in a material uncertainty regarding requiring the notes guaranteed by the Parent company to become repayable is included on page 23 Para 3.1.
Earnings call
Management will host an analyst call today at 9.30am. Details on how to access the call can be found on page 15.
Information on additional KPI
An IR pack with information on additional KPI and balance sheet is available to download on our website at https://airtel.africa/investors
Strategic overview
The Group is well positioned to capture growth opportunities presented by promising underlying macroeconomic and demographic trends in a fast-growing region that is vastly underpenetrated in terms of mobile and banking services. The Group's footprint is characterized by low but increasing levels of mobile connectivity, with a unique user penetration at 44%, highlighting the potential for growth across its footprint.
Airtel Africa's strategy underpins its medium-term aspirations for delivering growth in revenues and earnings, and our belief in enhancing connectivity and digitizing the countries where we operate. To this end, the Group has invested to expand its network footprint and number of 4G sites to enhance network capabilities and support its future business growth. A combination of an under-penetrated telecom market, a young addressable population and rising smartphone affordability, along with low data penetration and unbanked population, provide the growth opportunities for the data and Mobile Money segments.
The business continues to build momentum and the Group is confident of delivering sustained growth across voice, data and mobile money to deliver on its medium-term aspirations for revenue and profit growth. The young and fast-growing populations served by the Group are increasingly connecting to mobile networks, with solid growth in mobile subscribers in Airtel Africa's footprint expected in the years to come.
During the reporting period, the Group continued to make clear progress across each of its core strategic pillars, namely Win with Quality Customer; Win with Network; Win with Data; Win with Airtel Money; Win with Cost Optimization; Win with People and multiple in the areas of Additional Upside.
Quality Customers
Sub-Saharan Africa is characterized by low penetrated markets, with unique subscriber penetration at 44%. The Group's continued focus on building exclusive channels, combined with a simplified digital onboarding application with seamless onboarding customer experience have enabled to add quality customers, resulting in customer base growth of 10.4% to 104 Mn customers across our footprint. The customer growth remains well diversified across the three segments, where it increased by 15.6% in Nigeria, 9.1% in East Africa and 3.8% in the Rest of Africa. The overall churn decreased by 0.1% to 4.8%.
The Group continued to invest in its distribution network. During the first half of 2019, the Group added more activating outlets for KYC and exclusive franchise stores.
Customer onboarding experience continued to be enhanced through the launch of a Digital On-boarding application in 13 markets. The digitized application captures all regulatory requirements and allows most activations to be done within 5 minutes of SIM sale.
The Group's processes for improved self-care, implementation of interactive and dynamic IVRs helped to provide faster resolution to customer's queries, resulting in improved customer experience. In addition, the attractive pricing propositions resulted in increasing usage per customer by 3.7%, thereby contributing to voice revenue growth of 3.2%.
Quality Network
The Group strategy to invest in the 4G network through single RAN technology has resulted in better 4G coverage and enhanced the network's capacity, leading to high-speed data being made available to more of our customers. With continued investment in 4G network across our footprints, 4G sites now contributes 58% of total sites as compared to 27% in the last year. In the first half of the year, the Group launched 4G services in Democratic Republic of Congo and Niger and we are ready to activate the commercial launch in Tanzania, thereby making 4G services available across all of our 14 countries.
In the six months ended 30 September 2019, the Group completed its network modernization in nine countries (Uganda, Kenya, Zambia, Malawi, Rwanda, Congo B, Gabon, Madagascar and Seychelles) and continued the modernization in other countries.
The Group continued to invest to build large fibre capacities. In the past 6 months, the Group increased the number of sites on fibre and long-distance fibre capacities which has helped the Group to build strong redundancies, which further supported greater uptime and high-speed data availability to the Group's customers.
The Group also acquired additional spectrum, by adding 2600 MHz frequency (20 MHz) in Nigeria, 1800 MHz (5 MHz) in Chad and 2100 MHz (10 MHz) in Malawi. Furthermore, the Group continued the spectrum refarming activities to maximize network capacity.
The Group investment activities resulted in Capex amounting to $ 246 Mn in the first half of the year, excluding spectrum acquisitions.
Data
Data growth is a key pillar of the Group's strategy. The improved LTE network offered by the industry has contributed to increased smartphone penetration. The percentage of 3G and 4G enabled smartphones increased to 31% from 27.8% in the previous year. This has resulted in data customers increasing by 17.7% to 31.9 Mn which now represent 30.7% of our total customer base.
The Group's strategy to partner with key handset outlets, offering more affordable smartphone bundles and a customer-friendly SIM upgrade process has also supported data customer growth. Higher adoption of "More for More" data bundles has helped increase the data usage per customer to 1.6 GB/customer from 1GB/customer in previous period. All these have contributed to data revenue growth of 37.8%.
As a result of increased penetration and usage of 3G and 4G data customers, data ARPU increased by 18.5%, with every region contributing to data ARPU growth.
Mobile money
The Group continues to work on enhancing financial inclusion across its footprints. The lower penetration of traditional banking services demands mobile money services to fulfil the needs of largely unbanked customers. Continued expansion of distribution network of both agents and exclusive run franchisees (Kiosks, Mini-shops and Airtel Money Branches) contributed to ensure float availability to the customers. This has been a key driver of building greater confidence and interest towards Airtel Money across our footprints. The Group has also enhanced mobile money offerings to customers through enhancement of the merchant ecosystem, and offering insurance, loans and international money transfer facilities through partnership with other financial service providers.
Expanded distribution and enhanced offering contributed to mobile money customer growth of 2.6 Mn to a total of 15.5 Mn and an increased annualized transaction value to $ 30 billion from $ 24 billion in the previous period. Annualized transaction value in Q2'20 amounted to $ 32 billion.
Mobile money continues to be Airtel Africa's fastest-growing business segment, delivering revenue growth of 46.5% in the first half year, and slightly above 50% in Q2. It is an increasingly more important part of our business and currently accounts for 9% of total revenues.
The Group continued to enhance its customer offering by entering into partnerships with leading institutions such as Mastercard, Ecobank and Finablr to provide improved access to digital payments, to allow customers to receive conveniently and affordably funds from 160 different countries and improve customer access to financial services.
Operational Efficiency
The Group has an efficient operational model, focused on cost efficiency initiatives and enhancing our digitalization initiatives. We embrace robust cost discipline and continuously seek to improve processes with the aim to deliver one of the highest EBITDA margin in the industry. Additionally, we adopt technology in a financially efficient manner to optimize capital expenditures.
As we actively expand our infrastructure network, we adopt detailed analysis with the aim to minimise the incremental cost of building additional sites and additional capacity. We are also looking to limit on-going operating costs per-site by looking at initiatives to save energy costs, convert sites to a grid and consolidate sites already owned. Moreover, in the first half of the year we were able to largely reduce the cost per Mbps through our continued investments in large capacity IRUs and fibre in line with our model of creating huge throughputs.
We look at ways of simplifying our operating model on an on-going basis, making it seamlessly digitizable across all customer-facing and other processes. We established shared service centre in India, and we continue to look at ways to further leverage it by migrating more processes there.
In the first half year EBITDA margin expanded by 100bps to 43.9%, as a result of double-digit revenue growth and cost efficiencies.
Areas of additional upside
The Group's improved 4G network, alongside the increase in sites on fibre has provided an improved infrastructure to establish and grow both a wireless home broadband and enterprise businesses. The MiFi and the routers launched across the Group's footprints resulted in the growth of wireless home broadband. The Group has also witnessed encouraging results on fixed-line and enterprise business.
Financial review for the Half Year, ended 30 September 2019
Nigeria
Description UoM Half Year ended Quarter ended
----------------- ----- ---------------------------------------- ----------------------------------------
Sep-19 Sep-18 Reported Constant Sep-19 Sep-18 Reported Constant
Currency Currency Currency Currency
Change Change Change Change
% % % %
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarized
Statement
of Operations
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Revenue Mn 640 520 23.2% 23.1% 327 263 24.3% 24.2%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Voice Revenue Mn 398 352 13.2% 13.1% 200 176 13.6% 13.5%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Data Revenue Mn 199 113 75.9% 75.7% 105 59 78.3% 78.1%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Other Revenue Mn 43 55 (20.9%) (20.9%) 22 28 (21.8%) (21.9%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying $
EBITDA Mn 341 246 38.2% 38.0% 174 129 34.8% 34.6%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying 575 574 413 414
EBITDA Margin % 53.2% 47.4% bps bps 53.1% 49.0% bps bps
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation $
& Amortisation Mn (89) (78) 13.5% 13.4% (45) (37) 20.1% 20.1%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Exceptional $
Item Mn (3) (25) (88.8%) (88.8%) (2) (11) (78.1%) (88.3%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating $
Profit Mn 252 168 50.3% 49.5% 129 92 40.7% 40.6%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Capex Mn 115 44 162.3% 164.5% 62 30 108.9% 108.9%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
Free Cash $
Flow Mn 226 202 11.6% 10.8% 112 99 12.7% 12.4%
----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 2.8 2.6 6.4% 6.3% 2.8 2.6 7.4% 7.3%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total Customer
base Mn 39.5 34.2 15.6% 39.5 34.2 15.6%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data Customer
base Mn 15.5 12.8 20.8% 15.5 12.8 20.8%
----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
In the six months ended 30 September 2019, reported revenue in Nigeria increased by 23.2%, broadly in line with constant currency growth as a result of a stable foreign exchange environment.
Revenue in constant currency was up 23.1%, largely driven by voice revenue growth of 13.1% and sustained growth in data with revenue up 75.7%.
Voice revenue growth of 13.1% was mainly driven by double-digit growth in customer base. Customer growth resulted from the efficient sales and distribution system and expansion of network infrastructure.
Data revenue was up 75.7% and it remained the largest contributor to revenue growth. Data revenue growth was driven by accelerated rollout of our 4G network, with 62% of the sites being 4G, an increase in data customer base by 20.8% and ARPU growth of 43.0%. During the period 4G data usage increased by almost 20 times. Data revenue now accounts for 31% of Airtel Nigeria revenue, compared to 22% in the prior year. The solid expansion of the 4G network is a pillar of strong growth in Nigeria.
Underlying EBITDA margin in constant currency increased by 574bps as a result of revenue growth and operating efficiencies across various cost items. The increase in network expenses, resulting from the expansion of network infrastructure was more than compensated by data and voice revenue growth.
During the period, capital expenditure almost doubled, to $ 115 Mn, as the business continued to expand and invest in the network infrastructure, largely 4G, as the number of 4G sites increased 2.4x.
Operating Free Cash Flow was $ 226 Mn, up 11.6%, largely as a result of double-digit underlying EBITDA growth partially offset by an increase in capital expenditures.
Airtel Nigeria received "Brand of the year and most customer-centric brand" award in Jun 2019 from "Marketing Edge Magazine.
East Africa
Description UoM Half Year ended Quarter ended
----------------- ----- ---------------------------------------- ----------------------------------------
Sep-19 Sep-18 Reported Constant Sep-19 Sep-18 Reported Constant
Currency Currency Currency Currency
Change Change Change Change
% % % %
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarized
Statement
of Operations
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Revenue (1) Mn 578 546 5.8% 11.1% 301 281 7.5% 12.5%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Voice Revenue Mn 296 299 (0.9%) 4.6% 155 156 (0.8%) 4.3%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Data Revenue Mn 144 132 8.6% 13.8% 74 67 10.0% 14.9%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money $
Revenue(2) Mn 99 66 48.8% 53.9% 53 34 54.0% 58.7%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Other Revenue Mn 66 61 7.6% 12.4% 34 31 7.6% 12.1%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying $
EBITDA Mn 233 211 10.3% 16.2% 123 111 10.6% 16.2%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying 164 179 117 128
EBITDA Margin % 40.3% 38.7% bps bps 40.7% 39.5% bps bps
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation $
& Amortisation Mn (117) (111) 5.5% 10.8% (58) (51) 13.3% 18.4%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Exceptional $
Item Mn (5) (1) 345.2% 369.1% (2) - 0.0% 0.0%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating $
Profit Mn 116 100 15.5% 22.1% 65 60 8.3% 14.1%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Capex Mn 60 74 (19.0%) (19.0%) 30 53 (43.1%) (43.1%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
Free Cash $
Flow Mn 173 138 26.0% 36.1% 93 58 59.6% 73.3%
----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
ARPU $ 2.2 2.3 (2.1%) 2.8% 2.3 2.3 (0.5%) 4.2%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Total Customer
base Mn 45.0 41.3 9.1% 45.0 41.3 9.1%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data Customer
base Mn 12.1 10.3 18.4% 12.1 10.3 18.4%
----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Breakup of revenue as stated in above table will not add up to total revenue, since it also includes eliminations. (2) Mobile Money revenue post intersegment eliminations is $ 73 Mn for Half year ended Sep'19 and $ 54 Mn for Half year ended Sep'18, $ 40 Mn for Q2'20 and $ 26 Mn for Q2'19.
In the first six months ended 30 September 2019, reported revenue in East Africa increased by 5.8%, as constant currency growth of 11.1%, was partially offset by currency devaluation in Zambia and Malawi. Revenue growth of 11.1% in constant currency was driven by growth across all services.
