Strong and resilient operating performance across all regions despite foreign exchange headwinds, specifically in Nigeria.
Highlights
Operating key performance indicators (KPIs)
• Total customer base grew by 9.7% to 147.7 million, as the penetration of mobile data and mobile money services continued to rise, driving a 23.0% increase in data customers to 59.8 million and a 23.1% increase in mobile money customers to 36.5 million.
• Constant currency ARPU growth of 9.8% was driven by increased usage across voice, data and mobile money.
• Mobile money transaction value increased by 45.3% in constant currency, with Q2’24 annualised transaction value of $116bn in reported currency.
Financial performance
• Revenue in constant currency grew by 19.7%, with reported currency revenues up by 2.3% to $2,623m. In Q2’24, reported currency revenues declined by 4.7% reflecting a full quarter’s impact of the Nigerian naira devaluation in June 2023. Q2’24 constant currency revenues increased by 19.0%.
• Whilst reported currency revenue growth was impacted by currency devaluation, all segments delivered double-digit constant currency revenue growth. Across the Group mobile services revenue grew by 18.3% in constant currency, driven by voice revenue growth of 11.5% and data revenue growth of 28.1%. Mobile money revenue grew by 30.9% in constant currency.
• EBITDA increased by 21.2% in constant currency, and 3.7% in reported currency to $1,302m, with an EBITDA margin of 49.6%, reflecting a 70bps margin improvement over the prior period despite inflationary cost pressures and foreign exchange headwinds. Reported currency EBITDA declined by 3.3% in Q2’24 as the full impact of the Nigerian naira devaluation in June 2023 was incorporated.
• Loss after tax was $13m driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in June 2023. This impact has been classified as an exceptional item.
• EPS before exceptional items was 7.0 cents, an improvement of 3.2%. EPS before exceptional items and excluding foreign exchange and derivative losses was 10.7 cents. Basic EPS at negative (1.5 cents) compared to 7.9 cents in the prior period, was impacted by $317m net exceptional loss on account of naira devaluation in June 2023.
Capital allocation
• Capex of $312m was marginally higher compared to the prior period. Capex guidance for the full year remains between $800m and $825m as we continue to invest for future growth.
• The remaining debt at HoldCo is $550m, falling due in May 2024. Cash at the HoldCo was $495m at the end of the period and the Group is well positioned to fully repay the HoldCo debt when due. Leverage of 1.3x in September 2023, was broadly stable despite the foreign exchange impact on EBITDA as a result of the Nigerian naira devaluation in June 2023.
• The Board has declared an interim dividend of 2.38 cents per share, an increase of 9%, in-line with our progressive dividend policy.
Sustainability strategy
• Our landmark five-year $57m partnership with UNICEF was launched across nine of the 13 of our markets providing access to educational resources, free of charge, on our way to reaching one million children through our programmes by 2027.
• Net zero journey continues with implementation of Scope 1 and 2 emissions reductions and development of a robust Scope 3 strategy, including stakeholder engagement.
Olusegun Ogunsanya, Group chief executive officer, on the trading update:
“I am pleased to report a strong operating performance for the Group despite foreign exchange headwinds in many of our markets and specifically in Nigeria. The resilient growth in voice, data and mobile money usage levels reflects the inherent demand for these essential services across our footprint, and our six-pillar ‘win-with’ strategy continues to ensure we capture this growth opportunity by expanding our customer base and providing the platform to enable increased usage across the network. This strong momentum is supported by continued cost efficiencies which enabled further EBITDA margin expansion.
As reported in July 2023, our results for the first quarter were significantly impacted by the changes to the FX market in Nigeria, introduced by the Central Bank. Whilst the changes are required for the long-term benefit of the Nigerian economy, the immediate impact of the naira devaluation continues to weigh on our reported financial performance in the period. Our focus remains to enhance long term value by continuing to drive sustained and efficient growth. Over the last five years we have delivered constant currency revenue and EBITDA CAGR of 17.1% and 20.7% respectively, allowing us to further derisk the balance sheet and improve profitability across the Group.
Looking forward, the delivery of affordable and reliable telecom and mobile money services across our markets remains our key focus. Our strong operating performance continues to make us a stronger and bigger company, which is well positioned to deliver against the growth opportunities these markets offer. Despite the challenges of rising diesel prices in Nigeria, we aim to limit the impact with continued operational leverage and further cost efficiencies to deliver an improved EBITDA margin in FY’24 versus FY’23.”
