Airtel Africa Plc · LSE:AAF
Airtel Africa — H1 FY2021 Earnings Presentation
34 slides from Airtel Africa's earnings presentation, Oct 23, 2020
Slide 1: Airtel Africa plc Results for half year ended 30 September 2020
Airtel Africa plc Results for half year ended 30 September 2020 23 October 2020
Slide 2: Disclaimer
Disclaimer Important Information By reading this presentation you agree to be bound by the following conditions. The information contained in this presentation in relation to Airtel Africa plc ("Airtel Africa") and its subsidiaries has been prepared solely for use at this presentation. The presentat
Slide 3: Operational Performance
Operational Performance
Slide 4: Key Highlights
Key Highlights Revenue Margin Earnings Cash Underlying revenue Underlying EBITDA EPS pre-exceptional Free cash flow margin items-restated $1,815m 44.7% $ 3.0c $319m H1’21 +16.4% +110 bps ($ 0.7c) +52% Q2’21 +19.6% +153 bps ($0.1c) + 51.3% Track record of consistent delivery of double-digit growth ov
Slide 5: Delivering against our objectives
Delivering against our objectives Mobile revenue growth of 15.3% with both voice and Mobile revenue data growing Mobile money Mobile money revenue growth of 30.4% revenue Underlying EBITDA margin increased by 110bps Underlying EBITDA to 44.7% Capex Capex outlook remains stable at $ 650 – 700 Mn pa L
Slide 6: Strong results across the business
Strong results across the business Customer Base Growth ARPU Growth Revenue Growth Customers 116.4m + 12.0% YoY Voice Q2’21 Voice usage +12.0% (4.1%) +7.0% per customer @ 235 ARPU minutes $ 2.7 + 4.3% YoY Gross Revenue $1,815m + 16.4% YoY Data Q2’21 Data usage per +24.1% +10.1% +33.4% customer @ 2.5
Slide 7: Strong results across the segments
Strong results across the segments Nigeria • Continued expansion of network and distribution East Africa infrastructure Nigeria Francophone Africa • Revenue up 20.2% and EBITDA growth of 21.5% YoY Niger Chad • +20% growth in 5 out of 6 OPCOs Nigeria East Africa Uganda • Revenue up 21.9% and EBITDA g
Slide 8: Covid-19
Covid-19 ✓ Telecoms and mobile money are considered essential and critical ✓ We worked effortlessly to ensure the safety of our employees, customers and partners ✓ We have continued to work closely with governments, regulators, and suppliers to ensure our network remained fully operational and custo
Slide 9: Strategic Overview
Strategic Overview 9
Slide 10: Key pillars of our strategy
Key pillars of our strategy Win with Win with data mobile money Win with customers Win with cost Win with Win with network people Africa Multiple areas of additional Partnering the nation upside Attain leadership through a supply led demand strategy 10
Slide 11: A modernized, growing, future ready network
A modernized, growing, future ready network Expanding Coverage High data capacity (Tb/day) Site Count % Contribution 67% 4G Sites 12,845 4,055 16,900 70% 3G Sites 18,274 3,976 22,250 92% 10,253 2G Sites 21,821 2,408 24,229 100% 6,146 Total Sites 21,936 2,310 24,246 100% Q2'20 Q2'21 Total Capacity 4G
Slide 12: Win with customers
Win with customers Successful adoption of our strategy during the lockdown Customer base (m) ✓ Expanding distribution network ✓ Continued focus on SIM card availability and 116.4 penetration in rural markets 110.6 111.5 107.1 103.9 ✓ Continuation of smart offerings – encouraging 98.9 99.7 97.9 94.1
Slide 13: Win with data by increasing 4G users and data ARPU
Win with data by increasing 4G users and data ARPU 4G users growth leading to…. growth in data usage and data ARPU Q2’21 ARPU Mix (YoY) Wt. Avg ARPU ($) Mix (%) ARPU ($) Data Customers 39.6m vs 31.9m in Q2’20 0.3 34% 2ppts 0.1 2G 3G 2.2 36% 6ppts 0.8 Data usage at 2.5 GB per customer vs 1.7 GB per c
Slide 14: Winning with Mobile Money
Winning with Mobile Money Growth driven by customer penetration increase Increasing customer Partnerships Strong performance penetration H1’21 +30% +14.5% Customer base at Transaction value 27.8%* 20m per subs 24.0%* Transaction value & Revenue 25 181 FY’20 20 146 15 103 21 14.9% 17.3% 10 15 12 5 H1
Slide 15: Consistent and simple strategy for growth
Consistent and simple strategy for growth Our Aspirations: Win with network Growing ahead of market to increase revenue Win with market share customers Win with data Airtel Money to become the currency of choice Africa Win with Monetisation of assets (Towers + Fibre) mobile money Win with Potential
Slide 16: Financial Performance
Financial Performance
Slide 17: A strong set of financial results
A strong set of financial results Revenue EBITDA EBITDA margin $1,815m $812m 44.7% + 16.4% YoY + 19.3% YoY + 110 bps YoY Leverage 1 FCF 2 EPS before exceptional items 3 2.2x $319m $3.0c down from 2.3x YoY + 52% YoY ($0.7c) Declared an interim dividend of $ 1.5 cents per share Notes: Growth provided
Slide 18: Broad-based revenue growth across voice, data and mobile money
Broad-based revenue growth across voice, data and mobile money Revenue $m +16.4% ($256m) Constant currency growth (%) +7.0% +33.4% +30.4% On a 12 months basis, we estimate that 1% of Nigerian naira devaluation will have a negative $14m impact on revenues, $8m on underlying EBITDA and $7m on finance
