Airtel Africa PLC · LSE:AAF
Airtel Africa — FY2023 Earnings Presentation
51 slides from Airtel Africa's earnings presentation, May 11, 2023
Slide 1: Results for full year ended 31 March 2023
Airtel Africa plc Results for full year ended 31 March 2023 11 May 2023
Slide 2: Disclaimer
Disclaimer Important Information 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 By reading this presentation you agree to be bound by th
Slide 3: Key highlights
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Slide 4: Execution of strategic priorities reflected in strong operating performance
Strong revenue growth as ‘win-with’ strategy continues to deliver Margin resilience despite inflationary pressures Continuing to invest for future growth De-risk balance sheet and maintain capital discipline Execution of strategic priorities Creating value for all stakeholders reflected in strong op
Slide 5: Delivering strategically, operationally, financially and sustainably
Delivering strategically, operationally, financially and sustainably STRATEGIC OPERATIONAL FINANCIAL SUSTAINABILITY • Focussed investments to enhance • Customers base 140m, +9.0%. • Group revenue1 growth network coverage, with spectrum Mobile money customers base • Inaugural sustainability report ac
Slide 6: Delivering on our objectives despite challenging economic environment
Delivering on our objectives despite challenging economic environment Operational backdrop Macroeconomic pressures Inflationary challenges Currency volatility FX liquidity and rising rates Discretionary spend impacted Rising energy costs a key 6.1% average devaluation in Limited availability of $, b
Slide 7: Operational and strategic review
Operational and strategic review
Slide 8: Confident in our ability to deliver sustainable growth
Fast growing and young population 2.7% population growth, 40mn people entering workforce in SSA this year Low penetration of addressable market 47% unique SIM penetration across footprint, and low banking penetration Low adoption of key services suggests considerable growth Usage of voice and data v
Slide 9: Powerful and proven growth model
Invest for Customer the future Growth Powerful and Efficiencies and Increasing operating leverage proven sustain high EBITDA ARPU growth model profitability 9
Slide 10: Sustained growth across voice, data and mobile money services
Sustained growth across voice, data and mobile money services Contribution to Customer base ARPU growth Revenue growth Group revenue growth Strong revenue growth Voice 47.4% +9.0% +2.1% +11.8% driven by customer and ARPU growth Customer adoption and usage Data 34.0% +16.9% +9.3% +23.8% improvements,
Slide 11: Our six-pillar strategy
| Africa Our six-pillar : Sthategyp 1
Slide 12: Win with distribution
Win with distribution Increase touch points Simplification of customer Enhance quality • 10,500+ exclusive distribution channels of Airtel Money Branches, onboarding of gross adds Mini-shops and Kiosks added, reaching a total of 79,500+. process Reduce • 160,000+ multi-brand outlets added, reaching
Slide 13: Distribution investment across Zambia driving 15% customer growth
Brand awareness and Agent interaction to build reward structure to loyalty and awareness of product offerings enhance distribution network Distribution investment Partnering with mobile 189,000+ distribution across Zambia money agents, ensuring float touchpoints across Zambia, up driving 15% availab
Slide 14: Win with technology
Win with technology Fibre rollout • 1,100 new sites added in rural areas • More than 2,700 additional sites deployed, reaching 31,546 sites in Information Data analytics security total Network • Added 3,200+ more sites to 4G (90.3% of sites now on 4G) resilience • Added incremental 6k+ km of fibre (
Slide 15: 27.8% growth in data revenues supported by increased capacity in Nigeria
