May 11, 2022/CSL Research
Airtel Africa in its full year result released this morning reflected the company’s sustained ability to deliver decent performance across its markets of operations. Based on its FY 2022 financial scorecard, the company reported Revenue growth of 20.6% y/y to US$4.7bn from US$3.9bn in March 2021. Notably, March is the company’s accounting year end. Across its markets, the Nigerian business segment delivered 21.0% y/y revenue growth in FY 2022 to US$1.9bn from US$1.6bn in March 2021. Specifically, Airtel Nigeria’s voice revenue grew 9.8% y/y to US$985m. Thus, the driver of Airtel Nigeria’s revenue growth was Data, which grew 33.7% y/y to US$734m in FY 2022 and accounted for 39.1% of the revenue during the period versus 35.3% contributed in the prior period. Similarly, growth in data of 31.5% y/y trailed by Mobile Money growth of 29.0% y/y, were the major drivers of the 17.2% y/y revenue growth in Francophone Africa in FY 2022. The development was, however, different in East Africa where the 24.3% y/y revenue growth was mainly driven by Mobile Money (+41.55 y/y), trailed by Data (+29.1%) and Voice Revenue (+20.3% y/y). Beyond that, according to the company’s management, the region benefitted from a weakened performance in the first quarter of the prior year (June 2020) during the peak period of Covid-19 restrictions across the region.
Growth in Network Operating costs tracked Revenue growth, climbing by 17.7% y/y to US$817m in 2022 from US$694m in 2021. We believe the growth in Network Operating Cost is associated with the firm’s investments in expanding its 4G network footprint without also downplaying the impact of currency depreciation in some of its countries of operations. Nevertheless, growth in Profit after direct costs remained strong, rising 17.7% y/y to US$3.9bn in FY 2022 from US$3.2bn in FY 2021.
Operating Expenses excluding depreciation & amortization rose by 14.2% y/y to US$1.6bn in FY 2022 from US$1.4bn in FY 2021. Save for a 28.6% y/y decline in Impairment Loss on Financial Assets, other components of Opex increased y/y. Despite that, EBITDA edged higher, up 26.6% y/y to US$2.3bn in FY 2022 from US$1.8bn in FY 2021. In addition, EBITDA margin expanded, up 229bps y/y to 48.3% in FY 2022. Operating Profit grew by 37.2% y/y to US$1.5bn in FY 2022 from US$1.1bn in FY 2021 despite a 9.3% y/y increase in Depreciation & Amortisation to US$744m in FY 2022.
Net Finance Cost was broadly flat. Finance Income grew by 111.1% y/y compared with a marginal growth of 2.1% y/y in Finance Cost. Lower foreign exchange and derivative losses, higher interest income and a one-time US$12m gain in other finance charges as a result of the reversal of an interest provision in one of its operating entities were offset by a one-off cost of US$19m for the applicable premium paid on the early repayment of the US$505m bonds in March 2022. Additionally, interest costs were also broadly flat as lower interest costs on its reduced market debt were offset by an increase in interest costs on lease liabilities. Furthermore, the leverage position of the firm improved to 1.3x from 2.0x in the prior period, largely driven by increased cash generation, expansion of underlying EBITDA, and proceeds from Airtel Money Investments.
Pre-tax Profit increased 75.6% y/y to US$1.2bn in FY 2022, benefitting from a gain of US$111m on the sale of telecommunications towers assets in the Group subsidiaries in Tanzania, Malawi, Madagascar, and Rwanda. Effective Tax Rate decreased to 38.3% in FY 2022 from 40.5% in FY 2021. All in, Net Profit rose by 81.9% y/y to US$755m in FY 2022 from US$415m in FY 2021. EPS improved to 16.8 cents in FY 2022 from 9.0 cents in the prior period.
The company proposed a final dividend of 3 cents per share, bringing total dividend for the year to 5 cents per share compared to 4 cents in the previous period (2021).
Our estimates are under review. Current price; N1400.00/s.
Source: Company data, CSL Research
