October 30, 2023/CSL Research

Airtel Africa H1 2024 recently released financials showed that the company’s Revenue grew marginally by 2.3% to US$2.6bn from US$2.56bn in H1 2023. On a q/q basis, Total Revenue declined by 10% to US$1.25bn in Q2 2024 from US$1.38bn in Q1 2024. The growth in mobile money revenues was the major driver of the rise in Total Revenue.

Data Revenue remained resilient in H1 2024, increasing by 5.9% y/y to US$915m from US$864m in H1 2023. The growth in Data Revenue could be attributed to increased usage supported by the enhanced capacity through network expansion and smartphone penetration. The company reported that its total customer base grew by 9.7% to 147.7 million y/y, as the penetration of mobile data and mobile money services continued to rise, driving a 23.0% y/y increase in data customers to 59.8 million and a 23.1% y/y increase in mobile money customers to 36.5 million.

The company also noted that its expansion of the 4G network and improved user experience has helped drive increased smartphone penetration, customer ARPU, and consumption per data user across the segments. Smartphone penetration was up 2.6ppt to 37.7% y/y and data customers grew by 23.0% y/y, now representing 40.5% of the company’s total base. Data usage per customer per month also grew by 19.4% and reached 5.1 GB per month from 4.3 GB a year ago. This increase was driven by increased smartphone penetration and an expansion of its home broadband and enterprise customers. 4G handset users’ data usage now constitutes 79.6% of total data usage on the network in Q2 2024 indicating a growth of 53.9%. Voice Revenue declined by 4.6% to US$1.16m from US$1.22m in H1 2023. However, we note a significant improvement in mobile money revenues, up 25.5% y/y to US$416m from US$ 332m in H1 2023.

Direct Network Operating Cost grew by 0.4% to US$491m from US$489m in H1 2023. Operating Expenses rose by 2.3% y/y to US$846m in H1 2024 from US$827m in H1 2023. The growth in Opex reflects the impact of the Naira depreciation, elevated inflation and unavailability of FX leading to increased costs of in its network expansion program. Despite that, EBITDA increased by 3.7% y/y to US$1.3m in H1 2024 from US$1.25m in H1 2023. In addition, EBITDA margin increased, up 71bps y/y to 49.6% in H1 2024. Operating Profit grew by 1.5% y/y to US$885m in H1 2024 from US$872m in H1 2023, despite an 8.9% increase in Depreciation and amortization to US$417m in H1 2024.

Net Finance Cost increased, up 144.1% y/y to US$873m in H1 2024 from US$358m in H1 2023. The elevated Net Finance Cost mirrors the 141.2% y/y increase in Finance Cost despite a 54.5% y/y rise in Finance Income. The increase in Finance Cost was driven by the company’s exposure to the foreign exchange devaluation in June 2023. We also note that higher interest on market debt, mostly from spectrum acquisitions and license renewal payments made in the previous year, as well as higher interest on lease liabilities, contributed to the increase in net finance expenses.

Consequently, Pre-tax Profit decreased by 97.7% y/y to US$12m in H1 2024 from US$330m in H1 2023. The company recorded a loss position of US$13m in H1 2024. EPS declined to US$0.01 in H1 2024.

We have a target price of N1466.8/s with a Hold recommendation on the stock. Current price; N1400.1/s.

Airtel Africa (US$’m) H1 2024

Source: Company’s Financials, CSL Research

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