In the East Africa region, Kenya, Tanzania, Malawi and Zambia recorded double-digit revenue growth in constant currency.
Voice revenue was up 4.6%, largely driven by customer growth of 9.1% and an increased usage per customer of 12.0%.
Data revenue increased by 13.8%, driven by the increase in data customer base, up 18.4% and an increase in data usage per customer, up 56.5%. The growth in data revenue was driven by the rollout and expansion of 4G network. Smartphone penetration was up 5% and there was a continued higher adoption of the "more for more" data bundle offering, supporting the overall data usage and revenue growth. Data revenue accounted for 25% of total revenue in East Africa.
Mobile money revenue increased by 53.9%, due to the increase in customer base by 19.1% and transaction value per customer increased by 19%. We continued to expand the Mobile Money distribution network (Agents, Kiosks and Airtel Money Branches).
Underlying EBITDA margin in constant currency increased by 179 bps as a result of revenue growth and cost efficiencies.
During the period, capital expenditure was slightly lower as a large part of the network modernization in East Africa was completed in the previous year. As a result of lower capex and higher underlying EBITDA, operating free cash flow amounted to $ 173 Mn, up 26.0%.
Rest of Africa
Description UoM Half Year ended Quarter ended
----------------- ----- ---------------------------------------- ----------------------------------------
Sep-19 Sep-18 Reported Constant Sep-19 Sep-18 Reported Constant
Currency Currency Currency Currency
Change Change Change Change
% % % %
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarized
Statement
of Operations
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Revenue (1) Mn 426 455 (6.5%) (2.9%) 217 229 (4.9%) (1.9%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Voice Revenue Mn 265 309 (14.2%) (10.8%) 133 154 (13.6%) (10.7%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Data Revenue Mn 91 77 17.9% 21.9% 48 40 19.0% 22.4%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money $
Revenue(2) Mn 44 34 28.5% 33.1% 23 18 32.5% 36.1%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Other Revenue Mn 42 44 (4.6%) (1.3%) 22 22 0.4% 3.3%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying $
EBITDA Mn 140 176 (20.3%) (17.7%) 76 90 (16.1%) (13.8%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying
EBITDA Margin % 32.9% 38.6% (570)bps (590)bps 34.9% 39.6% (465)bps (481)bps
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation $
& Amortisation Mn (93) (95) (2.3%) 1.2% (47) (37) 25.9% 29.6%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Exceptional $
Item Mn (10) (1) 1520.2% 1609.5% (5) (0)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating $
Profit Mn 47 81 (41.7%) (40.2%) 29 53 (46.0%) (44.7%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Capex Mn 69 36 91.1% 91.1% 54 22 145.7% 145.7%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ---------- Operating Free Cash $ Flow Mn 71 140 (48.9%) (46.4%) 22 68 (68.5%) (66.3%) ----------------- ------- ------- ---------- ---------- ------- ------- ---------- ---------- Operating KPIs ----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ---------- ARPU $ 3.7 4.1 (9.0%) (5.6%) 3.8 4.1 (8.3%) (5.4%) ----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ---------- Total Customer base Mn 19.4 18.6 3.8% 19.4 18.6 3.8% ----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ---------- Data Customer base Mn 4.3 4.1 6.1% 4.3 4.1 6.1% ----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Breakup of revenue as stated in above table will not add up to total revenue, since it also includes eliminations. (2) Mobile Money revenue post intersegment eliminations is $ 28 Mn for Half year ended Sep'19 and $ 25 Mn for Half year ended Sep'18, $ 15 Mn for Q2'20 and $ 13 Mn for Q2'19
Performance in Rest of Africa improved in the second quarter as a result of improved performance in data and mobile money. Nevertheless, Rest of Africa continued to be impacted by macro-economic weakness in some of the countries in the region.
Revenue decreased by 2.9%, as growth in data, mobile money and other revenue did not offset a decline in voice revenue.
Voice revenue decreased by 10.8%, due in large part by the impact of a reduction in interconnect usage charges in Niger, Madagascar and Chad and overall market weakness in some of the countries in the segment.
Data delivered a growth of 21.9% largely driven by increased data usage with 4G launches in Republic of the Congo, Democratic Republic of Congo and Niger. In addition, the first phase of network modernization has been completed in the Democratic Republic of Congo. In Rest of Africa segment, 1,400+ additional sites were rolled out on 4G network, which accounted for almost half of the total sites. More than 7,400 broadband base stations were rolled out during the period.
Mobile money revenue increased by 33.1% with all key markets delivering double digit growth, supported by mobile money customer base growth of 24.6% and expansion of distribution network.
Underlying EBITDA margin in constant currency decreased by 590 bps as a result of lower revenue and a one-off quality of services charge in Gabon in the first quarter.
Capital expenditure almost doubled during the reporting period to $ 69 Mn as the business continued to invest in network modernization, the rollout of 4G network, with the number of 4G sites increasing by more than threefold.
Mobile Services:
Description UoM Half Year ended Quarter ended
----------------- ----- ---------------------------------------- ----------------------------------------
Sep-19 Sep-18 Reported Constant Sep-19 Sep-18 Reported Constant
Currency Currency Currency Currency
Change Change Change Change
% % % %
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarized
Statement
of Operations
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Revenue(1) Mn 1,540 1,435 7.3% 10.2% 790 730 8.1% 10.8%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying $
EBITDA Mn 644 597 7.8% 10.5% 335 310 8.0% 10.5%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying
EBITDA Margin % 41.8% 41.6% 21 bps 12 bps 42.4% 42.4% (5)bps (11)bps
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation $
& Amortization Mn (297) (282) 5.1% 8.4% (149) (125) 19.1% 22.3%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
Exceptional $
Items Mn 18 27 (32.8%) (32.2%) 9 12 (23.2%) (22.7%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating $
Profit Mn 347 315 10.1% 12.3% 186 185 0.4% 2.4%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Capex Mn 241 150 60.8% 60.8% 145 102 43.0% 43.0%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
Free Cash $
Flow Mn 403 447 (9.9%) (6.7%) 189 208 (9.1%) (5.7%)
----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile voice
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Voice revenue Mn 956 953 0.4% 3.2% 487 483 0.6% 3.2%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Customer base Mn 103.9 94.1 10.4% 103.9 94.1 10.4%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Voice ARPU $ 1.6 1.7 (8.6%) (6.0%) 1.6 1.7 (8.4%) (6.1%)
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile data
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Data revenue Mn 434 323 34.4% 37.8% 226 166 36.5% 39.6%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data customer
base Mn 31.9 27.1 17.7% 31.9 27.1 17.7%
----------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Data ARPU $ 2.4 2.1 15.6% 18.5% 2.4 2.1 17.2% 19.9%
----------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Mobile service revenue post intersegment eliminations is $ 1,534 Mn for Half year ended Sep'19 and $ 1,430 Mn for Half year ended Sep'18, $ 786 Mn for Q2'20 and $ 727 Mn for Q2'19.
Voice
Voice Revenue in constant currency grew by 3.2% largely driven by customer growth of 10.4%, as a result of stable churn and the expansion of sales and distribution network and expansion of network infrastructure.
Voice ARPU decreased by 6.0% in constant currency terms, largely driven by a weakness in Rest of Africa and decrease in interconnect usage charges across key markets in East Africa and Rest of Africa.
Data
Data Revenue was up by 37.8% in constant currency, largely driven by data customer growth of 17.7% and higher data usage per customer, up 55.7%. Data customer growth led by increase in smartphone penetration by 3%, accelerated roll out of 4G network, with 58% of the sites being 4G and more than 13,800 broadband base stations added. More than 30.7% of total customer base are data users, increased from 28.8% in previous period.
During the period, overall data usage increased by 81.1% supported by the investments in growth the strength and reliability of our 4G network (more than 7,300 additional sites now on 4G) and higher adoption of simplified "more for more" data bundles resulting in data ARPU growth of 18.5%. Data accounted for 26.4% of total revenue, up from 21.3% in the prior period.
Mobile Money
Description UoM Half Year ended Quarter ended
------------------- ----- ---------------------------------------- ----------------------------------------
Sep-19 Sep-18 Reported Constant Sep-19 Sep-18 Reported Constant
Currency Currency Currency Currency
Change Change Change Change
% % % %
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Summarized
Statement
of Operations
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Revenue(1) Mn 146 103 41.8% 46.5% 78 53 46.7% 50.9%
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying $
EBITDA Mn 70 37 91.3% 95.1% 38 20 84.5% 87.6%
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Underlying 1247 1198 989 942
EBITDA Margin % 48.2% 35.7% bps bps 48.2% 38.3% bps bps
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Depreciation $
& Amortization Mn (3) (3) 2.6% 3.3% (1) (1) 12.2% 13.8%
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating $
Profit Mn 67 34 98.2% 102.4% 37 19 88.4% 91.5%
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
$
Capex Mn 3 4 (12.5%) (12.5%) 2 3 (52.3%) (52.3%)
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
Free Cash $
Flow Mn 67 33 102.7% 107.1% 36 17 109.7% 113.5%
------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Operating
KPIs
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money
Key KPIs
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Transaction $
value Mn 14,968 12,088 23.8% 29.4% 7,856 6,092 29.0% 34.6%
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Active customers Mn 15.5 12.9 19.9% 15.5 12.9 19.9%
------------------- ----- ------- ------- ---------- ---------- ------- ------- ---------- ----------
Mobile Money
ARPU $ 1.6 1.4 18.4% 22.4% 1.7 1.4 25.0% 28.6%
------------------- ------- ------- ---------- ---------- ------- ------- ---------- ----------
(1) Mobile Money revenue post intersegment eliminations is $ 104 Mn for Half year ended Sep'19 and $ 82 Mn for Half year ended Sep'18, $ 56 Mn for Q2'20 and $ 40 Mn for Q2'19
Mobile money revenue grew by 46.5% in constant currency, driven by customer growth and growth in transaction value. Growth of customer base was largely driven by the expansion of the distribution network, as the business invested in more exclusive kiosks and mobile money branches, up 32% and 141% respectively compared to last year.
Furthermore, the expansion of the merchant ecosystem and the provision of more affordable tariffs further contributed to transaction value growth.
Underlying EBITDA in mobile money increased by 91.3%, amounting to $ 70.0 Mn, driven by revenue growth and supported by efficient distribution cost structure, resulting into better flow through in EBITDA. As a result, underlying EBITDA margin improved to 48.2%, up from 35.7%.
Transaction value increased by 29.4% in constant currency, with an annualized value of more than $ 30 billion driven by the expansion of its distribution infrastructure.
Mobile money active customer base at 15.5 Mn, up 19.9% on the previous year with the mobile money customer base currently representing 15% of the total base.
ARPU in mobile money increased 22.4% driven by subscriber growth and higher contribution from P2P and merchant payments.
Forward looking statements
This document contains certain forward-looking statements including "forward-looking" statements made within the meaning of Section 21E of the United States Securities Exchange Act of 1934, regarding our intentions, beliefs or current expectations concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates.
These statements are often, but not always, made through the use of words or phrases such as "believe," "anticipate," "could," "may," "would," "should," "intend," "plan," "potential," "predict," "will," "expect," "estimate," "project," "positioned," "strategy," "outlook", "target" and similar expressions.
It is believed that the expectations reflected in this document are reasonable, but they may be affected by a wide range of variables that could cause actual results to differ materially from those currently anticipated.
All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual future financial condition, performance and results to differ materially from the plans, goals, expectations and results expressed in the forward-looking statements and other financial and/or statistical data within this communication.
Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are uncertainties related to the following: the impact of competition from illicit trade; the impact of adverse domestic or international legislation and regulation; changes in domestic or international tax laws and rates; adverse litigation and dispute outcomes and the effect of such outcomes on Airtel Africa's financial condition; changes or differences in domestic or international economic or political conditions; the ability to obtain price increases and the impact of price increases on consumer affordability thresholds; adverse decisions by domestic or international regulatory bodies; the impact of market size reduction and consumer down-trading; translational and transactional foreign exchange rate exposure; the impact of serious injury, illness or death in the workplace; the ability to maintain credit ratings; the ability to develop, produce or market new alternative products and to do so profitably; the ability to effectively implement strategic initiatives and actions taken to increase sales growth; the ability to enhance cash generation and pay dividends and changes in the market position, businesses, financial condition, results of operations or prospects of Airtel Africa.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. The forward-looking statements contained in this document reflect the knowledge and information available to Airtel Africa at the date of preparation of this document and Airtel Africa undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on such forward-looking statements.
No statement in this communication is intended to be, nor should be construed as, a profit forecast or a profit estimate and no statement in this communication should be interpreted to mean that earnings per share of Airtel Africa plc for the current or any future financial periods would necessarily match, exceed or be lower than the historical published earnings per share of Airtel Africa plc.
Financial data included in this document are presented in US$ rounded to the nearest millions. Therefore, discrepancies in the tables between totals and the sums of the amounts listed may occur due to such rounding.
About Airtel Africa
Airtel Africa is a leading provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa.