Acquired 4G and 5G 160+ 5G ready sites by 31 spectrum in Dec’22 for March 2023 $317m Added over 1,000 km of Massive MIMO deployment to fibre infrastructure to ensure boost 4G coverage and reliability 27.8% growth in capacity data revenues supported by Data capacity increased by Peak hour data utilis
Slide 16: Win with data
Win with data Drive increased smartphone • 90.3% of sites are now on 4G, an increase of 2.7% in the year penetration • 16.9% increase in data customer base to 54.6 million, now Partnering with constituting 39.0% of our total customer base Wireless home suppliers of broadband equipment • 46.3% growth
Slide 17: Transparent, affordable data offerings in the DRC support 37.5% growth
Continued 4G coverage Competitive pricing in expansion and enhanced challenging inflationary distribution environment Transparent, 280+ 4G sites added over 4G customer base growth affordable data the last year of 37.5% to 1.9m offerings in the DRC support a 37.5% growth Total data usage in the DRC D
Slide 18: Win with mobile money
Win with mobile money Reliable and scalable platform Reliable and • Airtel Money branches and kiosks increased by 11.5% and 10.8% Digital trusted respectively. experience distribution • Multi-brand agents in our network increased by 44.1% Affordable and • 20.4% increase in Airtel Money customer base
Slide 19: Uganda 'quick-loan' product diversifies our product offering
Launch of ‘quick-loan’ Instant loan to cover product for customers payment shortfall subject to with insufficient funds personalised credit limit Appeal to micro-traders Strong customer engagement Uganda ‘quick- who buy stock in morning and with over 866,000 loans repay after trading hours taken up
Slide 20: Mobile Money: Strong revenue growth and high margins
Mobile Money: Strong revenue growth and high margins Customer base (m) Transaction value ($bn) Revenue ($m) EBITDA ($m) 500 20.4% 41.3% 800 29.6% 26.4% 450 100 .0 700 400 90.0 35.0 80.0 88.6 600 692 350 344 30.0 31.5 70.0 300 25.0 60.0 500 553 26.2 50.0 64.4 400 250 281 20.0 200 40.0 300 150 15.0 30
Slide 21: Mobile money: a diversified business, with rapidly evolving ecosystem
Mobile money: a diversified business, with rapidly evolving ecosystem User activities and revenue contribution financial Users as % of AM customers (FY’23) services Revenue contribution% (FY’23) 9% 74% Cash in / cash out 72% payment 13% Mobile re-charges solutions 54% P2P services 10% 44% Bill pay a
Slide 22: Nigerian PSB: Significant opportunity, steady progress
Opportunity Product build • Population(1) of 213m, growing 2.4% a • App and USSD live year • Across network functionality • 116m Population (>15 years) • Integration to NIBSS • Unbanked (2) population of 55% • Billers live • Existing mobile services customer base • On-boarding journey eased of 48.4m
Slide 23: Win with people
Win with people Growth mindset • Diversity: Disciplined Collaborates & & strong ➢ 26% women in workforce, level with prior year execution engages ➢ 29% women in ExCo at OpCo level Our Values ➢ Employees from 39 nationalities Alive, Inclusive, Respectful • Talent development and feedback: ➢ Delivered
Slide 24: Our sustainability highlights in FY'23
Our sustainability highlights in FY’23 Our business Our people Our community Our environment • 48.5% 4G penetration of our data • 81% employee engagement score, • UNICEF partnership launched • Published our Scope 1, 2 and 3 customer base with 90.3% of our a 2% improvement from the across 6 of our ma
Slide 25: Financial review
Financial review
Slide 26: Performance across key metrics
Performance across key metrics Customers Revenue Underlying EBITDA 140m $5.3bn $2.6bn +9.0% YoY +17.6% YoY +17.3% YoY (FY’22: 128m) (FY’22: $4.7bn) (FY’22: $2.3bn) OFCF Leverage Dividend (per share) $1.83bn 1.4x 5.45 $cents +10.4% YoY +9% YoY (FY’22: $1.66bn) (Mar’22: 1.3x) (FY’22: 5 $cents) Notes:
Slide 27: Double digit revenue growth across voice, data and mobile money
