Airtel Africa PLC · LSE:AAF
Airtel Africa — FY2020 Earnings Presentation
39 slides from Airtel Africa's earnings presentation, May 2020
Slide 1: Trading Update for the year ended 31 March 2020
Airtel Africa plc Trading Update for the year ended 31 March 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 Growth Margin Earnings Cash Underlying revenue Underlying EBITDA EPS pre-exceptional Free cash flow margin items-restated $ 3,422m 44.3% $ 6.9c $ 453m +13.8% +94 bps ($ 0.5c) +201% vs FY2019 vs FY2019 vs FY2019 vs FY2019 Notes: (1) All financial growth rates and underlying EBITDA marg
Slide 5: Track record of consistent delivery
Track record of consistent delivery 9 quarters of double-digit revenue growth and EBITDA margin expansion Revenue (Constant currency 5.0% 10.9% 14.4% 11.7% 12.0% 10.0% 10.2% 12.6% 17.9% 14.2% growth yoy; %) 40.4% 41.7% 42.6% 43.2% 43.3% 44.0% 43.7% 44.1% 45.2% 44.1% Underlying EBITDA margin 899 450
Slide 6: Delivering against our objectives
Delivering against our objectives Mobile revenue growth of 12.5% with both voice Mobile revenue and data growing Mobile money Mobile money revenue growth of 37.2% revenue Underlying EBITDA margin increased by 94bps Underlying EBITDA to 44.3% Capex Capex broadly stable at $642m Leverage Leverage rati
Slide 7: Strong results across the business
Strong results across the business Customer Base ARPU Revenue Customers (m) FY’19 FY’20 ($/customer/month) FY’19 FY’20 ($m) FY’19 FY’20 110.6 Mn 11.9% 110.6 (4.5%) 5.2% + 11.9% YoY 1.7 1.6 1,970 9.5% Q4’20 Voice Voice usage per ARPU 1,915 customer @ 98.9 211 minutes $ 2.7 + 3.3% YoY 35.4 930 Gross R
Slide 8: Strong results across the segments
Strong results across the segments Nigeria ▪ Customer base grew by 12.5% supported voice and data revenue increase East Africa Nigeria ▪ Accelerated 4G network expansion drove increased data usageFrancophone and dataAfrica revenue growth ▪ Revenue up 24.4% and EBITDA growth of 35.6% Niger Chad ▪ Cus
Slide 9: Covid-19
Covid-19 Safety FX and liquidity ✓ Our priority is the health and wellbeing of our employees, outsourced partners ✓ Liquidity: We enter this period of high volatility with a strong financial and customers position ✓ Supporting communities: Supplied masks, testing kits and contributing cash to • Our
Slide 10: Strategic Direction
Strategic Direction 10
Slide 11: Africa: demographic and market potential
Africa: demographic and market potential Growing population, high youth share Low mobile penetration Population CAGR 2019A-2023E, % Mobile subs penetration – 2019A 19% 16% 24% 23% 31% 32% 143% 148% 2.8% 120% 2.4% 106% 83% 70% 86% 85% 0.9% 0.8% 76% 0.7% 67% Unique user 51% 45% penetration. 0.0% Dec 2
Slide 12: 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 12
Slide 13: Solid spectrum and network position with extensive fibre coverage
Solid spectrum and network position with extensive fibre coverage Ample Spectrum by Country Increasingly Dense Broadband Network (Average Spectrum / Country) # of countries Network Towers (#) Data capacity (Tb/day) 700 MHz 10 1 800 MHz 10 5 64% 900 MHz 11 14 9% Total Capacity 1800 MHz 20 7,572 14 19
Slide 14: Quality and affordable 4G connectivity in Malawi
Quality and affordable 4G connectivity in Malawi Strategic aim: Timeline of the successful network modernization project: Quality and affordable 4G connectivity with high capacity infrastructure FY 2019/20 ⚫ Expanding 4G services across the whole network (largely FY 2018/19 rural areas) ⚫ Increase i
Slide 15: Win with customers
Win with customers Nigeria – KYC; innovative distribution driving growth Effective • Acquisition of quality customers distribution • Depth and width of distribution network ✓ Invested in an innovative mix of our outlets ✓ Leading the way in meeting KYC regulations with efficient, tech-driven registr
Slide 16: Win with data by increasing 4G users and data ARPU
