Airtel Africa’s Decent Operating Performance Hampered by Forex Losses in FY24

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FSDH Initial Reaction: Airtel Africa Plc FY24 results 
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May 10, 2024/FSDH Research

Key Performance Highlights:

  • Airtel Africa reported FY24 numbers on 9 May 2024. The Company recorded a 5.3% YoY revenue decline in reported currency to US$5.0 billion in FY24. It is worth noting that the slowdown in reported revenue growth reflected the impact of currency devaluation, particularly in Nigeria. However, revenue in constant currency grew by 20.9% YoY, with growth accelerating to 23.1% in 4Q24. The FY24 top-line growth (constant currency) was driven mainly by a 9.0% YoY growth in the customer base to 152.7 million and 10.7% YoY constant currency ARPU growth. Furthermore, mobile services revenue grew by 20.9% YoY in constant currency, driven by voice revenue growth of 11.9% YoY and data revenue growth of 29.2% YoY. Mobile Money revenue grew by 32.8% YoY in constant currency, with a continued strong performance in East Africa.
  • Network operating expenses declined 9.8% YoY to US$926 million, while Sales and marketing expenses increased 10.6% YoY to US$576 million in FY24. The license fee was up 1.2% YoY to US$244 million, and employee benefits expenses rose 4.9% YoY to US$301 million. Access Charges decreased by 23.4% YoY, while the other expenses increased by 6.7% YoY in FY24 to US$206 million.
  • In FY24, the Company’s operating profit fell 6.7% YoY (+20.3% YoY in constant currency) to US$1.6 billion as currency headwinds offset strong revenue growth and continued operating efficiency gains across the Group. Moreover, the net finance costs escalated 131.5% YoY to US$1.7 billion in FY24. Finance costs were primarily impacted by US$807 million of exceptional derivative and foreign exchange losses arising in Nigeria and Malawi following the significant currency devaluation in FY24. Consequently, the Company reported a loss before tax of US$63 million in FY24 compared to a profit before tax of US$1.0 billion in FY23. Despite tax expenses declining 90.8% YoY to US$26 million in FY24 (FY23: US$284 million), the Company’s loss after tax was US$89 million in FY24, impacted by the US$549 million net of tax impact of the exceptional derivative and foreign exchange losses. Excluding these exceptional items, profit after tax for FY24 was US$460 million. The Company reported a loss attributable to the company shareholders of US$165 million. Accordingly, the Company’s loss per share came in at 4.4 cents, compared to 17.7 cents earnings per share a year ago, mainly due to the derivative and foreign exchange losses.
  • The Company recorded a 5.7% YoY decline in underlying EBITDA in reported currency to US$2.4 billion in FY24. However, EBITDA increased by 21.3% YoY in constant currency. Growth in constant currency EBITDA was led by revenue growth and supported by continued improvement in operating efficiencies, limiting the impact of inflationary cost pressures in several markets. Furthermore, the underlying EBITDA margin marginally declined by 22 bps to 48.2% in FY24.
  • The Company reported a US$737 million capex in FY24, lower than the prior year period (US$748 million), largely due to a deferral in data centre investments. Operating cash flow declined 7.4% YoY to US$1.7 billion owing to lower EBITDA partially offset by lower capex in FY24. The net debt remained flat at $3.5 billion, and the leverage ratio remained stable at 1.4x in FY24. The Company had around $680 million of cash available at HoldCo to be utilized to fully repay the remaining $550 million debt, falling due in May 2024.
  • Looking at the key operating metrics, the total Customer base expanded 9.0% YoY to 152.7 million, with increased penetration across mobile data (customer base up 17.8% YoY) and mobile money services (customer base up 20.7% YoY). Airtel Africa recorded a 13.2% YoY decline in ARPU to 2.8 in FY24; however, the constant currency ARPU growth was up 10.7% YoY, driven by increased usage across all segments.
  • The Board recommended a final dividend of 3.57 cents for the financial year ended 31 March 2024 (bringing FY24 total dividend to 5.95 cents per share), payable on 26 July 2024 to shareholders recorded in the register at the close of business on 21 June 2024. Furthermore, on 1 March 2024, Airtel Africa commenced a share buyback programme. The share buyback programme is expected to be phased over two tranches, with the first tranche starting on 1 March 2024 and anticipated to end on or before 31 August 2024. The first tranche would amount to a maximum of $50 million. During March 2024, the Company purchased 7.4 million shares for a total consideration of $9 million.
  • On 6 February 2024, Airtel Africa plc announced that John Danilovich had informed the Board of his intention to retire as an independent non-executive director of Airtel Africa plc after this year’s AGM in July 2024. Also, on 9 May 2024, Airtel Africa plc announced the appointment of Paul Arkwright, CMG, as an independent non-executive director of the Company, with immediate effect.

Market Reaction: Investor’s reaction to the FY24 results was subdued as the stock declined 0.35% to close at N1,973.00, versus a 0.03% marginal gain for the All-Share Index (9/5).

Airtel Africa Earnings Highlight FY24

Source: Company Financials, FSDH

1. Revenue includes inter-segment eliminations of $188m for the year ended 31 March 2024 and $152m for the prior year.
2. Mobile money revenue post inter-segment eliminations with mobile services was $649m for the year ended 31 March 2024, and $540m for the prior year.
3. EBITDA includes other income of $21m for the year ended 31 March 2024 and $13m for the prior period.
Other revenue includes messaging, value added services, enterprise, site sharing and handset sale revenue.

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