Airtel Africa offers an integrated suite of telecommunications solutions to its subscribers, including mobile voice and data services as well as mobile money services both nationally and internationally. The Group aims to continue providing a simple and intuitive customer experience through streamlined customer journeys.
For further information:
Airtel Africa Investor Relations
E-mail address: investor.relations@africa.airtel.com
Telephone number: +44 207 493 9315
Website: https://airtel.africa/investors
Conference call
The management team will host an analyst and investor conference call at 9:30 AM UK time, on Friday 25 October 2019, including a Question and Answer session.
In order to participate in the event, please use the following options to access via:
1) Conference call, please follow the instructions:
In the 10 minutes prior to the start, call the appropriate participant dial-in number:
-- Standard International: +44 (0) 2071 928000 -- United Kingdom Freephone: 08003767922 -- United Kingdom Local Call: 08445718892 -- United States: 18669661396 -- United States, New York 16315107495 -- Nigeria, Lagos: 12278975 -- Nigeria, Lagos: 12278750 -- India: 18002666102 -- South Africa, Johannesburg: 0105007996 -- France: 0805103028
Provide the operator with the conference ID 8396762
2) Webcast
click on the link URL: https://edge.media-server.com/mmc/p/biu3u6oi
Interim Condensed Consolidated Financial Statements
Consolidated Statement of Comprehensive Income
(All amounts are in US Dollar millions; unless stated otherwise)
For six months ended
--------- ----------------------------------------
Notes September 30, 2019 September 30, 2018
--------- ------------------- -------------------
Income
Revenue 5 1,640 1,513
Other income 11 17
--------- -------------------
1,651 1,530
Expenses
Network operating expenses 297 273
Access charges 184 171
License fee / spectrum charges (revenue share) 94 92
Employee benefits expense 111 118
Sales and marketing expenses 83 76
Impairment loss on financial assets 2 16
Other expenses 166 142
Depreciation and amortisation 319 278
1,256 1,166
Operating profit 395 364
Finance costs 209 226
Finance income (60) (8)
Non-operating income (70) -
Share of loss / profit of joint ventures and associate (0) 24
Profit before tax 316 122
Tax expense / (credit) 6 88 (82)
Profit for the period 228 204
Profit before tax (as presented above) 316 122
Add: Exceptional items (net) 7 (46) 30
Underlying profit before tax 270 152
------------------------------------------------------------- --------- ------------------- -------------------
Profit after tax (as presented above) 228 204
Add: Exceptional items (net) 7 (74) (117)
Underlying profit after tax 154 87
------------------------------------------------------------- --------- ------------------- -------------------
For six months ended
--------- ----------------------------------------
Notes September 30, 2019 September 30, 2018
--------- ------------------- -------------------
Profit for the period (continued from previous page) 228 204
Other comprehensive income ('OCI')
Items to be reclassified subsequently to profit or loss:
Net losses due to foreign currency translation differences (24) (194)
Share of OCI of associate - 0
Net gain on net investments hedge 7 28
Net loss on cash flow hedge (3) (10)
Other comprehensive loss for the period (20) (176)
Total comprehensive income for the period 208 28
========= =================== ===================
Profit for the period attributable to: 228 204
Owners of the Company 215 181
Non-controlling interests 13 23
--------- ------------------- -------------------
Other comprehensive loss for the period attributable to: (20) (176)
Owners of the Company (20) (173)
Non-controlling interests (0) (3)
--------- ------------------- -------------------
Total comprehensive income for the period attributable to: 208 28
Owners of the Company 195 8
Non-controlling interests 13 20
--------- ------------------- -------------------
Earnings per share (In USD)
Basic 8 0.06 0.16
Diluted 8 0.06 0.16
--------- ------------------- -------------------
Consolidated Statement of Financial Position
(All amounts are in US Dollar millions; unless stated otherwise)
As of
------------------------------------
Notes September 30, 2019 March 31, 2019
------ ------------------- ---------------
Assets
Non-current assets
Property, plant and equipment 9 1,658 1,597
Capital work-in-progress 9 314 365
Right of use assets 638 655
Goodwill 4,099 4,126
Other intangible assets 381 349
Intangible assets under development 31 70
Investment in associate 4 3
Financial assets
- Investments 0 0
- Derivative instruments 0 45
- Security deposits 7 9
- Others 1 -
Income tax assets (net) 35 31
Deferred tax assets (net) 319 346
Other non-current assets 104 89
------------------- ---------------
7,591 7,685
Current assets
Inventories 3 3
Financial assets
- Derivative instruments 3 5
- Trade receivables 131 121
- Cash and cash equivalents 1,469 848
- Other bank balances 277 259
- Others 66 73
Other current assets 108 118
2,057 1,427
Total assets 9,648 9,112
=================== ===============
As of
------------------------------------
Notes September 30, 2019 March 31, 2019
------------- ------------------- ---------------
Equity and Liabilities
Equity
Share capital 11 3,420 3,082
Other equity 136 (455)
------------------- ---------------
Equity attributable to owners of the Parent 3,556 2,627
Non-controlling interests (171) (195)
3,385 2,432
Non-current liabilities
Financial liabilities
- Borrowings 12 2,700 2,437
- Lease liabilities 996 1,037
- Derivative instruments 1 7
- Others 2 7
Deferred revenue 32 34
Provisions 24 20
Deferred tax liabilities (net) 27 33
------------------- ---------------
3,782 3,575
Current liabilities
Financial liabilities
- Borrowings 12 284 625
- Current maturities of long-term borrowings 12 513 559
- Lease liabilities 192 181
- Derivative instruments 39 96
- Trade payables 705 712
- Others 389 604
Provisions 5 -
Deferred revenue 123 121
Current tax liabilities (net) 73 67
Other current liabilities 158 140
------------------- ---------------
2,481 3,105
Total liabilities 6,263 6,680
Total equity and liabilities 9,648 9,112
=================== ===============
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
Consolidated Statement of Changes in Equity (All amounts are in US Dollar millions; unless stated otherwise)
Equity attributable to owners of the Company Non-controlling Total
interests equity
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Share capital Other equity
---------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------- ----------------
Reserves and surplus Other components of Total
equity
-------------------------- ----------------------------------------------------------------------------------------------------------------------- -------------------- ----------------
No of shares Amount Share Retained earnings Shared-based payment reserve Transactions with NCI Other reserves
premium reserve
-------------------------- ------------ -------------- -------------------- ----------------------------- ---------------------------- -------------------- -------------------- ----------------
As of April 1,
2018 1,781,248,325 2,359 2,551 (3,510) - (500) - (1,903) (1,003) (231) (1,234)
Profit for the
period - - - 181 - - - - 181 23 204
Other
comprehensive
loss - - - - - - - (173) (173) (3) (176)
-------------------------- ------------ -------------- -------------------- ----------------------------- ---------------------------- -------------------- -------------------- ------------------ --------------
Total
comprehensive
income / (loss) - - - 181 - - - (173) 8 20 28
Transaction with
owners of equity
Shareholder loan
conversion 1 0 1,107 - - - - - 1,107 - 1,107
Common control
transactions - - - 98 - - - - 98 - 98
Dividend
(including tax)
to NCI - - - - - - - - - (4) (4)
Transaction with
NCI - - - - - (80) - - (80) 6 (74)
As of September
30, 2018 1,781,248,326 2,359 3,658 (3,231) - (580) - (2,076) 130 (209) (79)
========================== ============ ============== ==================== ============================= ============================ ==================== ==================== ================ ================== ==============
Profit for the
period - - - 207 - - - - 207 15 222
Other
comprehensive
income - - - - - - - 40 40 - 40
-------------------------- ------------ -------------- -------------------- ----------------------------- ---------------------------- -------------------- -------------------- ---------------- ------------------ --------------
Total
comprehensive
income - - - 207 - - - 40 247 15 262
Transaction with
owners of equity
Re-organization
adjustment (613,490,706) (1,191) (3,658) 4,850 - - - - - - -
Issue of share
capital 1,913,986,957 1,914 473 (136) - - - - 2,251 - 2,251
Share issue
costs - - (2) - - - - - (2) - (2)
Dividend
(including tax)
to NCI - - - - - - - - - (1) (1)
----------------------------
As of March 31,
2019 3,081,744,577 3,082 471 1,690 - (580) - (2,036) 2,626 (195) 2,432
========================== ============ ============== ==================== ============================= ============================ ==================== ==================== ================ ================== ==============
Profit for the
period - - - 215 - - - - 215 13 228
Other
comprehensive
loss - - - - - - - (20) (20) (0) (20)
-------------------------- ------------ -------------- -------------------- ----------------------------- ---------------------------- -------------------- -------------------- ------------------ --------------
Total
comprehensive
income / (loss) - - - 215 - - - (20) 195 13 208
Transaction with
owners of equity
Reduction in
nominal value
of shares [Note
11 (1)] - (1,541) - - - - - - (1,541) - (1,541)
Issue of
deferred share
capital [Note
11 (1)] 3,081,744,577 1,541 - - - - - - 1,541 - 1,541
Issue of
redeemable
deferred share
capital [Note
11 (3)] 50,000 0 - - - - - - 0 - 0
Issue of share
capital [Note
11 (2)] 676,406,927 338 342 - - - - - 680 - 680
Issue of share
capital to NCI - - - - - - - - - 13 13
Share issue
costs - - (4) (13) - - - - (17) (17)
Share
stabilisation
proceeds [Note
4 (d)] - - - - - - 7 - 7 - 7
Employee
share-based
payment
expenses - - - - 0 - - - 0 - 0
Reversal of
indemnities
[Note 4 (a)] - - - 64 - - - - 64 - 64
Dividend
(including tax)
to NCI - - - - - - - - - (2) (2)
--------------------
As of September
30, 2019 6,839,946,081 3,420 809 1,956 0 (580) 7 (2,056) 3,556 (171) 3,385
========================== ============ ============== ==================== ============================= ============================ ==================== ==================== ================ ================== ==============
Statement of Cash Flows (All amounts are in US Dollar millions; unless stated otherwise)
For six months ended
----------------------------------------
September 30, 2019 September 30, 2018
------------------- -------------------
Cash flows from operating activities
Profit before tax 316 122
Adjustments for -
Depreciation and amortisation 319 278
Finance income (60) (8)
Finance cost 209 226
Share of loss / profit of joint ventures and associate (0) 24
Non-operating adjustments (70) -
Other adjustments (7) 12
Operating cash flow before changes in working capital 707 654
Changes in working capital
Increase in trade receivables (12) (14)
Increase / (decrease) in inventories 0 (0)
Decrease in trade payables 4 (53)
Increase / (decrease) in provisions 2 (3)
Decrease in other financial and non financial liabilities (9) (25)
Increase in other financial and non financial assets (27) (63)
Decrease in deferred revenue (0) (6)
Net cash generated from operations before tax 665 490
Income tax paid (69) (63)
Net cash generated from operating activities (a) 596 427
------------------- -------------------
Cash flows from investing activities
Purchase of property, plant and equipment and capital
work-in-progress (349) (273)
Purchase of intangible assets (35) (56)
Proceeds on sale of tower assets - 41
Interest received 14 8
Net cash used in investing activities (b) (370) (280)
------------------- -------------------
Cash flows from financing activities
Proceeds from issue of shares 680 -
Proceeds from issue of shares to NCI 3 -
Acquisition of non- controlling interest - (74)
Payment of share issue expenses (16) -
Proceeds from borrowings 144 238
Repayment of borrowings (319) (182)
Proceeds from sale and lease back of towers - 22
Repayment of lease liabilities (89) (81)
Dividend paid to non-controlling interests - (4)
Interest and other finance charges paid (176) (178)
Proceeds from borrowings from related parties - 337
Share stabilisation proceeds 7 -
Proceeds from sale of derivatives 122 -
Net cash generated from financing activities (c) 356 78
------------------- -------------------
Net increase in cash and cash equivalents during the period (a+b+c) 582 225
Effect of exchange rate on cash and cash equivalents 3 2
Cash and cash equivalent as at beginning of the period 632 56
Cash and cash equivalents as at end of the period (Note 10) 1,217 283
=================== ===================
Notes to Interim Condensed Consolidated Financial Statements
(All amounts are in US Dollar millions; unless stated otherwise)
1. Corporate information
Airtel Africa Limited was incorporated as a private company limited by shares on July 12, 2018 as a subsidiary of Airtel Africa Mauritius Limited ('the Parent'), a company registered in Mauritius. It was subsequently re registered as Airtel Africa plc ('the Company') on June 13, 2019. The Company is incorporated and domiciled in England and Wales (registration number 11462215). The registered address of the Company is First Floor, 53/54 Grosvenor Street, London, W1K 3HU, United Kingdom.
The Company listed on London Stock Exchange ('LSE') on July 3, 2019 and on Nigerian Stock Exchange ('NSE') on July 9, 2019.
The Company, together with its subsidiary undertakings (hereinafter referred to as 'the Group') has operations in Africa. The principal activities of the Group and its associate consist of provision of telecommunication services and mobile money services.
2. Basis of preparation
These interim condensed consolidated financial statements ('financial statements') have been prepared to comply in all material respects with the International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU') and the disclosure requirements of the Listing Rules. These financial statements are unaudited.
These financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. Accordingly, the financial statements do not include all the information required for a complete set of financial statements, and should be read in conjunction with the Group's Historical Financial Information for the year ended March 31, 2019 included as part of the Airtel Africa prospectus published during the Company's listing process. Further, selected explanatory notes have been included to explain events and transactions that are significant for the understanding of the changes in the Group's financial position and performance since the latest annual consolidated financial statements.
These financial statements for the six months ended September 30, 2019 and financial year ended March 31, 2019 do not constitute statutory accounts as defined in section 434 of the U.K. Companies Act 2006. For the year ended March 31, 2019, the Group took the exemption available under the UK Companies Act from preparing consolidated statutory financial statements, as it was included in the group accounts of Bharti Airtel Limited. The Bharti Airtel Limited group financial statements are publically available and can be obtained at www.airtel.com. The comparative information included within these interim financial statements was separately prepared for the Board of Directors. This comparative financial information will also be included in the financial statements for the year ended March 31, 2020.
The financial statements of the Group for the six months ended September 30, 2019 were authorised by the Board of Directors on October 24, 2019.
These financial statements apply the same accounting policies, presentation and methods of calculation as those followed in the preparation of the Group's Historical Financial Information for the year ended March 31, 2019. Further, there have been no changes in critical accounting estimates, assumptions and judgements other than the following change in judgement:
-- Airtel Congo (RDC) S.A. (a subsidiary of the Company in DRC) has carried forward tax losses and timing differences on which deferred tax was not recognised in the past. Considering DRC has been in continuous and cumulative profits and on the basis of the likely timing and the level of future taxable profits, the Group has determined that it is now probable that taxable profits will be available against which the tax losses and temporary differences can be utilised in the foreseeable future. Consequently, a deferred tax asset of USD 27 was recognised during the six months ended September 30, 2019. For remaining loss making subsidiaries, the criteria to recognise a deferred tax asset was not met.
3. Basis of measurement
The financial statements have been prepared under the historical cost convention and are presented in United States Dollars (USD), with all values stated in USD Mn and rounded to the nearest millions except when otherwise indicated. Further, amounts which are less than a million are appearing as '0'.
3.1 Working capital and Going Concern
The Group has USD 2.7 Bn of intermediate parent guaranteed Bonds ("the Notes"). In May 2019 and ahead of IPO, the Group executed a bank facility agreement (the 'New Airtel Africa Facility') in a principal amount of up to USD 2 Bn which was available to draw down for a period of six months. In addition certain of the Group's subsidiaries arranged for USD 425 other committed facilities. The Group expressed an intention at IPO to refinance the Notes through various suitable means including the draw down on the facilities by December 2019 to the extent that the Notes had not been refinanced or unless alternate committed liquidity have been put in place.
Following successful completion of the IPO and receipt of USD 680 of IPO proceeds, in October 2019 the Group further reassessed the requirement for the New Airtel Africa Facility amounting to USD 1.2 Bn (USD 0.8 Bn already having been cancelled post IPO) and having considered business performance, free cash flows, liquidity expectation for the next 12 months together with its other existing drawn and undrawn facilities, the Group cancelled the remaining USD 1.2 Bn New Airtel Africa Facility. As part of this evaluation the Group has considered its future working capital requirements and has to date secured letters of intent and term sheets including underwrites for Debt Capital Market issuances from several institutions totalling USD 1.5 Bn, subject to customary terms and conditions. In the Group's assessment these, once executed, along with existing cash and facilities will provide an option to the Group to refinance the Notes should it choose to do so.
On October 24, 2019, The Honourable Supreme Court of India delivered an adverse court judgement in India on the Group's intermediate parent in relation to a long outstanding industry wide case ("the Court Judgement"). The overall financial impact arising out of the Court Judgement, is still being assessed by the intermediate parent company but this could result in USD 505 of the Group's Notes requiring to be prepaid on a voluntary basis to avoid loan incurrence covenants on those Notes coming into force. If required, this prepayment can be made from the Group's existing facilities with no adverse impact to the Group's operations or going concern.
As part of its assessment of going concern, the Directors have taken into account all factors likely to affect its future performance and financial position, including the Group's cash flows under both base and a number of reasonable worst case scenarios, solvency and liquidity positions, and borrowing facilities and all the risks and uncertainties relating to its business activities. The Group has also considered whether any events are likely to arise that would result in an early repayment requirement of the balance of the Notes and has assessed any material restrictions that may be imposed on it consequent to the actions / inactions of its intermediate parent company. The Group will continue to assess this risk as the impact of the Court Judgement becomes clearer and has considered whether this could give rise to the early repayment of the balance of the remaining USD 2.2 Bn of Notes. This represents a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. However the Group has cash and facilities together with a number of financing options as detailed above and other operational mitigation measures available to it should they be required and has concluded that despite the risks associated with the Court Judgement against the intermediate parent and its impact on the Notes, the Group will be able to continue as a going concern.
4. Significant transactions / new developments
a) Under a deed dated May 28, 2019 between the Company, Airtel Africa Mauritius Limited ('AAML' / the 'parent') and the several global investors, the terms of minority adjustments were varied such that the obligation existing until such date were assumed by the parent of the Company. Consequently, these minority adjustment liabilities have been reversed through equity.
Further, other indemnity adjustments expired on the publication of the registration document of the Company on May 28, 2019 in accordance with the original Share Subscription Agreement between the Company and the global investors and hence these were recorded as non-operating income in the statement of comprehensive income.
b) As outlined in the Company's prospectus dated June 17, 2019 and pursuant to a resolution of the Company passed on May 24, 2019, the Company has completed a reduction of its share capital by cancelling and extinguishing 50,000 redeemable deferred shares and reducing the amount standing to the credit of the share premium account of the Company to zero. The capital reduction was formally approved by the High Court in London and registered with the Registrar of Companies on October 22, 2019. Consequently GBP 50,000 will be repaid to the holder of the redeemable deferred shares.
c) During the six months ended September 30, 2019 the Government of Tanzania ('GoT'), Bharti Airtel Tanzania B.V. ('BATBV') and Airtel Tanzania ('AT') executed agreements to resolve all disputes. These mainly cover the following: (i) New shares to be issued by AT to the GoT at no cost such that the GoT will own 49 per cent of the entire share capital of AT and BATBV will own 51 per cent; (ii) Tanzania Revenue Authority's (TRA) tax claim of approximately USD 874 on Bharti Airtel International (Netherlands) B.V. ('BAIN') will be treated as settled without any liability; (iii) Tanzania Communications Regulatory Authority's Compliance Decision of April 20, 2018 imposing on AT a fine of approximately USD 183 too will be treated as settled without any liability; (iv) TRA's various tax claims against AT of approximately USD 47 will; subject to verification and consideration of the records, be treated as settled without any liability; (v) AT will be issued a one-time tax clearance certificate in regard to tax disputes in respect of all historical tax claims up to December 31, 2018; (vi) In all cases this shall not be construed as an admission of fact or law or as a concession or admission of any wrongdoing, obligation, liability by any party; (vii) AT, subject to verification and consideration of the records by the TRA will be allowed the carry-forward tax loss balance as recorded in AT's corporate tax return for the tax year ended December 31, 2017; (viii) Parties will co-operate to effect the sale of towers and the proceeds thereof will be distributed in a pre-defined manner towards repayment of AT's shareholder loan, to be retained in AT and balance as a special one-time pay-out to the GoT. On receipt of its share of the proceeds from sale of towers, BATBV will waive the balance shareholder loan; (ix) A valid Listing Waiver will be provided to AT and the Group entities in AT in accordance with the laws of Tanzania. Furthermore, in case of listing, the BATBV shares in AT are not subject to listing; (x) Group entities will not be subject to any tax in connection with any of the transactions described above; and (xi) AT will pay to GOT, approximately USD 0.4 every month for a period of 60 months, effective April 1, 2019 for the support services provided. As at September 30, 2019, TRA's tax claim of approx. USD 874 has been vacated without any liability. The completion of all other steps set out above are still in progress at the date of authorisation of the financial statements.
d) As part of the IPO process, the Company through one of the underwriters, carried out share price stabilisation activities during a 30 day period after the IPO. Company's parent lent shares to the underwriter to facilitate these stabilisation activities. Such stabilization activities resulted in proceeds of USD 7 which being earned on Company's own shares has been recorded as 'Other reserves' within equity.
e) Airtel Gabon is involved in a dispute with a company, 2JTH, with respect to disputed invoices for services provided by 2JTH to Airtel Gabon under a service contract. Although the original order under the contract was issued by Airtel Gabon for a total amount of CFA 473,800,000 (approximately USD 1), in 2014 2JTH initiated arbitration claiming a sum of approximately CFA 1.9 billion (approximately USD 3.3), which was awarded by an arbitral tribunal. A lower court on the September 29, 2015 enforced the arbitral award and ordered certain of Airtel Gabon's banks to release the funds under a penalty of CFA 50 Mn per day (approximately USD 0.08). Airtel Gabon appealed to the Court of Appeal, which dismissed the appeal on June 15, 2016 and imposed an additional CFA 1 billion (approximately USD 1.7) as damages for abuse of court process. Airtel Gabon filed an appeal before the OHADA Common Court of Justice and Arbitration ('CCJA' in Abidjan), Ivory Coast, the highest commercial court of OHADA countries, which confirmed the arbitral award but quashed the rulings of September 2015 and June 2016, including the imposition of the daily penalty in November 2018. In mid- May 2019, a lower court in Gabon issued an order against Airtel Gabon reinstating the daily penalty imposed in 2015, for an amount of approximately CFA 35 billion (approximately USD 60). Airtel Gabon lodged an immediate appeal and stay of execution. On June 19, 2019, the Supreme Court granted a stay of execution. Airtel Gabon believes that the lower court order is without merit given the prior decision of CCJA. In July 2019 the Court of Appeal delivered a judgment, which was served on Airtel in August 2019, confirming the ordinance of mid - May 2019 condemning Airtel to pay the sum of CFA 35 billion (approximately USD 60) which was intended to be seized on the assets of Airtel Gabon. Airtel Gabon appealed to the Supreme Court and applied for a stay by challenging the merits of the Appeal Court ruling itself. The magistrate of the lower court who took the injunction and the presiding Judge of the court of appeal have both been removed from their respective positions by the President and a criminal complaint has been lodged by Airtel against 2JTH since June 2019 for fraud and extortion on the ground that 2JTH is using null and void decisions against banks to try to extort money from the company. In September 2019, the Supreme Court of Gabon issued a stay of execution against the ruling of the court of appeal of July 2019. With this stay of execution by the Supreme Court, 2JTH is not in position to pursue the seizure of Airtel Gabon's bank accounts. The next step is the proceeding before the OHADA regional court where Airtel Gabon will seek the annulment of the injunction of the mid-May 2019 and court of appeal ruling of July 2019.
f) On December 13, 2018, Authority for Regulations of Electronic Communication & Post (ARCEP) "the regulator" in Gabon sanctioned Airtel Gabon for provision of poor quality services on its network. In connection with such sanction, ARCEP has issued Quality of Service charges of approximately USD 14. Consequent to engagements between Airtel Gabon and the regulator, payment was suspended by the regulator until further notice. On May 27 2019, the regulator had issued a revised demand letter for USD 8.6. Airtel Gabon continued to engage with the regulator on this matter. The regulator through a letter dated July 3, 2019 (received on July 4 2019) informed that Airtel Gabon has to pay a final amount of USD 8.6 within 72 hours. Airtel Gabon through a letter dated July 8 2019 informed the regulator that the reduced penalty of USD 8.6 will be paid in instalments, first instalment of USD 3.4 will be paid in the 3rd week of July 2019, and other 2 instalments of USD 2.6 and USD 2.6 in August 2019 and September 2019 respectively. In response to Airtel Gabon's request, the regulator has provided onetime approval on this payment plan through their letter dated July 15 2019. Accordingly, the Company has paid the penalty of USD 8.6 in instalments during the quarter as per the approved plan from the regulator.
g) The proposed interim dividend of $ 3c per share was approved by the Board on 24 October 2019 and has not been included as a liability as at September 30, 2019.
5. Segmental Information
In line with the new strategy and the re-organisation, the Group revised its organisational structure on the basis of geographical clusters (from erstwhile one Africa segment) in March 2019. Segment information is provided on the basis of geographical clusters to the Group's Chief Executive Officer (Chief Operating Decision Maker - 'CODM') for the purposes of resource allocation and assessment of performance. The reporting segments, which have been retrospectively applied for all the periods in the financial statements, are as follows:
Nigeria
East Africa: Comprising of operations in Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia
Rest of Africa: Comprising of operations in Niger, Gabon, T Chad, Congo, DRC, Madagascar and Seychelles
Each segment derives revenue from mobile services, mobile money and other services. Expenses, assets and liabilities primarily related to the corporate headquarters of the Group are presented as Unallocated Items.
The amounts reported to CODM are based on the accounting principles used in the preparation of the financial statements. Segmental performance is evaluated based on segment revenue and segment result.
