Last year, Airtel Africa initiated some growth-focused changes in Nigeria, its biggest market in Africa, that included divestment to payment service with SMARTCASH Payment Service Bank Limited and approval in principle by the Central Bank of Nigeria for Airtel Commerce Nigeria Limited’s super-agent license.
These moves are believed to have buoyed its recent ground-breaking growth that puts the telecom company at the top of the Nigerian stock market.
Airtel Africa operates in 13 other African countries, but Nigeria, which leads the continent in tech and digital innovation, is key to its growth. Yesterday, in a financial report the telco said had been prepared based on International Accounting Standard 34 (IAS 34) issued by the International Accounting Standards Board (IASB) and approved for use in the UK by the UK Accounting Standards Endorsement Board (UKEB), released its nine months financial statement for the year ended December 31, 2021, with a revenue growth of $3,492 million and a customer base of 125.8 million.
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Compared to other regions in Africa, Airtel recorded about 5% more revenue in Nigeria. In Nigeria, the telecoms company’s growth is up 29.0%; East Africa up 24.4% and Francophone Africa up 19.0%. Its revenue across all key services in voice is up 16.1%, while data and mobile money were both up 37.2%.
According to the statement, Airtel recorded strong growth across all key metrics, and would unlock further mobile money opportunity, given the Payment Service Bank (PSB) approval in principle that it got from Nigeria.
The telco’s aim at diversification into financial services is a game changer spurring its growth in an unprecedented manner.
The statement said the underlying EBITDA was $1,703m, growing by 31.3 per cent in reported currency with an EBITDA margin of 48.8 per cent, an increase of 326 basis points led by both revenue growth and improved operational efficiencies.
Operating profit grew by 43.1 per cent to $1,146 million in reported currency, while Profit after tax almost doubled to $514 million as higher profit before tax more than offset associated tax charges.
Basic EPS was 11.7 cents, an increase of 113.8 per cent, largely as a result of higher profit. EPS before exceptional items increased to 11.5 cents, up from 5.0 cents in the previous period.
Operating free cash flow grew by 42.2 per cent to $1,271 million and net cash generated from operating activities was up 23.1per cent to $1,499 million.
The customer base expanded to 125.8 million, growing by 5.8 per cent, with increased penetration across mobile data and mobile money services.
The growth has come on the heels of the federal government’s directive mandating Nigerian telcos to link National Identification Number (NIN) to registered SIM lines. Airtel said the new regulatory policy, which for some time, prohibited the purchase of new lines, impacted its customer base growth.
Commenting on the growth, Chief Executive Officer of Airtel Africa, Segun Ogunsanya said: “A strong third quarter has contributed to a pleasing nine-month financial performance across all key metrics.
“Operationally we have continued to execute on our network and distribution expansion plans, driving continued strong growth in ARPUs across voice, data and mobile money. We have also seen further improvement in our customer growth trends for the Group with Nigeria returning to strong customer growth after a period affected by the implementation of new ‘know your customer’ requirements, posting 1.9 million net additions in the third quarter, taking total Group customer additions to 3.1 million.
“I am particularly pleased with developments in Nigeria, where in November we received approval in principle for both a payment service bank (mobile money) license and a super-agent license. We are now working closely with the Central Bank of Nigeria to meet all its conditions to receive the final operating licenses and commence operations. This will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services.
“We continued to strengthen our balance sheet, with our leverage ratio now 1.4 times underlying EBITDA, thanks both to continued increases in operating cash flow delivery and to over $550m of cash that has now been received from minority investments into our mobile money business.”
However, there is concern that Airtel’s growth could be scuttled in the near future when the 5G network becomes operational. In October, Airtel lost to MTN and Mafab in Nigeria’s 5G auction. The winners, who paid $273.6m for the licenses, are believed to be in a better position to lead the telecom industry’s growth.
But with its financial diversification moves, Airtel will likely make up for the 5G loss. Ogunsanya said the company will focus on expanding its services, focusing on financial and digital inclusion across Africa.
“We will continue to invest in expanding and evolving our platform to further deepen both financial and digital inclusion across Africa. I continue to see huge growth potential across voice, data and mobile money and our strategy is delivering against this opportunity. Our sustained investments in both network and distribution expansion will help to ensure that both the communities and economies across our footprint will continue to benefit from increased and affordable connectivity and financial inclusion. We are committed to continue to improve the delivery of our services to our customers, with sustainability at the heart of our continued purpose to transform lives across Africa,” he said.
Airtel Africa has a market capitalization of N4.78 trillion, putting it in leadership position in Nigeria’s capital market.