$m +11.5% reported currency growth ($541m) +5.6% +17.2% +25.1% +11.8% +23.8% +29.6% +17.6% constant currency growth ($822m) Double digit FY’22 Currency Voice Data Mobile money Others FY’23 devaluation revenue growth across voice, data and mobile money Currency devaluation sensitivities for revenues:
Slide 28: Nigeria: Strong performance in challenging environment
• Revenue grew 20.3% driven by a Customer base1 ARPU combination of both voice and data. Cash shortages in the country impacted Q4’23 48.4m $3.8 revenues with 50% of recharges cash based. +7.0% YoY 9.0% YoY • Voice revenue grew 13.4% largely driven by customer base growth of 9.0%. ARPU stable despit
Slide 29: East Africa: 17.4% revenue growth, with broad-based strong performance
Customer base1 ARPU • Revenue grew 17.4% driven by driven by all services; voice, data and mobile money. 62.7m $2.7 (revenue in reported currency grew by 9.7% YoY +9.0% YoY 12.5%). • Voice revenue grew 12.2% driven by customer base growth of 9.7% and voice ARPU growth of 4.0%. Revenue Underlying EBI
Slide 30: Francophone Africa: Encouraging growth across all metrics
Customer base2 ARPU • Revenue grew 12.7% in constant currency with reported currency growth of 6.2%. 28.9m $3.7 Constant currency growth driven by all the key services; voice, data and mobile money. 7.8% YoY +3.8% YoY • Voice revenue grew 8.8% driven by customer base growth of 7.8% with ARPU largely
Slide 31: Underlying EBITDA growth of 17.3%, with margin at 49.0%
$m +11.4% reported currency growth ($264m) Margin Margin 49.0% 49.0% +17.3% constant currency growth ($397m) FY’22 Currency Revenue Fuel Price Other Expenses FY’23 devaluation Underlying EBITDA Increase* *Out of $245m impact of fuel price increase, $215m is contributed by Nigeria growth of 17.3%, wi
Slide 32: Strong track record in driving efficiencies – Win with cost
Strong track record in driving efficiencies – Win with cost Underlying EBITDA margin: Scale and efficiencies drive improvements Operating leverage driven by real revenue growth 50% 49% 48% Offline to online distribution 47% 46% 45% 44% Churn reduction 43% 42% 41% Sweating the existing assets and cos
Slide 33: Finance costs impacted by significant currency movements in the year
Finance costs impacted by significant currency movements in the year $m Foreign exchange and derivative losses ($338m)2 2 1 Shareholder liabilities Market debt Currency devaluation sensitivities for finance costs: On a 12 months basis, Lease liabilities Creditors • 1% currency devaluation across all
Slide 34: EPS before exceptional items impacted by forex losses
$ cents +13.4% 2 1 2 EPS before exceptional • EPS before exceptional items was 13.6 cents (lower by 2.4 cents from 16.0 cents in the prior year) which was impacted by higher foreign items exchange and derivative losses of $245m (impact of 7.0 cents). Operating EPS before EI and derivative and exchan
Slide 35: Our transparent and balanced capital allocation policy
Our transparent and balanced capital allocation policy 2 Group capex (excluding spectrum) of 1 $748m in-line with our guidance for the year. Capex outlook (excluding spectrum) of $800- $825m for FY’24. Efficient Sustainable capital capital 2 Net debt / Underlying EBITDA of 1.4x investments structure
Slide 36: Continuing to invest for future growth opportunities
Continuing to invest for future growth opportunities Capital expenditure in FY’23 ($748m) Investing for future growth • Total capital expenditure of $748m, up 14.0% 15% • 87% of capex investment is towards growth initiatives which is 20% targeted to enhance network capacity, increase coverage and en
Slide 37: Normalised free cash flow impacted by higher cash tax and capex
$m Stable despite FX headwinds 1 2 3 4 5 Normalized free cashflow is defined as cash from operations (excl. mobile money wallet balance) less cash interest, cash tax, lease repayments, capex (tangible & intangible) and payouts to non controlling interests in subsidiaries. However, it does not includ