Win with data by increasing 4G users and data ARPU Leverage market conditions… ...to grow 4G users leading to increase in Data ARPU Q4’20 ARPU Mix Wt. Avg ARPU ($) % mix Extensive 4G rollout ARPU ($) 2G 0.3 32% 0.1 3G 2.2 39% 0.9 Data usage Building fast and superior data network @2.1 GB/subs 4G 5.5
Slide 17: Winning with data in DRC
Winning with data in DRC Successful data strategy… … led to strong set of results Data usage/ subs +126% yoy Increase smartphone Leading network Right pricing to penetration Data ARPU accelerate data usage +23.8% yoy Smartphones sell at our Modernized 4G and fibre shops through partnerships; Afforda
Slide 18: Mobile money – a strong business getting stronger
Mobile money – a strong business getting stronger Subscriber Penetration – provide banking to unbanked Group Highly penetrated markets Moderately penetrated markets Low penetrated markets * 31.2% * 58.8% 36.5% 56.6% 42.4% 38.9% 34.1% 30.5% 57.1% 24.4% 53.4% 15.7% 14.6% 36.2% 29.5% 27.2% 24.4% 1.0% 2
Slide 19: Winning with Airtel Money in Zambia
Winning with Airtel Money in Zambia Excellent distribution network Strategy Strong performance Group: 28.7% customer base • Currency of choice growth across Africa 37.2% • Leveraging our mobile customer revenue growth across Africa base Zambia: • Additional services - “One to 42.4% many”, “Many to o
Slide 20: Win with people – performance driven culture
Win with people – performance driven culture Organization structured for growth and complexity Empowered senior management ✓ Airtel Africa’s Group Executive and Managing Directors have extensive local ✓ Our expanded leadership team, which includes three regional heads, as well and international expe
Slide 21: Transforming lives, making an impact in Africa
Transforming lives, making an impact in Africa Enhancing Financial Positive impact on Bridging digital divide $ economy inclusion • Affordable access to financial • One of the top employers across • Increasing smartphone penetration services the footprint • Expanding data network • A more convenient
Slide 22: 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 mobile money Monetisation of assets Win with cost Win with people To con
Slide 23: Financial Performance
Financial Performance
Slide 24: A strong set of financial results
A strong set of financial results Revenue EBITDA EBITDA margin $ 3,422 Mn $ 1,515 Mn 44.3% + 13.8% yoy + 16.3% yoy + 94 bps yoy Leverage (1) FCF (2) EPS before exceptional 2.1x $ 453 Mn items (3) down from 3.0x yoy + 201% yoy $ 7.3 cents Recommended final dividend of $3 cents per share, bringing tot
Slide 25: Broad-based revenue growth across voice, data and mobile money
Broad-based revenue growth across voice, data and mobile money Revenue ▪ Revenue $ 3,422 Mn up 11.2% +13.8% (+ $ 421 Mn) ▪ Constant currency revenue growth Constant of 13.8% currency growth 5.2% 39.0% 37.2% ▪ Strong growth broad based across (%) voice, data and mobile money 86 3,422 ▪ FX impact ($ 7
Slide 26: Nigeria – Strong double-digit growth
Nigeria – Strong double-digit growth ▪ Strong 4G network accelerated rollout of 4G network, (67.8% of Revenue EBITDA EBITDA margin sites are 4G) $ 1,373 Mn $ 744 Mn 54.2% ▪ ARPU growth underpinned by expansion of profitable customers + 24.4% yoy + 35.6% yoy + 449 bps yoy ▪ Expansion of 4G network re
Slide 27: East Africa – Broad-based growth across voice, data and mobile money
East Africa – Broad-based growth across voice, data and mobile money ▪ Revenue increase 13.6% - driven by growth across all products. Revenue EBITDA EBITDA margin ▪ Data revenue growth 20.3% - due $ 1,201 Mn $ 485 Mn 40.4% to 4G rollout, increase in + 13.6% yoy + 14.6% yoy + 37 bps yoy smartphone pe
Slide 28: Francophone Africa – Improved Q4 performance driven by data & mobile money
Francophone Africa – Improved Q4 performance driven by data & mobile money ▪ Improved performance in Q4’20, +4.1% in constant currency driven Revenue EBITDA EBITDA margin by data and mobile money, despite macroeconomic weakness $ 859 Mn $ 292 Mn 34.0% ▪ Voice revenue impoacted by IUC (0.5%) yoy (11.