Alternative performance measures (APM) 1 (Half year ended)
Description Sep-23 Sep-22 Reported currency Constant currency
$m $m change change
Revenue 2,623 2,565 2.3% 19.7%
EBITDA 1,302 1,255 3.7% 21.2%
EBITDA margin 49.6% 48.9% 70 bps 63 bps
EPS before exceptional items ($ cents) 7.0 6.8 3.2%
Operating free cash flow 990 945 4.8%
(1) Alternative performance measures (APM) are described on page 45.
GAAP measures (Half year ended)
Description Sep-23 Sep-22 Reported currency
$m $m change
Revenue 2,623 2,565 2.3%
Operating profit 885 872 1.5%
(Loss)/Profit after tax (13) 330 (103.8%)
Basic EPS ($ cents) (1.5) 7.9 (118.5%)
Net cash generated from operating activities 1,121 1,011 10.8%
About Airtel Africa
Airtel Africa is a leading provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa.
Airtel Africa offers an integrated suite of telecoms solutions to its subscribers, including mobile voice and data services as well as mobile money services, both nationally and internationally. We aim to continue providing a simple and intuitive customer experience through streamlined customer journeys. Enquiries
Airtel Africa – Investor Relations
Pier Falcione
Alastair Jones
Investor.relations@africa.airtel.com
+44 7446 858 280
+44 7464 830 011
+44 207 493 9315
Hudson Sandler
Nick Lyon
Emily Dillon
airtelafrica@hudsonsandler.com
Conference call
+44 207 796 4133
Management will host an analyst and investor conference call at 12:00pm UK time (BST), on Monday 30th October 2023, including a Question-and-Answer session.
To receive an invitation with the dial in numbers to participate in the event, please register beforehand using the following link:
Conference call registration link
Key consolidated financial information
Description Unit of measure Half year ended Quarter ended
Sep-23 Sep-22 Reported currency change % Constant currency change % Sep-23 Sep-22 Reported currency change % Constant currency change %
Profit and loss summary
Revenue 1 $m 2,623 2,565 2.3% 19.7% 1,246 1,308 (4.7%) 19.0%
Voice revenue $m 1,169 1,226 (4.6%) 11.5% 548 616 (11.1%) 11.2%
Data revenue $m 915 864 5.9% 28.1% 429 446 (3.8%) 26.6%
Mobile money revenue 2 $m 416 332 25.3% 30.9% 215 173 24.5% 30.5%
Other revenue $m 216 216 (0.0%) 18.9% 102 110 (7.2%) 18.2%
Expenses $m (1,337) (1,316) 1.6% 19.0% (635) (671) (5.4%) 18.7%
EBITDA 3 $m 1,302 1,255 3.7% 21.2% 620 641 (3.3%) 20.1%
EBITDA margin % 49.6% 48.9% 70 bps 63 bps 49.8% 49.0% 73 bps 44 bps
Depreciation and amortisation $m (417) (383) 8.8% 27.4% (197) (195) 1.1% 27.5%
Operating exceptional items $m – – 0.0% 0.0% – – 0.0% 0.0%
Operating profit $m 885 872 1.5% 18.5% 423 446 (5.2%) 16.9%
Other finance cost – net of finance income $m (402) (358) 12.4% (190) (206) (7.6%)
Finance cost – exceptional items 4 $m (471) – – – –
Total finance cost $m (873) (358) (190) (206) (7.6%)
(Loss)/Profit before tax $m 12 516 (97.7%) 233 240 (3.1%)
Tax 5 $m (179) (228) (21.5%) (95) (109)
Tax – exceptional items 4, 6 $m 154 42 270.0% – 21
Total tax credit/(charge) $m (25) (186) (95) (88) 7.3%
(Loss)/Profit after tax $m (13) 330 138 152 (8.8%)
Non-controlling interest $m (42) (34) 22.4% (23) (19) 16.0%
Profit attributable to owners of
the company – before exceptional items $m 262 254 3.1% 115 112 3.3%
(Loss)/Profit attributable to owners of the company $m (55) 296 (118.4%) 115 133 (13.2%)
EPS – before exceptional items cents 7.0 6.8 3.2% 3.1 3.0 2.9%
Basic EPS cents (1.5) 7.9 (118.5%) 3.1 3.5 (13.2%)
Weighted average number of shares million 3,751 3,753 (0.1%) 3,751 3,752 (0.0%)
Capex $m 312 310 0.5% 172 169 1.3%
Operating free cash flow $m 990 945 4.8% 448 472 (5.0%)
Net cash generated from operating activities $m 1,121 1,011 10.8% 541 622 (13.2%)
Net debt $m 3,327 3,278 3,327 3,278
Leverage (net debt to EBITDA) times 1.3x 1.3x 1.3x 1.3x
Return on capital employed % 24.7% 23.5% 127 bps 23.7% 23.7% (4) bps
Operating KPIs
ARPU $ 3.0 3.2 (6.2%) 9.8% 2.9 3.3 (13.0%) 8.6%
Total customer base million 147.7 134.7 9.7% 147.7 134.7 9.7%
Data customer base million 59.8 48.6 23.0% 59.8 48.6 23.0%
Mobile money customer base million 36.5 29.7 23.1% 36.5 29.7 23.1%
(1) Revenue includes inter-segment eliminations of $93m for the half year ended 30 September 2023 and $73m for the prior period.