Segment result is Underlying EBITDA i.e. earnings before interest, tax, depreciation and amortisation before exceptional items as adjusted for corporate social responsibility costs. This is the measure reported to the CODM for purposes of resource allocation and assessment of segment performance.
Inter-segment pricing and terms are reviewed and changed by the management to reflect changes in market conditions and changes to such terms are reflected in the period in which the changes occur.
Inter-segment revenues eliminated upon consolidation of segments are reflected in the 'Eliminations / Adjustments' column.
Segment assets and segment liabilities comprise those assets and liabilities directly managed by each segment. Segment assets primarily include receivables, property, plant and equipment, capital work in progress, right-to-use assets, intangibles assets, inventories, cash and cash equivalents. Segment liabilities primarily include operating liabilities. Segment capital expenditure comprises of investment in property, plant and equipment, capital work in progress, intangible assets (excluding licenses) and capital advances.
Summary of the segmental information for the six months ended and as of September 30, 2019 is as follows:
Sep-19 Nigeria East Africa Rest of Africa Unallocated Eliminations Total
-------- ------------ --------------- ------------ ------------- ------
Revenue from external customers
Mobile services 636 503 395 - - 1,534
Mobile money 3 73 28 - - 104
Others 0 2 2 - - 4
639 578 425 (2) - 1,640
Inter-segment revenue 1 0 1 - (2) -
Total revenue 640 578 426 (2) (2) 1,640
Segment results: Underlying EBITDA 341 233 140 (20) 25 719
Less:
Depreciation and amortisation
(excluding exceptional items) 89 117 93 1 (0) 300
Finance costs 209
Finance income (60)
Non-operating Income, (net) (70)
Share of loss of associate (0)
Corporate social responsibility costs 0 0 0 3 - 3
Exceptional items pertaining to
operating profit 3 5 10 - 3 21
Profit before tax 316
Other segment items
Capital expenditure 115 60 69 2 - 246
-------------------------------------- -------- ------------ --------------- ------------ ------------- ------
As of September 30, 2019
Segment assets 1,237 1,604 1,618 30,775 (25,586) 9,648
Segment liabilities 962 2,614 2,664 17,057 (17,034) 6,263
Investment in associate (included in
segment assets above) - - 4 - - 4
Summary of the segmental information for the six months ended September 30, 2018 and as of March 31, 2019 is as follows:
Sep-18 Nigeria East Africa Rest of Africa Unallocated Eliminations Total
-------- ------------ --------------- ------------ ------------- ------
Revenue from external customers
Mobile services 516 490 424 - - 1,430
Mobile money 3 54 25 - - 82
Others 0 1 2 - - 4
519 545 451 (2) - 1,513
Inter-segment revenue 1 1 4 - (6) -
Total revenue 520 546 455 (2) (6) 1,513
Segment results: Underlying EBITDA 246 211 176 (10) 26 649
Less:
Depreciation and amortisation
(excluding exceptional items) 78 111 95 1 (32) 253
Finance costs 226
Finance income (8)
Share of profit of joint venture and
associate 24
Corporate social responsibility costs 0 0 0 2 - 2
Exceptional items pertaining to
operating profit 25 1 1 3 - 30
Profit before tax 122
Other segment items
Capital expenditure 44 74 36 1 - 155
-------------------------------------- -------- ------------ --------------- ------------ ------------- ------
As of March 31, 2019
Segment assets 1,253 1,888 1,526 29,781 (25,336) 9,112
Segment liabilities 1,130 2,896 2,696 16,926 (16,968) 6,680
Investment in joint venture and
associate (included in segment
assets above) - - 3 - - 3
6. Taxation
The tax expense / (credit) is as follows:
For the six months ended
September 30, 2019 September 30, 2018
-------------------------------- --------------------------------
Current tax 70 37
Deferred tax 18 (119)
Tax expense / (credit) 88 (82)
================================ ================================
7. Exceptional items
Underlying profit before tax excludes the following exceptional items:
For the six months ended
----------------------------------------------------------------------------
September 30, 2019 September 30, 2018
------------------------------------- -------------------------------------
Profit before tax 316 122
Add: Exceptional items
- Network modernisation (1) 19 25
- Settlement of litigations and claims
(2) - 3
- Share issue and IPO related expenses 7 -
(3)
- Voluntary retirement scheme (4) - 2
- Reversal of indemnities (5) (72) -
(46) 30
Underlying profit before tax 270 152
===================================== =====================================
1. mainly includes accelerated depreciation pertaining to the non-usable de-installed network equipment as part of the Group's network modernisation programmes started in 2017. The network modernisation programmes which are under progress are expected to be completed by March 2020.
2. represents a charge due to settlement of past litigations, vendor claims, reconciliation of balances and tax related contingent liability.
3. represents equity issuance related expenses under IPO of the Company including cost and fair value changes of derivatives taken for IPO proceeds. It also includes equity issuance cost of rights issue in a subsidiary, Congo B.
4. mainly relates to the voluntary retirement of employees on account of restructuring in Madagascar and Rwanda.
5. represents expiry of indemnity obligation on the publication of registration document of the Company. This is presented as 'Non-operating income' in the statement of comprehensive income.
Underlying profit after tax excludes the following exceptional items:
For the six months ended
----------------------------------------------------------------------------
September 30, 2019 September 30, 2018
------------------------------------- -------------------------------------
Profit after tax 228 204
-Exceptional item (as above) (46) 30
-Tax on above exceptional items (1) (4)
- Deferred tax asset recognition (27) (116)
- Reversal of current tax provision - (27)
(74) (117)
------------------------------------- -------------------------------------
Underlying profit after tax 154 87
===================================== =====================================
Profit attributable to non-controlling interests include benefit of USD 0 and expense of USD 7 during the six months ended September 30, 2019 and 2018 respectively, relating to the above exceptional items.
8. Earnings per share ('EPS')
The details used in the computation of basic EPS:
For the six months ended
September 30, 2019 September 30, 2018
----------------------------------- -----------------------------------
Profit for the period attributable to
owners of the Company 215 181
Weighted average ordinary shares
outstanding for basic EPS(1) 3,413,117,559 1,167,757,622
Basic EPS 0.06 0.16
=================================== ===================================
The details used in the computation of diluted EPS:
For the six months ended
September 30, 2019 September 30, 2018
----------------------------------- -----------------------------------
Profit for the period attributable to
owners of the Company 215 181
Weighted average ordinary shares
outstanding for diluted EPS (1) (2) 3,414,000,861 1,167,757,622
Diluted EPS 0.06 0.16
=================================== ===================================
1. Deferred shares have not been considered for EPS computation as they do not have right to participate in profits. For periods prior to the re-organisation (whereby the Company became the parent of BAIN and its subsidiaries), the weighted average number of shares has been calculated by multiplying the weighted average number of shares of BAIN by the share for share exchange ratio. For the period post re-organisation, the weighted average number of shares considers the shares in issue during the respective periods.
2. The difference between the basic and diluted number of shares at the end of September 2019 being 883,303 (September 2018: Nil) relates to awards committed but not yet issued under the Group's share-based payment schemes.
3. Refer Note 11 for detail on the ordinary share movements as part of the initial public offering process during the six months ended September 30, 2019.
9. Property, plant and equipment ('PPE')
The following table presents the reconciliation of changes in the carrying value of PPE for the six months ended September 30, 2019 and 2018:
Leasehold Improvements Building Land Plant and Equipment Furniture & Fixture Vehicles Office Equipment Computer Total Capital work-in-progress
--------------------------- ----------------- ------------- -------------------------- ----------------------- ---------------- ---------------------- ------------------ ------------- -----------------------------
Gross
carrying
value
Balance as of
April 1,
2018 52 56 29 1,725 15 30 21 652 2,580 271
Additions 0 0 - 162 3 0 4 12 181 183
Acquisition
through
business
combinations - - - 6 - - - - 6 -
Disposals /
adjustments (0) (0) 3 (7) (1) (1) 1 5 (0) (183)
Exchange
differences (2) (4) (1) (143) (2) (1) (2) (23) (179) (8)
Balance as of
September
30, 2018 50 52 31 1,743 15 28 24 646 2,589 263
=========================== ================= ============= ========================== ======================= ================ ====================== ================== ============= =============================
Balance as of
April 1,
2019 50 52 30 1,957 18 27 29 670 2,833 365
Additions 0 0 0 286 5 0 3 10 304 260
Disposals /
adjustments (1) - (0) (14) (2) (2) 0 (4) (23) (306)
Exchange
differences (1) (1) (0) (64) (1) (0) (1) (12) (80) (5)
Balance as of
September
30, 2019 48 51 30 2,165 20 25 31 664 3,034 314
=========================== ================= ============= ========================== ======================= ================ ====================== ================== ============= =============================
Accumulated
depreciation
Balance as of
April 1,
2018 40 11 1 297 7 27 14 624 1,021 -
Charge 1 2 0 162 2 1 2 16 186
Disposals /
adjustments 0 0 1 0 (1) (1) (3) 7 4
Exchange
differences (2) (1) (0) (91) (2) (0) (2) (25) (123)
Balance as of
September
30, 2018 39 12 2 368 6 27 11 622 1,087 -
=========================== ================= ============= ========================== ======================= ================ ====================== ================== ============= =============================
Balance as of
April 1,
2019 41 13 2 505 9 25 14 627 1,236 -
Charge 2 2 0 186 2 0 4 12 208 -
Disposals /
adjustments (1) - 0 (6) (1) (2) (0) (2) (12) -
Exchange
differences (1) (0) 0 (42) (1) (0) (1) (11) (56) -
Balance as of
September
30, 2019 41 15 2 643 9 23 17 626 1,376 -
=========================== ================= ============= ========================== ======================= ================ ====================== ================== ============= =============================
Net carrying
value
As of April
1, 2018 12 45 28 1,428 8 3 7 28 1,559 271
As of
September
30, 2018 11 40 29 1,375 9 1 13 24 1,501 263
As of April
1, 2019 9 39 28 1,452 9 2 15 43 1,597 365
As of
September
30, 2019 7 36 28 1,522 11 2 14 38 1,658 314
10. Cash and cash equivalents ('C&CE')
For the purpose of the statement of cash flows, C&CE are as follows:
As of
--------------------------------------------------------------------------
September 30, 2019
------------------ September 30, 2018
------------------------------------
C&CE as per statement of financial
position 1,469 439
Bank overdraft (252) (156)
1,217 283
==================================== ====================================
11. Share Capital
As of
------------------------------------------------------------------------
September 30, 2019 March 31, 2019
---------------------------------------- ------------------------------
Issued, Subscribed and fully paid-up shares
3,758,151,504 Ordinary shares of Airtel
Africa Limited of USD 0.5 each (March
2019: 3,081,744,577
Ordinary shares of USD 1 each) (1) (2) 1,879 3,082
3,081,744,577 Deferred shares of USD 0.5 1,541 -
each (1)
50,000 redeemable Deferred shares of GBP 1 0 -
each (3)
3,420 3,082
======================================== ==============================
1. On June 27, 2019, the Company sub-divided and converted each ordinary share of USD 1 into:
-- One ordinary share of USD 0.50 each having the same rights and being subject to the same restrictions as the existing ordinary shares of the Company; and
-- One deferred share of USD 0.50 each. These deferred shares are not listed and are intended to be cancelled in due course. No share certificates are to be issued in respect of the deferred shares. These are not freely transferable and would not affect the net assets of the Company. The deferred shareholders shall have no right to receive any dividend or other distribution or return whether of capital or income. On a return of capital in a liquidation, the deferred shareholders shall have the right to receive the nominal amount of each deferred share held, but only after the holder of each Other share (i.e. shares other than the deferred shares) in the capital of the Company shall have received the amount paid up on each such Other share held and the payment in cash or in specie of GBP 100,000 (or its equivalent in any other currency) on each such Other shares held. The Company shall have an irrevocable authority from each holder of the deferred shares at any time to purchase all or any of the deferred shares without obtaining the consent of the deferred shareholders in consideration of the payment of an amount not exceeding one US cent in respect of all of the deferred shares then being purchased.
2. On July 3, 2019 and July 9, 2019, the Company completed its listing on the London Stock Exchange (LSE) and Nigerian Stock Exchange (NSE) respectively and raised USD 680 (including share premium of USD 342) from the issue of 676,406,927 new ordinary shares.
3. During the six months ended September 30, 2019, in order to meet the share capital requirements for re-registration as a public limited company, the Company allotted 50,000 redeemable deferred shares of GBP 1.00 each (the 'Redeemable Deferred Shares') to AAML.
12. Borrowings
Non- Current
As of
------------------------------------------------------------------
September 30, 2019 March 31, 2019
------------------------------------- ---------------------------
Secured
Term loans 10 20
Less: Current portion (10) (20)
------------------------------------- ---------------------------
0 0
Unsecured
Term loans 503 296
Non-convertible bonds 2,700 2,680
------------------------------------- ---------------------------
3,203 2,976
Less: Current portion (503) (539)
------------------------------------- ---------------------------
2,700 2,437
2,700 2,437
===================================== ===========================
Current
As of
------------------------------------------------------------------
September 30, 2019 March 31, 2019
------------------------------------- ---------------------------
Secured
Term loans 0 0
Bank overdraft 42 24
------------------------------------- ---------------------------
42 24
Unsecured
Term loans 32 409
Bank overdraft 208 192
------------------------------------- ---------------------------
240 601
------------------------------------- ---------------------------
283 625
Current maturities of long-term borrowings 513 559
===================================== ===========================
Additional amounts of USD 180 were drawn down under the Group's loan facilities and overdraft.