Slide 29: Mobile money continued to deliver strong growth in EBITDA
Mobile money continued to deliver strong growth in EBITDA Subscribers (Mn) Transaction Value ($ Bn) 28.7% 31.0% 18.3 31.6 14.2 25.1 11.5 10.6 20.1 es FY'18 FY'19 FY'20 FY'18 FY'19 FY'20 Revenue ($ Mn) EBITDA ($ Mn) and Margin (%) 37.2% 310.6 180.0 Underlying EBITDA Margin 48.2% 41.7% 45.0% 149.6 160
Slide 30: Consistent EBITDA growth
Consistent EBITDA growth Underlying EBITDA ▪ Underlying EBITDA grew 13.8% to +94 bps (+ $ 215 Mn) $ 1,515 Mn Constant ▪ Underlying EBITDA growth of currency 13.8% 16.3% in constant currency growth (%) ▪ USD 32 Mn of foreign exchange impact driven by devaluation ($m) ▪ Increase in OPEX resulting from
Slide 31: A transparent and balanced capital allocation policy
A transparent and balanced capital allocation policy Leverage target of 2.0-2.5x Clear dividend policy net debt / EBITDA Return cash Sustainable Total dividend of $6 cents per to capital Net debt/EBITDA of 2.1x share shareholders structure Efficient capital investments The group’s Capex (excluding s
Slide 32: Strong free cash flow generation
Strong free cash flow generation ($m) FCF more than doubled from $151m in 2019 32
Slide 33: Consistent leverage reduction to 2.1x of net debt to EBITDA
Consistent leverage reduction to 2.1x of net debt to EBITDA Leverage Leverage As of March 31, 2020 As of March 31, 2019 10.0x xLTM 1 xLTM 2 9.0x USDm Underlying USDm Underlying 9.0x EBITDA EBITDA 8.0x Foreign Currency: 2,791 1.8x 3,342 2.5x 6.8x - Holdco 2,330 1.5x 2,696 2.0x 7.0x - OPCOs 461 0.3x 6
Slide 34: Restated EPS before exceptional items
Restated EPS before exceptional items EPS with normalized weighted average EPS $ cents number of shares outstanding ($ cents) FY'19 EPS before exceptional items 14.0 7.4 Exchange (0.5) Operating profit (Constant Currency) 6.4 Total Finance Charges (1.0) Derivatives and Forex gain/(loss) (2.2) Financ
Slide 35: Summary and outlook
Summary and outlook FY 2020 Strong set of results Our outlook • Mid-term opportunity remains unchanged driven by strong • Consistent double digit revenue growth population growth and need for increased connectivity and • Underlying EBITDA margin expansion financial inclusion • Strong free cash flow
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Slide 37: Appendix
Appendix
Slide 38: Finance cost & FOREX
Finance cost & FOREX Year Ended Year Ended Description Change March 2020 March 2019 Total Finance Charges (excluding exceptional USDm USDm USDm USDm items) higher by $ 18 Mn due to: Interest and Other finance charges 330 348 (18) ▪ Finance charges (excluding derivatives and Interest Income (29) (22)
Slide 39: Strong free cash flow generation
Strong free cash flow generation ($m) FCF for FY’20 higher by 201% YoY as a result of: ▪ Higher underlying EBITDA resulting from organic growth ▪ Higher capex – resulting from network expansion and modernization ▪ Higher cash taxes due to higher taxable income ▪ Lower interest resulting from partial