Slide 19: Nigeria – Strong double-digit growth
Nigeria – Strong double-digit growth ▪ Strong 4G network accelerated rollout of 4G network (76% of sites are 4G) Revenue EBITDA EBITDA margin ▪ Revenue increase 20.2% - driven by $718m $386m 53.8% growth across all products + 20.2% YoY + 21.5% YoY + 60 bps YoY ▪ Voice revenue - double digit growth 1
Slide 20: East Africa – Broad-based growth across voice, data and mobile money
East Africa – Broad-based growth across voice, data and mobile money ▪ Revenue increase 21.9% - driven by growth across all products Revenue EBITDA EBITDA margin ▪ Voice revenue - double digit growth 12.8%, as a result of customer base $659m $292m 44.3% growth and growth of usage per + 21.9% YoY + 3
Slide 21: Francophone Africa – Improved Q2 performance driven by data & mobile money
Francophone Africa – Improved Q2 performance driven by data & mobile money ▪ Improved performance in Q2’21, +6.4% in constant currency driven by Revenue EBITDA EBITDA margin data and mobile money, despite macroeconomic weakness $445m $146m 32.8% ▪ Voice revenue impacted by IUC 4.4% YoY 4.1% YoY (9)
Slide 22: Mobile money continued to deliver strong growth in EBITDA
Mobile money continued to deliver strong growth in EBITDA Customer base (m) Transaction Value ($Bn) 29.6% 45.7% 20.1 20.7 15.5 es 15.0 12.9 12.1 H1'19 H1'20 H1'21 H1'19 H1'20 H1'21 Revenue ($m) EBITDA ($m) and Margin (%) 30.4% Underlying EBITDA Margin 140.0 60.0% 120.0 48.2% 48.6% 181.2 50.0% 100.0
Slide 23: Consistent EBITDA growth and margin expansion
Consistent EBITDA growth and margin expansion EBITDA $m +19.3% ($132m) +16.4% On a 12 months basis, we estimate that 1% of Nigerian naira devaluation will have a negative $14m impact on revenues, $8m on underlying EBITDA and $7m on finance costs. 23 Note: Expenses includes interconnect cost, airtel
Slide 24: A transparent and balanced capital allocation policy
A transparent and balanced capital allocation policy 2 The group’s Capex Leverage target of < 2.0x (excluding spectrum) to remain stable at $ 650 – Efficient Sustainable net debt / EBITDA 700 Mn per annum capital capital Net debt/EBITDA of 2.2x investments structure 1 Return cash to shareholders 3 N
Slide 25: Strong free cash flow generation, with free cash flow up 52%
Strong free cash flow generation, with free cash flow up 52% $m + 52% Note: Airtel Africa definition of FCF does not include among others: leases (both capital & interest), intangible capex, dividends, effects of significant acquisitions, disposals, effects of extraordinary events etc. 25
Slide 26: Leverage reduction to 2.2x of net debt to EBITDA
Leverage reduction to 2.2x of net debt to EBITDA Leverage 10.0x As of September 30, As of September 30, 9.0x Leverage 2020 2019 9.0x 1 xLTM xLTM 2 8.0x $m Underlying $m Underlying 6.8x EBITDA EBITDA 7.0x Foreign Currency: 2,952 1.8x 3,151 2.2x 6.0x - Holdco 2,383 1.5x 2,683 1.9x 5.0x - OPCOs 569 0.4
Slide 27: Restated EPS before exceptional items
Restated EPS before exceptional items $ cents 1 1 2 1 Restated EPS before exceptional items was $ 3 cents, down by 20%, as a result of i) increase in tax charges due to higher operating profit and withholding tax on dividend; and ii) recognition of derivatives gain of $46m in previous period. Exclud
Slide 28: Summary and outlook
Summary and outlook H1’21 Strong set of results Our outlook • Mid-term opportunity remains unchanged driven by strong • 16.4% revenue growth, 11 quarters of consistent double population growth and need for increased connectivity and digit revenue growth financial inclusion • 110 bps of Underlying EB
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Slide 30: Appendix
Appendix
Slide 31: Track record of consistent delivery
Track record of consistent delivery 11 quarters of double-digit revenue growth and EBITDA margin expansion Revenue (Constant currency 14.4% 11.7% 12.0% 10.0% 10.2% 12.6% 14.2% 17.9% 13.0% 19.6% growth YoY; %) Underlying 42.6% 43.2% 43.3% 44.0% 43.7% 44.1% 45.2% 44.1% 44.1% 45.3% EBITDA margin (%) 50
Slide 32: Africa: Demographic and market potential
Africa: Demographic and market potential Growing population, high youth share Low mobile penetration Population CAGR 2020-2024E, % Mobile subs penetration – 2020E 19% 16% 24% 23% 31% 32% 151% 149% 2.8% 124% 2.4% 102% 85% 74% 0.7% 0.9% 0.8% 87% 86% 76% 69% Unique user 52% penetration. 46% Dec 2020E (
Slide 33: Effective tax rate and adjusted effective tax rate
Effective tax rate and adjusted effective tax rate Half year ended Unit of Sep-20 Sep-19 SN Description measure Profit before Income tax Profit before Income tax Tax Rate % Tax Rate % taxation expense taxation expense 1.00 Reported Effective tax rate $m 281 136 49% 316 88 28% 2.00 Adjusted for : 2.0
Slide 34: Finance cost & FOREX
Finance cost & FOREX Description H1'21 H1'20 Change $m $m $m Total Finance Charges (excluding exceptional items) higher by $43.2m due to: Interest cost on gross debt 147.7 151.3 (3.7) Interest Income (4.5) (14.5) 10.0 ▪ Finance charges (excluding derivatives and Forex gain/loss) reduced by $1.3m Net