(2) Mobile money revenue post inter-segment eliminations with mobile services was $323m for the half year ended 30 September 2023, and $259m for the prior period.
(3) EBITDA includes other income of $16m for the half year ended 30 September 2023 and $6m for the prior period.
(4) Exceptional items of $471m for the half year ended 30 September 2023 is on account of derivative and foreign exchange losses due to Nigerian naira devaluation in June 2023 (from 465.1 NGN/USD in May 2023 to 752.2 NGN/USD in June 2023). This has resulted in an exceptional tax gain of $154m. Hence, there was a negative impact of $317m on loss after tax.
(5) The tax charge of $179m is net of a tax gain of $30m arising from reversal of deferred tax liability on account of a reduction of undistributed retained earnings of Nigeria.
This reduction is an indirect consequence of a one-time exceptional foreign exchange loss of $471m. The $30m tax gain is not treated as exceptional.
(6) Tax exceptional items in the half year ended 30 September 2022 reflect the initial recognition of a deferred tax credit of $42m in Kenya.
Financial review for half year ended 30 September 2023
Revenue in reported currency grew by 2.3%, with constant currency growth of 19.7% for the Group. The gap in constant and reported currency revenue growth of 17.4% in H1’24 is primarily due to the impact of average currency devaluations between the periods, mainly in the Nigerian naira (51.7%), the Zambian kwacha (14.9%), the Kenyan shilling (19.3%), the Malawi kwacha (10.6%), the Madagascar ariary (8.8%) and the Tanzania shilling (4.0%), in turn, partially offset by appreciation in the Central African franc (4.9%).
Double digit constant currency revenue growth was posted across all reporting segments. In mobile services, revenue in Nigeria was up by 21.7%, East Africa up by 20.6% and Francophone Africa by 10.9%, respectively. Group mobile services revenue grew by 18.3%, with voice revenue growth of 11.5%, data revenue growth of 28.1% and other revenues growing by 19.0%. Mobile money revenue grew by 30.9% in constant currency, driven by growth of 34.9% in East Africa and 18.7% in Francophone Africa, respectively.
During the period, the Nigerian naira devalued from 461 per US dollar to 777, resulting in a 40.6% appreciation in the US dollar since 31 March 2023. The most significant part of the devaluation occurred in June 2023 when the Nigerian naira devalued to 752 NGN/USD, resulting in only a partial impact on revenue and EBITDA in the reporting period. If the closing rate of 777 NGN/USD were to be used to consolidate the results of the Group for the half year ended 30 September 2023, reported revenues would have declined by 5.1% to $2,434m, as opposed to 2.3% growth which was reported. Similarly, reported EBITDA would have declined by 4.1% to $1,204m, as opposed to the 3.7% growth reported.
The translation impact of the Nigerian naira devaluation to 777 NGN/USD over the period is expected to be between $900m and $950m on annualised revenue and between $450m and $500m on annualised EBITDA. The impact of the Nigerian naira devaluation on reported revenue and EBITDA for the period ending 30 September 2023 was $283m and $153m, respectively.