Repayments of other bank loans amounting to USD 319 were made during the period, in line with previously disclosed repayment terms.
13. Contingent liabilities and commitments
(i) Contingent liabilities
As of
September 30, 2019 March 31, 2019
------------------------------------------- -------------------------------------------
(i) Taxes, Duties and Other
demands
(under adjudication /
appeal / dispute)
-Sales Tax & Service
Tax 38 40
-Income Tax 50 51
-Customs Duty & Excise
Duty (1) 11 20
-Other miscellaneous
demands (2) 12 13
(ii) Claims under legal
cases including
arbitration matters 21 22
132 146
=========================================== ===========================================
There are uncertainties in the legal, regulatory and tax environments in the countries in which the Group operates, and there is a risk of demands which may be raised based on current or past business operations. Such demands have in past been challenged and contested on merits with appropriate authorities and appropriate settlements agreed. Other than amounts provided where the group believes there is a probable settlement and contingent liabilities where the group has assessed the additional possible amounts, there are no other legal, tax or regulatory obligations which may be expected to be material to the financial statements.
The movement in contingent liabilities during the six months ended September 30, 2019 majorly comprise of:
(1) Settlement of Excise Duty assessment pertaining to year 2014 and 2015 in DRC amounting to USD 15. Demand raised under fresh Custom Duty assessment pertaining to year 2014 to 2018 in DRC amounting to USD 5.
(2) Settlement of cases pertaining to social contribution in DRC for year 2012 to 2015 amounting to USD 5.
Guarantees:
Guarantees outstanding as of September 30, 2019 and March 31, 2019 amounting to USD 17 and USD 19 respectively have been issued by banks and financial institutions on behalf of the Group. These guarantees include certain financial bank guarantees which have been given for sub judice matters, the amounts with respect to these have been disclosed under capital commitments, contingencies and liabilities, as applicable, in compliance with the applicable accounting standards.
(ii) Capital commitments
The Group has contractual commitments towards capital expenditure (net of related advances paid) of USD 348 and USD 273 as of September 30, 2019 and March 31, 2019 respectively.
14. Related Party disclosure
(a) List of related parties
i. Parent company
Airtel Africa Mauritius Limited (since September 6, 2018)
Network i2i Limited (until September 6, 2018)
ii. Intermediate parent entity
Network i2i Limited (since September 6, 2018)
Bharti Airtel Limited
iii. Ultimate controlling entity
Bharti Enterprises (Holding) Private Limited. It is held by private trusts of Bharti family, with Mr. Sunil Bharti Mittal's family trust effectively controlling the company.
iv. Joint ventures
Bharti Airtel Ghana Holding B.V. (until August 24, 2018)
Airtel Ghana Limited (until August 24, 2018)
Millicom Ghana Company Limited (until August 24, 2018)
Airtel Mobile Commerce (Ghana) Limited (until August 24, 2018)
Mobile Financial Services Limited (until August 24, 2018)
v. Associate
Seychelles Cables Systems Company Limited
vi. Other entities with whom transactions have taken place during the reporting period a. Fellow subsidiaries
Bharti Airtel International (Mauritius) Limited
Nxtra Data Limited
Bharti Airtel (Services) Limited
Bharti International (Singapore) Pte Ltd
Bharti Airtel (UK) Limited
Bharti Airtel (USA) Limited
Bharti Airtel (France) SAS
Bharti Airtel Lanka (Private) Limited
Bharti Hexacom Limited
b. Other related parties
Airtel Ghana Limited (since August 24, 2018)
Singapore Telecommunication Limited
c. Key Management Personnel ('KMP')
Raghunath Venkateswarlu Mandava (w.e.f. July 12, 2018)
Jantina C. Uneken - Van de Vreede (till November 12, 2018)
(b) The details of significant transactions with the related parties for the six months ended September 30, 2019 and 2018 respectively, are provided below:
For the six months ended
--------------------------------------------------------------------------------
September 30, 2019 September 30, 2018
------------------------------------ ------------------------------------------
Sale / rendering of services
Airtel Ghana Limited 0 1
Bharti Airtel (France) SAS 2 3
Bharti Airtel (UK) Limited 43 35
Bharti Airtel Limited 4 7
Bharti International (Singapore)
Pte Ltd 1 0
Singapore Telecommunication Limited 0 0
Bharti Airtel Lanka (Private)
Limited 0 0
Bharti Airtel Services Limited 0 -
Network i2i Ltd. 0 -
Purchase / receiving of services
Airtel Ghana Limited 0 1
Bharti Airtel (France) SAS 7 7
Bharti Airtel (UK) Limited 27 17
Bharti Airtel Limited 13 13
Bharti Airtel Services Limited 0 1
Bharti International (Singapore)
Pte Ltd 6 6
Network i2i Ltd. 3 3
Nxtra Data Limited 1 0
Singapore Telecommunication Limited 0 0
Bharti Airtel Lanka (Private)
Limited 0 0
Seychelles Cable Systems Company
Limited 0 0
Guarantee and collateral fees
Bharti Airtel Limited 5 9
Loan conversion
Network i2i Ltd. - 1,107
Loans repayment
Network i2i Ltd. - 259
Bharti Airtel (France) SAS - 2
Bharti Airtel (UK) Limited - 31
Bharti Airtel (USA) Limited - 6
Loans received
Network i2i Ltd. - 410
Bharti Airtel (UK) Limited - 9
Bharti Airtel (USA) Limited - 1
15. Fair Value of financial assets and liabilities
The category wise details as to the carrying value, fair value and the level of fair value measurement hierarchy of the Group's financial instruments are as follows:
Carrying value as of Fair value as of
-------------------------------------------------------------------------- -----------------------------------------------------------------------
September 30, 2019 March 31, 2019 September 30, 2019 March 31, 2019
-------------------------------------- ---------------------------------- -------------------------------------- -------------------------------
Financial
assets
FVTPL
Derivatives
- Forward
and option Level
contracts 2 1 4 1 4
- Currency
swaps and
interest Level
rate swaps 2 2 46 2 46
Level
Investments 2 0 0 0 0
Amortised
cost
Security deposits 7 9 7 9
Trade receivables 131 121 131 121
Cash and cash
equivalents 1,469 848 1,469 848
Other bank balances 277 259 277 259
Other financial
assets 67 73 67 73
1,954 1,360 1,954 1,360
====================================== ================================== ====================================== ===============================
Financial
liabilities
FVTPL
Derivatives
- Forward
and option Level
contracts 2 35 28 35 28
- Currency
swaps and
interest Level
rate swaps 2 1 7 1 7
- Embedded Level
derivatives 2 4 4 4 4
- Embedded Level
derivatives 3 - 64 - 64
Amortised
cost
Borrowings - Level
fixed rate 1 2,700 2,680 2,791 2,747
Borrowings - Level
fixed rate 2 49 65 53 71
Borrowings - floating
rate 748 875 748 875
Trade payables 705 712 705 712
Other financial
liabilities 391 611 391 611
4,633 5,046 4,728 5,119
====================================== ================================== ====================================== ===============================
The following methods / assumptions were used to estimate the fair values:
i. The carrying value of bank deposits, trade receivables, trade payables, short-term borrowings, other current financial assets and liabilities approximate their fair value mainly due to the short-term maturities of these instruments.
ii. Fair value of quoted financial instruments is based on quoted market price at the reporting date.
iii. The fair value of non-current financial assets, long-term borrowings and other financial liabilities is estimated by discounting future cash flows using current rates applicable to instruments with similar terms, currency, credit risk and remaining maturities.
iv. The fair values of derivatives are estimated by using pricing models, wherein the inputs to those models are based on readily observable market parameters. The valuation models used by the Group reflect the contractual terms of the derivatives (including the period to maturity), and market-based parameters such as interest rates, foreign exchange rates, volatility etc. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgement and inputs thereto are readily observable.
During the six months ended September 30, 2019 and year ended March 31, 2019, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.
The following table describes the key inputs used in the valuation (basis discounted cash flow technique) of the Level 2 financial assets / liabilities as of September 30, 2019 and March 31, 2019:
Financial assets / liabilities Inputs used
------------------------------------- -------------------------------------
- Currency swaps, forward and option Forward foreign currency exchange
contracts rates, Interest rate
- Interest rate swaps Prevailing/forward interest rates
in market, Interest rate
- Embedded derivatives Prevailing interest rates in market,
inflation rates
- Other financial assets / fixed
rate borrowings / other financial Prevailing interest rates in market,
liabilities Future payouts , Interest rates
Reconciliation of fair value measurements categorised within level 3 of the fair value hierarchy - Financial Assets / (Liabilities) (net)
For the three months ended For the year ended
------------------------------------------------------ -----------------------------------------
September 30, 2019 March 31, 2019
------------------------------------------------------ -----------------------------------------
Opening Balance 64 -
Issuance - 64
Reversal in (64) -
retained earnings
Closing Balance - 64
====================================================== =========================================
Valuation process used for fair value measurements categorized within level 3 of the fair value hierarchy
As part of issue of equity shares to global investors, the Group has committed indemnities pertaining to acquisition of non-controlling interest in Group's operations in Nigeria and Congo B. The liability for such indemnity derives its value based on the price of the shares in these entities and hence is a derivative liability. The significant input to valuation is the probability of acquisition of minority interest at a lower value and avoiding this pay-out to the global investors. The liability has been valued on the basis of probability weighted amount payable for acquisition of non-controlling interest in these entities which is a significant unobservable input to the valuation.
Narrative description of sensitivity of fair value changes to changes in unobservable inputs
As at March 31, 2019, any increase / decrease in probability of expected pay-outs under non-controlling indemnity liability by 5% would have resulted in 6% increase / decrease in the derivative liability value.
16. Events after the balance sheet date
Other than the following matters, no subsequent events or transactions have occurred since the date of statement of financial position or are pending that would have material effect on the financial statements as at and for the six months ended September 30, 2019:
-- The capital reduction (refer Note 4 (b)) was formally approved by the High Court in London and registered with the Registrar of Companies on October 22, 2019. Consequently GBP 50,000 will be repaid to the holder of the redeemable deferred shares.
Appendix -IAS 34
Additional information pertaining to three months ended September 30, 2019
Condensed Consolidated Statement of Comprehensive Income
(All amounts are in US Dollar millions; unless stated otherwise)
For three months ended
----------------------------------------------------------------------------
September 30, 2019 September 30, 2018
------------------------------------- -------------------------------------
Income
Revenue 844 769
Other income 7 6
851 774
Expenses
Network operating expenses 156 141
Access charges 94 85
License fee / spectrum charges
(revenue share) 48 47
Employee benefits expense 61 53
Sales and marketing expenses 46 42
Impairment loss on financial
assets (3) 7
Other expenses 76 68
Depreciation and amortisation 162 137
641 581
Operating profit 210 194
Finance costs 96 148
Finance income (38) (5)
Non-operating cost 2 -
Share of loss / profit of joint
ventures and associate (0) 8
Profit before tax 150 42
Tax expense / (credit) 54 (12)
Profit for the period 96 54
Profit before tax (as presented
above) 150 42
Add: Exceptional items (net) 4 12
Underlying profit before tax 153 54
---------------------------------------- ------------------------------------- -------------------------------------
Profit after tax (as presented
above) 96 54
Add: Exceptional items (net) (11) (18)
Underlying profit after tax 85 36
---------------------------------------- ------------------------------------- -------------------------------------
Other comprehensive income ('OCI')
Items to be reclassified subsequently
to profit or loss:
Net gains / (losses) due to
foreign currency translation
differences 7 (86)
Share of OCI of associate - 0
Net gain on net investments hedge 7 0
Net loss on cash flow hedge (2) (2)
Other comprehensive income / (loss)
for the period 12 (88)
Total comprehensive income / (loss)
for the period 109 (33)
===================================== =====================================
Profit for the period attributable to: 96 54
Owners of the Company 90 56
Non-controlling interests 6 (2)
------------------------------------- -------------------------------------
Other comprehensive income / (loss)
for the period attributable to: 12 (88)
Owners of the Company 13 (84)
Non-controlling interests (0) (4)
------------------------------------- -------------------------------------
Total comprehensive income / (loss)for
the period
attributable to: 109 (34)
Owners of the Company 103 (27)
Non-controlling interests 6 (7)
------------------------------------- -------------------------------------
INDEPENT REVIEW REPORT TO AIRTEL AFRICA PLC
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2019 which comprises the Interim Condensed Consolidated Statement of Comprehensive Income, Interim Condensed Consolidated Statement of Financial Position, Interim Condensed Consolidated Statement of Changes in Equity, Interim Condensed Consolidated Statement of Cash Flows and related notes 1 to 16.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Group a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Emphasis of matter related to going concern
We draw attention to note 3.1 to the condensed set of financial statements. On 24 October 2019, the Honourable Supreme Court of India has ruled on a matter that will result in unknown financial penalties being levied against Bharti Airtel Limited (the intermediate parent company). The impact of these penalties on the intermediate parent company, and whether this could result in an early call on any or all of $2.7 billion of intermediate parent guaranteed bonds set out in note 3 indicates the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern. Notwithstanding this material uncertainty note 3.1 describes the Directors' view on why it is appropriate to prepare the financial information on a going concern basis. Our review conclusion is not modified in respect of this matter.