Slide 38: Capital efficiency drives rising RoCE
683bps 101bps 25. 0% 20. 0% 22.3% 23.3% 16.5% 15. 0% 10. 0% 5.0 % 0.0 % FY'21 FY'22 FY'23 • Strong operational trends underpinned by efficient capital deployment across all markets Capital • RoCE continues on a positive trajectory reflecting strong management efficiency execution as well as continue
Slide 39: HoldCo debt reduction, localising debt and $1bn of upstreaming
HoldCo debt reduction, localising debt and $1bn of upstreaming Cash upstream diversified across the regions Balance sheet strength maintained despite investments As of Mar 31, 2023 As of Mar 31, 2022 $m Times $m Times 26% Foreign Currency: 1,144 0.5x 1,585 0.7x 39% - Holdco 550 0.2x 1,000 0.4x - OpC
Slide 40: Conclusions
Conclusions
Slide 41: Summary and outlook
$ High Revenue Growth Sustainable, High Transparent capital Margins allocation policy and • Supportive demographics • Strong demand for voice, data • Operating leverage favourable shareholder and mobile money services from revenue growth returns • Additional opportunities: • Focus on cost • Invest f
Slide 42: Thank you
Thank you Q&A
Slide 43: Appendix
Appendix
Slide 44: Growth by service segment waterfalls
Growth by service segment waterfalls Voice revenue ($m) Data revenue ($m) +11.8% constant currency growth +23.8% constant currency growth Mobile money revenue ($m) +29.6% constant currency growth 44
Slide 45: Effective tax rate
Effective tax rate Unit of Year ended Year ended Description measure Mar-23 Mar-22 Profit before Income tax Tax rate Profit before Income tax Tax rate taxation expense % taxation expense % Reported effective tax rate $m 1,034 284 27.4% 1,224 469 38.3% Adjusted for: Exceptional Items $m - 161 (60) 2
Slide 46: Finance cost & forex
Finance cost & forex Description FY'23 FY'22 Change $m $m $m Total finance charges were higher by $320m, mainly due to: Interest on gross debt and other financial liabilities 362 310 52 Interest income (29) (19) (10) • Net interest costs were higher by $42m, primarily due Net Interest Cost 333 291 4
Slide 47: Voice: coverage and distribution facilitates growth opportunity
Voice: coverage and distribution facilitates growth opportunity Unique SIM penetration highlights the opportunity Comparable usage across footprint very low (as at Dec 21)1 Voice usage per customer in mins2 89% 87% (per month) 77% 67% 602 54% 700 47% 600 338 500 400 298 272 300 176 200 100 - North A
Slide 48: Data: Network investment and affordable offerings to drive demand
Data: Network investment and affordable offerings to drive demand 4G penetration of total data customers Data usage remains low in a global context Data usage per customer in GB1 (per month) FY'23 48.5% 14.0 11.8 11.5 9.3 12.0 5.9pp 10.0 8.0 5.8 FY'22 42.6% 12.1pp 6.0 4.4 4.0 2.2 2.0 - (2) North Ame
Slide 49: Mobile money: driving financial inclusion and developing the ecosystem
Mobile money: driving financial inclusion and developing the ecosystem Core focus to drive future uptake Developing ecosystem of financial services Assured availability float Bank to wallet & Safety Bill /merchant payments and cash wallet to bank Bulk transfers - gov’t International money Ease and c
Slide 50: Mobile money: customer usage continues to gain traction
Mobile money: customer usage continues to gain traction Annualized transaction value1 ($bn) Mobile money revenue growth FY'23 692 Q4'23 102.2 25.1% 29.6% 53.5% FY'22 553 Q4'22 66.6 - 100 200 300 400 500 600 700 800 Reported Constant - 20.0 40.0 60.0 80.0 100 .0 120 .0 currency currency 1In constant
Slide 51: Currency effects – historical trends
Currency effects – historical trends Historical Trends CAGR Deval/(Appr.) Currency Mar 2018 Mar 2020 Mar 2022 Mar 2023 1-year 3-year 5-year NGN 360.0 385.3 415.2 461.4 11.1% 6.2% 5.1% UGX 3,690.5 3,795.0 3,590.0 3,780.0 5.3% (0.1%) 0.5% TZS 2,259.3 2,313.0 2,320.0 2,341.0 0.9% 0.4% 0.7% ZMK 9.5 17.9