Total finance costs increased from $358m to $873m during the period. The primary driver of this increase was the $471m exceptional item reflecting the revaluation impact of USD balance sheet liabilities and derivatives in Nigeria following the naira devaluation in June 2023 (for a more detailed explanation, refer to the Q1’24 RNS). Excluding this exceptional item, finance costs increased by $44m largely as a result of increased debt in the operating entities which carries a higher average interest rate.
Total tax charges primarily reflected an exceptional gain of $154m on account of the Nigerian naira devaluation during the current period compared with the deferred tax credit of $42m in Kenya in the prior period, hence a higher exceptional gain of $112m. Tax charges excluding exceptional items was $179m compared to $228m in the prior period. Basic EPS at negative (1.5 cents) was largely impacted by the derivative and exchange loss following the Nigerian naira devaluation in June 2023. EPS before exceptional items and excluding foreign exchange and derivative losses was 10.7 cents, up by 0.2 cents.
Leverage at 1.3x was broadly unchanged. Following the prepayment of $450m bonds in July 2022, the remaining debt at HoldCo is now $550m. Cash at the HoldCo was $495m at the end of the period and the Group is well positioned to fully repay the HoldCo debt when due in May 2024. The EBITDA used to calculate the leverage ratio of 1.3x is based on the last 12 months to September 2023 and, therefore, does not fully incorporate the impact from the devaluation of the Nigerian naira. On a 12 months basis, after including the impact of the Nigeria naira devaluation seen to date on both the P&L and balance sheet, the leverage ratio is expected to be between 1.3x and 1.4x.
GAAP measures
Revenue
Reported revenue increased to $2,623m, up by 2.3% in reported currency, and by 19.7% in constant currency driven by both customer base growth of 9.7% and ARPU growth of 9.8%. Reported revenues declined by 4.7% in Q2’24 reflecting the full impact of the Nigerian naira devaluation in June 2023. The constant currency revenue growth was partially offset by average currency devaluations between the periods, mainly in the Nigerian naira (51.7%), the Zambian kwacha (14.9%), the Kenyan shilling (19.3%), the Malawi kwacha (10.6%), the Madagascar ariary (8.8%) and the Tanzania shilling (4.0%) in turn partially offset by appreciation in the Central African franc (4.9%).
Mobile services revenue grew by 18.3% in constant currency, supported by growth of 21.7% in Nigeria, 20.6% in East Africa and 10.9% in Francophone Africa, respectively. Mobile money revenue grew by 30.9% in constant currency, driven by revenue growth in East Africa of 34.9% and Francophone Africa of 18.7%.
During the period, the Nigerian naira devalued from 461 per US dollar to 777, resulting in a 40.6% appreciation in the US dollar since 31 March 2023. The most significant part of the devaluation occurred in June 2023 when the Nigerian naira devalued to 752NGN/USD, resulting in only a partial impact on revenues for the reporting period. If the closing rate of 777 NGN/USD were to be used to consolidate the results of the Group for the half year ended 30 September 2023, reported revenues would have declined by 5.1% to $2,434m, as opposed to 2.3% growth which was reported.
The translation impact of the Nigerian naira devaluation to 777 NGN/USD over the period is expected to be between $900m and $950m on annualised revenue. The Nigerian naira devaluation impacted revenues by $283m during the period ended 30 September 2023.
Operating profit
Operating profit in reported currency increased by 1.5% to $885m as a result of revenue growth and continued improvements in operating efficiency across the Group.
Net finance costs
Net finance costs (including loss on foreign exchange and derivatives and an exceptional item due to the Nigerian naira devaluation in June 2023) increased by $515m to $873m in the half year. Of the $515m, $471m related to the Nigerian naira devaluation in June 2023 which has been reported as an exceptional item. Adjusting for this exceptional item, net finance costs (including loss on foreign exchange and derivatives) increased by $44m, largely driven by higher interest on market debt predominantly resulting from spectrum acquisitions and licence renewal payments made over the last year and higher interest on lease liabilities.
The Group’s effective interest rate increased to 8.8% compared to 6.4% in the prior period, largely driven by higher local currency debt at the OpCo level, in line with our strategy to move more debt into our operating entities.
Taxation
Total tax charges reflected an exceptional gain of $154m on account of the Nigerian naira devaluation during the current half year compared with deferred tax credit of $42m in Kenya in the prior period, hence a higher exceptional gain of $112m. Tax charges excluding exceptional items was $179m as compared to $228m in the prior period. The tax charge of $179m is net of a tax gain of $30m arising from the reversal of deferred tax liability on account of a reduction of undistributed retained earnings of Nigeria. This reduction is an indirect consequence of the impact of the Nigerian naira devaluation. Total tax charges were $25m as compared to $186m in the prior period.