Deloitte LLP
Statutory Auditor
London, United Kingdom
25 October 2019
Alternative Performance Measures (APMs)
Introduction
In the reporting of financial information, the Directors have adopted various APMs. These measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be directly comparable with other companies' APMs, including those in the Group's industry.
APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.
Purpose
The Directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Group.
APMs are also used to enhance the comparability of information between reporting periods and geographical units (such as like-for-like sales), by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid users in understanding the Group's performance.
Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes.
The Directors believe the following metrics to be the APMs used by the Group to help evaluate growth trends, establish budgets and assess operational performance and efficiencies. These measures provide an enhanced understanding of the Group's results and related trends, therefore increasing transparency and clarity into the core results of the business.
The following metrics are useful in evaluating the Group's operating performance:
APM Closest Adjustment Table Definition and
equivalent to reconcile Reference(1) Purpose
IFRS to IFRS measure
measure
----------------
Underlying Operating Table The Group
EBITDA Profit * Depreciation and amortisation A defines
and Margin Underlying
EBITDA
* Charity and donation as Operating
profit/ (loss)
for the
* Exceptional Item period before
depreciation
and
amortization,
charity and
donation and
adjusted for
exceptional
items.
Group defines
Underlying
EBITDA Margin
as Underlying
EBITDA divided
by total
revenue.
Underlying
EBITDA and
margin are
measures
used by the
Directors to
assess the
trading
performance of
the business
and are
therefore the
measure of
segment
profit that the
Group presents
under
IFRS.
Underlying
EBITDA and
margin
are also
presented on a
consolidated
basis because
the Directors
believe
it is important
to consider
profitability
on a basis
consistent with
that of
the Group's
operating
segments. When
presented on a
consolidated
basis,
Underlying
EBITDA and
margin are APM.
Depreciation
and
amortisation is
a
non-cash item
which
fluctuates
depending
on the timing
of capital
investment.
Directors
believe that a
measure which
removes this
volatility
improves
comparability
of the Group's
results period
on period
and hence is
adjusted to
arrive at
Underlying
EBITDA and
Margin.
Charity and
donation is not
related
to the trading
performance of
the Group
and hence
adjusted to
arrive at
Underlying
EBITDA and
Margin.
Exceptional
items are
additional
specific
items that
because of
their size,
nature
or incidence in
the results,
are considered
to hinder
comparison of
the Group's
performance on
a period to
period basis
and could
distort the
understanding
of our
performance for
the period and
the
comparability
between periods
and
hence are
adjusted to
arrive at
Underlying
EBITDA and
Margin.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Underlying Table The Group
Operating * Access charges B defines
Expenditure Underlying
Operating
* Depreciation and amortisation Expenditure as
expenses
excluding
* Charity and Donation access
charges,
depreciation
* Exceptional items and
amortisation,
charity and
donation and
adjusted for
exceptional
items.
The Directors
view Underlying
Operating
Expenditure to
be a meaningful
measure
to track the
actual cost of
the Group's
business,
excluding
exceptional
items,
as well as to
track the
efficiency
and
productivity of
the business.
The Directors
view access
charges in
net level (net
of revenue and
cost)
in revenue
account and
hence adjusted
to arrive at
Underlying
Operating
Expenditure.
Depreciation
and
amortisation is
a
non-cash item
which
fluctuates
depending
on the timing
of capital
investment.
Directors
believe that a
measure which
removes this
volatility
improves
comparability
of the Group's
trading
expenses period
on period and
hence is
adjusted to
arrive at
Underlying
Operating
Expenditure.
Charity and
donation is not
related
to the trading
expenses of the
Group
and hence
adjusted to
arrive at
Underlying
Operating
Expenditure.
Exceptional
items are
additional
specific
items that
because of
their size,
nature
or incidence in
the results,
are considered
to hinder
comparison of
the Group's
trading
expenses on a
period to
period
basis and could
distort the
understanding
of our
performance for
the period and
the
comparability
between periods
and
hence are
adjusted to
arrive at
Underlying
Operating
Expenditure.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Underlying Profit Table The Group
Profit / (Loss) * Exceptional Items C defines
/ (Loss) Before Underlying
Before Tax Profit
Tax / (Loss) before
Tax as Profit/
(loss)
before tax
adjusted for
exceptional
items.
The Directors
view Underlying
Profit
/ (Loss) Before
Tax to be a
meaningful
measure to
analyse the
Group's
profitability.
Exceptional
items are
additional
specific
items that
because of
their size,
nature
or incidence in
the results,
are considered
to hinder
comparison of
the Group's
performance on
a period to
period basis
and could
distort the
understanding
of our
performance for
the period and
the
comparability
between periods
and
hence are
adjusted to
arrive at
Underlying
Profit / (Loss)
Before Tax.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Adjusted Reported Table The Group
effective tax rate * Exceptional items and D defines
tax rate adjusted
effective
* Foreign Exchange rate movementsOne off tax litigation tax rate as
settlement reported tax
rate (reported
tax charge
divided by
reported profit
before tax)
adjusted for
exceptional
items, foreign
exchange rate
movements
and one off tax
litigation
settlements.
This provides
an indication
of the
on-going tax
rate across the
Group.
Exceptional
items are
additional
specific
items that
because of
their size,
nature
or incidence in
the results,
are considered
to hinder
comparison of
the Group's
performance on
a period to
period basis
and could
distort the
understanding
of our
performance for
the period and
the
comparability
between periods
and
hence are
adjusted to
arrive at
Adjusted
effective tax
rate.
Foreign
exchange rate
movements are
specific items
that are
non-tax
deductible
and hence are
considered to
hinder
comparison of
the Group's
effective
tax rate on a
period to
period basis.
One off tax
litigation
settlement are
additional
specific items
that because
of their size
and frequency
in the
results, are
considered to
hinder
comparison
of the Group's
effective tax
rate on
a period to
period basis.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Underlying Profit/(loss) Table The Group
profit/(loss) for the * Exceptional Items E defines
after period Underlying
tax Profit
/ (Loss) after
Tax as profit /
(loss)
for the period
adjusted for
exceptional
items.
The Directors
view Underlying
Profit
/ (Loss) after
Tax to be a
meaningful
measure to
analyse the
Group's
profitability.
Exceptional
items are
additional
specific
items that
because of
their size,
nature
or incidence in
the results,
are considered
to hinder
comparison of
the Group's
performance on
a period to
period basis
and could
distort the
understanding
of our
performance for
the period and
the
comparability
between periods
and
hence are
adjusted to
arrive at
Underlying
profit/(loss)
after tax.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Earnings EPS Table The Group
per share * Exceptional Items F defines
before Earnings per
exceptional share
items before
exceptional
items as
profit/
(loss) for the
period before
exceptional
items
attributable to
owners of the
Group divided
by the weighted
average
number of
ordinary shares
in issue
during the
financial
period.
This measure
reflects the
earnings
per share
before
exceptional
items
for each share
unit of the
Group.
Exceptional
items are
additional
specific
items that
because of
their size,
nature
or incidence in
the results,
are considered
to hinder
comparison of
the Group's
performance on
a period to
period basis
and could
distort the
understanding
of our
performance for
the period and
the
comparability
between periods
and
hence are
adjusted to
arrive at
earnings
for the purpose
of Earnings per
share
before
exceptional
items.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Operating Cash Table The Group
Free generated * Income tax paid, H defines
Cash from Operating Free
Flow operating Cash
activities * Changes in working capital, Flow as net
cash generated
from operating
* Other non-cash items, activities
before income
tax paid,
* Non-operating income, changes in
working
capital, other
* Charity and donation and non-cash
items,
non-operating
* Exceptional items income, charity
and donation
and exceptional
* Capital expenditures items
less capital
expenditures.
The Group
views Operating
Free Cash Flow
as a
key liquidity
measure, as it
indicates
the cash
available to
pay dividends,
repay debt or
make further
investments
in the Group.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Free Cash Table The Group
Cash generated * Changes in working capital, I defines Free
Flow from Cash Flow as
operating net cash
activities * Capital expenditures generated from
operating
activities
* Cash tax after change in
operating
working
* Cash Interest capital,
cash tax & cash
interest. It is
computed
as "EBITDA less
change in
operating
working
capital,
capital
expenditures,
cash tax and
cash interest"
The Group views
Free Cash Flow
as a
key liquidity
measure, as it
indicates
the cash
available to
pay dividends,
repay debt or
make further
investments
in the Group.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
Net Debt No direct Table The Group
and Leverage equivalent * Borrowing J defines Net
Ratio debt as
borrowings
* Lease liabilities including lease
liabilities
less cash
* Cash and cash equivalent and cash
equivalents,
processing
* Fair value hedges costs
related to
borrowings and
fair value
hedge
adjustments.
The Group
defines
Leverage Ratio
as
net debt
divided by
underlying
EBITDA.
The Directors
view Net debt
and Leverage
Ratio to be a
meaningful
measure to
monitor the
Group's ability
to cover
its debt
through its
earnings.
-------------- -------------- ------------------------------------------------------------ ------------- ----------------
(1) Refer "Reconciliation between GAAP and Alternative Performance Measures" for respective table.
Some of the Group's APMs are translated at constant exchange rates. Constant exchange rates are the average actual periodic exchange rates for the previous financial period and are used to eliminate the effects of exchange rate fluctuations in assessing performance. Actual exchange rates are the average actual periodic exchange rates for that financial period.
Changes to APMs
During the period, there has not been any change in Group's APM.
Reconciliation between GAAP and Alternative Performance Measures
Table A: Underlying EBITDA and Margin
Description UoM Half Year ended
-------------------------------- ------ ----------------------
30-Sep-19 30-Sep-18
-------------------------------- ------ ---------- ----------
Operating profit $ Mn 395 364
Add:
Depreciation and amortisation $ Mn 319 278
Charity and donation $ Mn 3 2
Exceptional items $ Mn 2 5
Underlying EBITDA $ Mn 719 649
Revenue $ Mn 1,640 1,513
-------------------------------- ------ ---------- ----------
Underlying EBITDA Margin (%) $ Mn 43.9% 42.9%
-------------------------------- ------ ---------- ----------
Table B: Underlying Operating Expenditure
Description UoM Half Year ended
----------------------------------- ------ ----------------------
30-Sep-19 30-Sep-18
----------------------------------- ------ ---------- ----------
Expenses $ Mn 1,256 1,166
Less:
Access charges $ Mn (184) (171)
Depreciation and amortisation $ Mn (319) (278)
Charity and donation $ Mn (3) (2)
Exceptional items $ Mn (2) (5)
Underlying Operating Expenditure $ Mn 748 710
----------
Table C: Underlying Profit / (Loss) Before Tax
Description UoM Half Year ended
---------------------------- ------ ----------------------
30-Sep-19 30-Sep-18
---------------------------- ------ ---------- ----------
Profit / (loss) before tax $ Mn 316 122
Exceptional items (net) $ Mn (46) 30
Underlying profit / (loss)
before tax $ Mn 270 152
----------
Table D: Adjusted Effective tax rate
Description UoM Half Year ended
------------------------------ ------
30-Sep-19 30-Sep-18
------------------------------ ------ ------------------------------------ ------------------------------------
Profit Income Tax Rate Profit Income Tax Rate
before tax expense % before tax expense %
taxation taxation
------------------------------ ------ ---------- ------------- --------- ---------- ------------- ---------
Reported Effective tax
rate $ Mn 316 88 28% 122 (82) (67%)
Adjusted for :
Exceptional Items (provided
below) $ Mn (46) 2 30 147
Foreign Exchange rate
movements for Non DTA
opco's & Hold Co's $ Mn (28) (15)
Adjusted effective tax
rate $ Mn 242 90 37% 137 65 47%
---------
Exceptional items
1. Deferred tax asset
recognition $ Mn (116)
2. Reversal of current
tax provision $ Mn (27)
3. Network modernisation $ Mn 19 2 25
4. Settlement of litigations
and claims $ Mn 3
5. Voluntary retirement
scheme $ Mn 2
6. Tax on exceptional
items $ Mn (4)
7. Reversal of indemnities $ Mn (72)
8. Share issue and IPO
related expenses $ Mn 7
Total $ Mn (46) 2 30 (147)
---------
Table E: Underlying Profit / (Loss) After Tax
Description UoM Half Year ended
---------------------------------- ------ ----------------------
30-Sep-19 30-Sep-18
---------------------------------- ------ ---------- ----------
Profit / (loss) after tax $ Mn 228 204
Exceptional items $ Mn (74) (117)
Underlying profit / (loss) after
tax $ Mn 154 87
----------
Table F: Earnings Per Share before exceptional items
Description UoM Half Year ended
--------------------------------------- --------- ----------------------
30-Sep-19 30-Sep-18
--------------------------------------- --------- ---------- ----------
Profit / (loss) after tax before
exceptional items attributable
to owners of the Group (Refer Table
G) $ Mn 141 71
Weighted average number of ordinary
shares in issue during the financial
period. Mn 3,413 1,168
Earnings per share before exceptional
items $ Cents 4.1 6.2
----------
Table G: Earnings Per Share -Restated
Description UoM Half Year ended
------------------------------------------ -------- --------------------
30-Sep-19 30-Sep-18
------------------------------------------ -------- --------- ---------
Weighted average shares Mn 3,413 1,168
Weighted average shares - Restated Mn 3,758 3,758
Profit for the period attributable
to owners of the parent $ Mn 215 181
Operating and Non Operating
Exceptional Items $ Mn (46) 30
Tax Exceptional Items $ Mn (28) (147)
Non Controlling Interest Exceptional
Item $ Mn (0) 7
Profit attributable to parent company
shareholder - pre Exceptional items $ Mn 141 71
Basic EPS $ cents 6.3 15.5
EPS before exceptional items $ cents 4.1 6.1
Basic EPS -Restated (1) $ cents 5.7 4.8
EPS before exceptional items -Restated
(1) $ cents 3.7 1.9
------------------------------------------ -------- --------- ---------
(1) EPS has been restated considering all the shares as at 30th September 2019 had been issued on 1st April 2018 for like to like comparison.