Profit after tax
Profit after tax was negative ($13m) largely driven by $654m of foreign exchange and derivative losses as a result of the revaluation of foreign currency liabilities in the OpCos. In particular, the devaluation of the Nigerian naira in June 2023 resulted in a foreign exchange loss of $317m after tax. The impact of the Nigerian naira devaluation has been classified as an exceptional item. Excluding the impact of these exceptional items, profit after tax would be $304m, compared to $288m in the prior period.
Basic EPS
Basic EPS at negative (1.5 cents), as compared to 7.9 cents in the prior period, was impacted by $317m net exceptional loss on account of naira devaluation in the month of June 2023. EPS before exceptional items and excluding foreign exchange and derivative losses was 10.7 cents. During the period we benefitted from a $30m one-off gain arising from reversal of deferred tax liability on account of the reduction of undistributed retained earnings of Nigeria. This reduction is an indirect consequence of the impact of the Nigerian naira devaluation.
Net cash generated from operating activities
Net cash generated from operating activities was $1,121m, 10.8% higher than the $1,011m of the prior period. This was largely due to lower cash tax payments (higher tax payment in last year due to higher dividend tax) and higher operating cash flows.
Alternative performance measures
EBITDA
EBITDA increased to $1,302m, up by 3.7% in reported currency, and by 21.2% in constant currency. Growth in EBITDA was led by revenue growth and supported by continued improvement in operating efficiencies which more than offset inflationary cost pressures. The EBITDA margin improved by 70 basis points in reported currency to 49.6%. In Q2’24, EBITDA margins did benefit from a 15% reduction in Nigerian diesel prices compared to the prior period.
Foreign exchange had an adverse impact of $345m on revenue, and $165m on EBITDA, as a result of average currency devaluations, mainly in the Nigerian naira (51.7%), the Zambian kwacha (14.9%), the Kenyan shilling (19.3%), the Malawi kwacha (10.6%), the Madagascar ariary (8.8%) and the Tanzania shilling (4.0%) in turn partially offset by appreciation in the Central African franc (4.9%).
During the period, the Nigerian naira devalued from 461 per US dollar to 777, resulting in a 40.6% appreciation in the US dollar since 31 March 2023. The most significant part of the devaluation occurred in June 2023, when the Nigerian naira devalued to 752 NGN/USD, resulting in only a partial impact on EBITDA for the reporting period. If the closing rate of 777 NGN/USD were to be used to consolidate the results of the Group for the half year ended 30 September 2023, reported EBITDA would have declined by 4.1% to $1,204m, as opposed to 3.7% growth which was reported.
The translation impact of the Nigerian naira devaluation to 777 NGN/USD during the period is expected to be between $450m and $500m on annualised EBITDA. The impact of the Nigerian naira devaluation on reported EBITDA for the period ending 30 September 2023 was $153m.
With respect to currency devaluation sensitivity going forward, on a 12-month basis, a further 1% USD appreciation across all currencies in our OpCos would have a negative impact of $49m on revenues, $24m on EBITDA and $19m on finance costs (excluding derivatives). Our largest exposure is to the Nigerian naira, for which a further 1% USD appreciation would have a negative impact of $14m on revenues, $8m on EBITDA and $7m on finance costs (excluding derivatives). This sensitivity analysis assumes the USD appreciation occurs at the beginning of the period.
For detailed disclosure on the currency devaluation risk posed to the Group, see ‘Risk Factors’.
Tax
The effective tax rate was 39.0%, compared to 39.4% in the prior period, largely due to profit mix changes amongst the OpCos and the lower impact of withholding taxes on dividends. The effective tax rate is higher than the weighted average statutory corporate tax rate of approximately 33%, largely due to the profit mix between various OpCos and withholding taxes on dividends by subsidiaries.
Exceptional items
The exceptional item of $471m is on account of derivative and foreign exchange losses following the Nigerian naira devaluation in June 2023 (from 465 NGN/USD in May 2023 to 752 NGN/USD in Jun 2023). This has resulted in an exceptional tax gain of $154m. Tax exceptional items in the previous period benefited from the initial recognition of a deferred tax credit of $42m in Kenya.
EPS before exceptional items
EPS before exceptional items was at 7.0 cents, 3.2% higher compared to 6.8 cents in the prior period. Current period EPS was negatively impacted due to higher finance cost including foreign exchange and derivative losses. EPS before exceptional items and excluding foreign exchange and derivative losses was 10.7 cents, up by 0.2 cents. During the period we benefitted
from a $30m one-off gain arising from reversal of deferred tax liability on account of the reduction of undistributed retained earnings of Nigeria. This reduction is an indirect consequence of the impact of the Nigerian naira devaluation.
Operating free cash flow
Operating free cash flow was $990m, up by 4.8%, as a result of higher EBITDA during the period. Capital expenditure during the period of $312m was marginally higher compared to the prior period.
Leverage
Leverage (net debt to EBITDA) at 1.3x in September 2023 was stable over the prior period despite $500m of spectrum investment in the last fiscal year and the renewal of the 2100 MHz spectrum licence in Nigeria in the period. Following the prepayment of $450m bonds in July 2022, the remaining debt at HoldCo is now $550m, falling due in May 2024. Cash at HoldCo was $495m at the end of the period and the Group is well positioned to fully repay the HoldCo debt when due.
The EBITDA used to calculate the leverage ratio of 1.3x is based on the last 12 months and, therefore, does not fully incorporate the impact from the devaluation of the Nigerian naira. On a 12 months basis, after including the impact of the Nigerian naira devaluation seen to date on both the P&L and balance sheet, the leverage ratio is expected to be between 1.3x and 1.4x.
Other significant updates
Nigerian naira devaluation
On 14 June 2023, the Central Bank of Nigeria (CBN) announced changes to the operations in the Nigerian Foreign Exchange (FX) market, including the abolishment of segmentation, with all segments now collapsing into the Investors and Exporters (I&E) window and the reintroduction of the ‘Willing Buyer, Willing Seller’ model at the I&E window. As a result of the CBN decision, the US dollar has appreciated against the Nigerian naira in the I&E window. The market expectation is that the new foreign currency policy and subsequent realignment of the several market exchange rates will provide greater US dollar liquidity over time and help to alleviate the challenges faced in the last few years to access US dollars in the market.
The Group continues to invest in Nigeria to enable it to capture the growth opportunity. This continued investment will facilitate growth, drive continued digitalisation across the country, facilitate economic progress and transform lives across Nigeria.
Nigeria 2100 MHz spectrum renewal
On 9 May 2023, the Group announced that its Nigerian subsidiary, Airtel Networks Limited (‘Airtel Nigeria’), had made a payment of NGN58.7bn ($127.4m), payable to the Nigerian Communications Commission (NCC), to renew its 2x10MHz 2100 MHz spectrum licence, which will be valid for a period of 15 years following the expiry of the previous licence (30 April 2022).
This investment to renew the licence reflects our continued confidence in the opportunity inherent across the Nigerian market, supporting the local communities and economies through furthering digital inclusion and connectivity.
Uganda spectrum
The regulator had previously issued an invitation to apply for spectrum in various bands (700, 800, 2300, 2600, 3300, 3500, etc). On 7 June 2023, Airtel Uganda has submitted its application for acquisition of additional spectrum of 10 MHz in 800 band, 100 MHz in 3500 band and 500 MHz in E-band along with a bank guarantee of $1.5m. There is no upfront payout for spectrum but, instead, there is an annual payout of $1.2m for a period of 17 years, which is the validity period for the spectrum. On 26 June 2023, the Uganda Communications Commission confirmed that Airtel Uganda Limited had qualified for the award of the 800 MHz and 3500 MHz spectrum.
Uganda IPO update
Under Article 16 of Uganda’s National Telecom Operator (‘NTO’) licence, Airtel Uganda Limited is obliged to comply with the sector policy, regulations and guidelines requiring the listing of part of its shares on the Uganda Stock Exchange. The current Uganda Communications (Fees & Fines) (Amendment) Regulations 2020, creates a public listing obligation for all NTO licensees, and specifies that 20% of the shares of the operator must be listed within two years of the date of the effective date of the licence. Airtel Uganda applied for an extension of listing date and was granted a 1-year extension to 16 December 2023.