Table H: Operating Free Cash Flow
Description UoM Half Year ended
------------------------------------------- ----- --------------------
30-Sep-19 30-Sep-18
------------------------------------------- -----
Net cash generated from operating
activities $ Mn 596 427
Add: Income tax paid $ Mn 69 63
Net cash generation from operation
before tax $ Mn 665 490
Less: Changes in working capital
Increase in trade receivables $ Mn 12 14
Increase / (decrease) in inventories $ Mn (0) 0
Decrease in trade payables $ Mn (4) 53
Increase / (decrease) in provisions $ Mn (2) 3
Decrease in other financial
and non financial liabilities $ Mn 9 25
Increase in other financial
and non financial assets $ Mn 27 63
Decrease in deferred revenue $ Mn 6
Operating cash flow before changes
in working capital $ Mn 707 654
Other adjustments 7 (12)
Charity and donation $ Mn 3 2
Exceptional items $ Mn 2 5
Underlying EBITDA $ Mn 719 649
Less: Capital Expenditure $ Mn (246) (155)
Operating Free Cash Flow $ Mn 473 494
Table I: Free Cash Flow
Description UoM Half Year ended
-----
30-Sep-19 30-Sep-18
-----
Underlying EBITDA $ Mn 719 649
Less: Capital Expenditure $ Mn (246) (155)
Operating free cash flow $ Mn 473 494
Add: Changes in working capital
Increase in trade receivables $ Mn (12) (14)
Increase / (decrease) in inventories $ Mn 0 (0)
Decrease in trade payables $ Mn 4 (53)
Increase / (decrease) in provisions $ Mn 2 (3)
Decrease in deferred revenue $ Mn (0) (6)
Operating cash after changes in
working capital $ Mn 467 418
Less: Cash Tax $ Mn (69) (63)
Less: Cash Interest (net) $ Mn (162) (170)
Free Cash Flow $ Mn 237 185
Table J: Net Debt and Leverage
Description UoM As at As at As at
30-Sep-19 31-Mar-19 30-Sep-18
Long term borrowing, net of
current portion $ Mn 2,700 2,437 3,825
Short-term borrowings and current
portion of long-term borrowing $ Mn 797 1,184 1,765
Add: Processing costs related
to borrowings $ Mn 5 6 10
Add/(less): Fair value hedge
adjustment $ Mn (30) 8 75
Less: Cash and Cash Equivalents $ Mn (1,469) (848) (439)
Net Debt excluding Lease Obligations $ Mn 2,003 2,787 5,236
Add: Lease Obligations $ Mn 1,188 1,218 1,203
Net Debt including Lease Obligations $ Mn 3,191 4,005 6,439
Underlying EBITDA (LTM) $ Mn 1,402 1,332 1,259
Underlying EBITDA (Annualized) $ Mn 1,439 1,366 1,297
Leverage (LTM) Times 2.3 3.0 5.1
Leverage (Annualized) Times 2.2 2.9 5.0
Glossary
Technical and Industry Terms
Company Related
Average Customers Average customers are derived by computing the average
of the monthly average customers for the relevant
period.
ARPU Average revenue earned per user per month, which
is derived by dividing total revenue during
the relevant period by the average number of customers
and dividing the result by the number of months
in the relevant period
Capital Expenditure It is not a GAAP measure and is defined as investment
in gross fixed assets (tangible and intangible excluding
spectrum/license) and capital work in progress (CWIP)
excluding provisions on CWIP for the period.
Churn The total number of customer disconnections during
the relevant period divided by the average customers
in the relevant period.
Customer Base Total number of subscribers that used any of our
services (voice calls, SMS, data usage or Airtel
Money transaction) in the last 30 days.
Data Customer Total subscribers that consumed at least 1MB on the
Base Group's GPRS, 3G or 4G network in the last 30 days
Data Usage per The average data consumption per data subscriber
Customer on a monthly basis. It is calculated by dividing
the total MBs consumed on the Group's network during
the relevant period by the average data customer
base over the same period, and dividing the result
by the number of months in the relevant period.
Underlying EBITDA It is not a GAAP measure; it is defined as operating
profit before depreciation, amortization, CSR cost
and exceptional items.
Underlying EBITDA It is not a GAAP measure; It is computed by dividing
Margin Underlying EBITDA for the relevant period by total
revenue for the relevant period.
Earnings Per Share EPS is computed by dividing the profit for the period
(EPS) attributable to the owners of the parent company
by the weighted average number of shares outstanding
during the period.
Free Cash Flow Free Cash Flow defined as Operating Free Cash Flow
less cash interest, cash tax and change in operating
working capital.
Lease Obligation Lease Obligation represents the present value of
the future lease payment obligation.
Mobile Broadband It includes all the 3G and 4G Base stations deployed
Base stations across all technologies/spectrum bands
Minutes of Usage Total voice minutes used by customers on the Group's
network during the relevant period.
Network Towers/Sites Comprises of Base Transmission System (BTS) which
holds the radio transceivers (TRXs) that define a
cell and coordinates the radio links protocols with
the mobile device. It includes all the Ground based,
Roof top and In Building Solutions as at the end
of the period. Towers as referred to be revenue generating
Towers.
Net Debt It is not a GAAP measure and is defined as the long-term
borrowings, short term borrowings and leased liability
less cash and cash equivalents.
Net Debt to Underlying It is not a GAAP measure and is computed by dividing
EBITDA (LTM) Net Debt as at the end of the relevant period by
Underlying EBITDA for preceding last 12 months (from
the end of the relevant period).
Net Debt to Underlying It is not a GAAP measure and is computed by dividing
EBITDA (Annualized) net debt as at the end of the relevant period by
Underlying EBITDA for the relevant period (annualized).
Operating Free It is computed by subtracting Capital Expenditure
Cash flow from Underlying EBITDA.
Operating Profit It is a GAAP measure and is computed as Revenue less
operating expenditure including depreciation & amortisation
and operating exceptional items.
Return On Equity For the full year ended it is computed by dividing
attributable to net profit for the period by the closing Equity attributable
equity holders to equity holders of parent. For the quarterly computations,
of parent it is computed by dividing net profit for the preceding
last 12 months from the end of the relevant period
by the closing Stockholder's equity for the relevant
period.
Total MBs on Network Includes total MBs consumed (uploaded & downloaded)
via our network during the relevant period.
Voice Minutes Total voice minutes of usage the Group's network
of Usage per Customer during the relevant period divided by the average
per month number of customers during the same period, divided
by the number of months in the relevant period.
Weighted Average The weighted average number of shares is calculated
No of Shares by taking the number of outstanding shares and multiplying
the portion of the reporting period those shares
covered, doing this for each portion and, finally,
summing the total.
Abbreviations
3G Third - Generation Technology
4G Fourth - Generation Technology
ARPU Average Revenue Per User
bps Basis points
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
EPS Earnings Per Share
IPO Initial Public Offering
IVR Interactive Voice Response
LTM Last twelve months
LTE Long-Term Evolution (4G technology)
MI Minority Interest (Non Controlling Interest)
MB Megabyte
Mn Million
GAAP Generally Accepted Accounting Principles
GB Gigabyte
KYC Know Your Customer
IAS International Accounting Standards
IFRS International Financial Reporting Standards
ppts Percentage points
P2P Person 2 Person
RAN Radio Access Network
RoE Return on Equity
SIM Subscriber Identification Module
Risk Factors
The Group's business and the industry in which it operates, together with all other information contained in this document as a whole, including, in particular, the risk factors summarized below. The risk factors described in the prospectus are not an exhaustive list or explanation of all risks which investors may face and should be used as guidance only. Additional risks and uncertainties relating to the Group that are not currently known to the Group, or that the Group currently deem immaterial, may individually or cumulatively also have a material adverse effect on the Group's business, results of operations and financial condition. For detailed risks, refer page number 14 to 45 in the prospectus which was filled in June 2019, just before the Initial Public Offering of the Ordinary shares.
Summarized Risks
1. The Group operates in an increasingly competitive environment, particularly with respect to pricing and market share, across its markets and segments, which may adversely affect its revenue and margins.
2. If the Group does not continue to provide telecommunications or related products and services that are useful and attractive to customers on a timely basis, it may not remain competitive.
3. The Group may face increased competition from non-traditional OTT telecommunications players.
4. Demand for traditional paid voice services across the telecommunications industry globally is in decline.
5. The Group may experience a failure or interruption in the operations of its networks, gateways to its networks or the networks of other operators (some of which may be outside its control).
6. The Group may not be able to pass on increased costs to consumers.
7. The Group may not be able to successfully implement the Group's overall strategy, including its growth strategy.
8. The Group's insurance coverage may not be adequate.
9. The Group may be unable to identify or accurately evaluate suitable candidates for acquisition or merger, or to complete or integrate past or prospective acquisitions or mergers successfully or in a timely or cost-effective manner, which could adversely affect the Group's overall strategy.
10. Current and future antitrust and competition laws in the countries in which the Group operates may limit its growth and subject it to antitrust and other investigations or legal proceedings.
11. Telecommunications businesses require substantial capital investment and the Group may not be able to obtain sufficient financing on favourable terms.
12. The Group's success relies on the Group's central and local management team and other highly skilled personnel.
13. The Group is reliant on local management to provide accurate and timely reporting.
14. The Group is dependent on third parties for the supply of certain of the Group's services.
15. Mobile money services are subject to a new and evolving regulatory environment.
16. The Group's IT systems may fail to perform their functions adequately or be interrupted, which could have a material adverse effect on the Group's business
17. A computer system failure, security breach or cyber-attack could significantly disrupt the Group's ability to operate its business.
18. The Group operates a large distribution and channel partner network and is reliant on good working relationships with its franchisees and other third-party distributors.
19. Fluctuations in foreign currency exchange could increase the operating and debt servicing costs of, and the financial burden on, the Group and any hedging transactions involve risks that can harm the Group's financial performance.
20. The Group is dependent on interconnection with its competitors' networks and associated infrastructure as well as roaming arrangements with other international telecommunications operators.
21. The Group faces risks relating to its property and towers portfolio, including failure by the Group to renew leases, which could lead to decreased revenue, reduce the Group's network capacity and markets or raise the Group's costs.
22. Risks relating to countries where the Group operates
23. Actions by governments, political events or instability or changes in public policy in the countries in which the Group operates could have an adverse effect on the Group's business.
24. The Group is subject to inflation risks, which might adversely affect its business, results of operations, financial condition and prospects.
25. There are uncertainties in the legal, regulatory and tax environments in the countries in which the Group operates, and there is a risk of demands which may be raised based on current or past business operations. Such demands have in past been challenged and contested on merits with appropriate authorities and appropriate settlements agreed. Other than amounts provided where the group believes there is a probable settlement and contingent liabilities where the group has assessed the additional possible amounts, there are no other legal, tax or regulatory obligations which may be expected to be material to the financial statements.
Statement of Director's Responsibilities
For the 6 month period ended 30 September 2019
Each of the directors of Airtel Africa plc, confirms to the best of his or her knowledge and belief that:
-- The condensed set of financial statements, which has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union, gives a true and fair view of the assets, liabilities, financial position and profit or loss of Airtel Africa plc.
-- The interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of consolidated financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the Group's 31 March 2019 Historical Financial Information, within the Prospectus, that could do so.
The Directors of Airtel Africa plc are listed on pages 196 of the Prospectus. No changes to the Directors have been made since the date of the Prospectus.
On behalf of the Board
Raghunath Mandava
Chief Executive Officer
25(th) of October 2019
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR UVSVRKAARURA
(END) Dow Jones Newswires
October 25, 2019 02:09 ET (06:09 GMT)
1 Year Airtel Africa Chart |
1 Month Airtel Africa Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