On 29 August 2023, Airtel Uganda Limited issued a prospectus in relation to the offer for sale of 8,000,000,000 ordinary shares, representing 20% of Airtel Uganda Limited. The listing of Airtel Uganda Limited will be on the Main Investment Market Segment of the Uganda Securities Exchange. The offer closed on 27 October 2023, with the announcement of allocation on 6 November 2023, and the admission to listing on 7 November 2023.
Further details on the Uganda IPO can be found at https://www.airtel.co.ug/ipo-ug.
Share capital reduction
On 15 August 2023, Airtel Africa announced the cancellation and extinction of all of its deferred shares of USD 0.50 nominal value each (the ‘capital reduction’), which was approved by shareholders at the annual general meeting of the Company held on 4 July 2023. The cancellation and extinction was sanctioned by the High Court of England and Wales (the ‘High Court’). The effect of the capital reduction is to create additional distributable reserves which will be available to the company going forward and may be used to facilitate returns to shareholders in the future, whether in the form of dividends, distributions or purchases of the company’s own shares.
The company confirms that, following the capital reduction, the issued share capital of the company will be 3,758,151,504 ordinary shares of USD 0.50 nominal value each, carrying one vote each. There are no shares held in treasury. The total voting rights in the company therefore will be 3,758,151,504.
Dividend payment timetable
The board has declared an interim dividend of 2.38 cents per share for the period ended 30 September 2023, payable on 15 December 2023 to shareholders recorded in the register at the close of business on 10 November 2023.
Last day to trade shares cum dividend 8 November 2023
Shares commence trading ex-dividend 9 November 2023
Record date 10 November 2023
Currency election date 27 November 2023
Payment date 15 December 2023
Information on additional KPIs
An investor relations pack with information on the additional KPIs and balance sheet is available to download on our website at airtel.africa/investors
Strategic overview
The Group provides telecoms and mobile money services in 14 emerging markets of sub-Saharan Africa. Our markets are characterised by huge geographies with relatively sparse populations, high population growth rates, high proportions of youth, low smartphone penetration, low data penetration and relatively unbanked populations. Unique mobile user penetration across the Group’s footprint is around 48%, and banking penetration remains under 50%. These indicators illustrate the significant opportunity still available to Airtel Africa to enhance both digital and financial inclusion in the communities we serve, enriching and transforming their lives through digitalisation, whilst at the same time growing our revenues profitably across each of our key services of voice, data and mobile money.
The Group continues to invest in its network and distribution infrastructure to enhance both mobile connectivity and financial inclusion across our countries of operation. In particular, we continued to invest in expanding our 4G network footprint to increase data capacity in our networks to support future business growth, as well as deploying new sites, especially in rural areas, to enhance coverage and connectivity.
6
2,639 2,571 Expenses
Network operating expenses
491 489
Access charges 179 207
License fee and spectrum usage charges 124 114
Employee benefits expense 152 137
Sales and marketing expenses 127 118
Impairment loss on financial assets 4 6
Other operating expenses 260 245
Depreciation and amortisation
417 383
1,754 1,699 Operating profit
885
872
Finance costs
- Net loss on foreign exchange and derivative financial instruments
654
184
- Other finance costs 236 185
Finance income (17) (11)
Share of profit of associate and joint venture accounted for using equity method
Profit before tax
(0) (2)
12 516
Income tax expense
(Loss)/Profit for the period
6
25
186
(13)
330
Profit before tax (as presented above) 12 516
Add/(Less): Exceptional items 7 471 –
Underlying profit before tax 483 516
(Loss)/Profit after tax (as presented above) (13) 330
Add/(Less): Exceptional items 7 317 (42)
Underlying profit after tax 304 288
For the six months ended 30 September 2023 30 September 2022
(13)
330
(628)
(244)
(45) (0) (4) (1)
(673) (249)
(0)
(1)
0 0
(0) (1)
(673) (250)
(686) 80
Notes
(Loss)/Profit for the period (continued from previous page)
Other comprehensive income ('OCI')
Items to be reclassified subsequently to profit or loss:
Loss due to foreign currency translation differences
Tax on above
Share of OCI of associate and joint venture accounted for using
equity method Items not to be reclassified subsequently to profit or loss: Re-measurement loss on defined benefit plans
Tax on above
Other comprehensive loss for the period
Total comprehensive (loss)/income for the period (Loss)/Profit for the period attributable to:
(13)
330
Owners of the company (55) 296
Non-controlling interests 42 34 Other comprehensive loss for the period attributable to: (673) (250)
Owners of the company (659) (239)
Non-controlling interests (14) (11) Total comprehensive (loss)/income for the period attributable to:
(686)
80
Owners of the company (714) 57
Non-controlling interests 28 23 (Loss)/Earnings per share
Basic 8 (1.5 cents) 7.9 cents
Diluted 8 (1.5 cents) 7.9 cents
Consolidated Statement of Financial Position
(All amounts are in US Dollar millions unless stated otherwise)
As of 30 September 2023 31 March 2023
1,935 2,295
193 212
1,266 1,497
2,989 3,516
903 813
4 399
5 4
0
0
0 9
45 34
1 1
427 337
139 151
7,907
9,268
21
15
1 –
19 4
161 145
429 586
363 131
720 616
127 142
250 259
2,091 1,898
9,998 11,166
Notes
Assets
Non-current assets
Property, plant and equipment 9 Capital work-in-progress 9
Right of use assets
Goodwill 10
Other intangible assets
Intangible assets under development
Investments accounted for using equity method
Financial assets – Investments
- Derivative instruments
- Others
Income tax assets (net)
Deferred tax assets (net)
Other non-current assets Current assets
Inventories Financial assets - Investments
- Derivative instruments – Trade receivables – Cash and cash equivalents – Other bank balances
- Balance held under mobile money trust
- Others
Other current assets Total assets
24
As of 30 September 2023 31 March 2023
1,371
945
355 395
27 5
399 460
703 582
363 533
59 83
147 183
119 194
183 192
3,726
3,572
(1,635)
(1,674) 933
1,233
1,450 1,652
562 569
91 43
155 147
22 21
70 108
11 13
3,294
3,786
7,020 7,358
2,978 3,808
1,879
3,420
930 215
2,809 3,635
169 173
2,978 3,808
Notes
Current liabilities
Financial liabilities - Borrowings 13
- Lease liabilities – Derivative instruments
- Trade payables
- Mobile money wallet balance
- Others Provisions
Deferred revenue
Current tax liabilities (net)
Other current liabilities Net current liabilities Non-current liabilities
Financial liabilities - Borrowings 13
- Lease liabilities
- Put option liability – Derivative instruments
- Others
Provisions
Deferred tax liabilities (net)
Other non-current liabilities Total liabilities Net Assets Equity
Share capital 12
Reserves and surplus
Equity attributable to owners of the company
Non-controlling interests (‘NCI’)
Total equity
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
For and on behalf of the board of Airtel Africa plc
Olusegun Ogunsanya
Chief Executive Officer
29 October 2023
25
Consolidated Statement of Changes in Equity
(All amounts are in US Dollar millions unless stated otherwise)
Equity attributable to owners of the company
Non-
controlling
interests
(NCI)
Total equity
Share Capital Retained earnings Transactions with NCI reserve Other components of equity
Total Equity attributable
to owners of the company
No. of shares (1) Amount
6,839,896,081 3,420 3,436 (942) (2,412) 82
296
(239) 3,502 296 147
34
(11) 3,649
330
(250)
- –
- 296
(1) – – - (238)
(239) - – 295 – (238) 57
4 57 23
- 80
– – (0) – 4 4 4
- – –
- – (11)
5 – (11) 5 (11) 5 –
3 (11) 8 - – (113) – – (113) (113) – (113)
- – – – – – – (25) (25)
6,839,896,081 3,420 3,618 (937) (2,657) 24 3,444 148 3,592 - – 367 – – 367 367 53 420
- – 1 – (103) (102) (102) (1) (103)
- – 368 – (103) 265 265 52 317
- –
(2) – 2 – – – – - – – 8 – 8 8 – 8
- – (82) – – (82) (82) – (82)
- – – – – – – (27) (27)
6,839,896,081 3,420 3,902 (929) (2,758) 215 3,635 173 3,808 - – (55) – – (55) (55) 42 (13)
- – (0) – (659) (659) (659) (14) (673)
- – (55) – (659) (714)
(714) 28 (686) - –
- – (1) (1)
(1) –
(1)
- – (1) (1)
- – (0) – 2 2 2 – 2
(3,081,744,577) (1,541) 1,541 – – 1,541 – – – - – – 10 – 10 10 2 12
- – (123) – – (123) (123) – (123)
- – – – – – – (34) (34)
3,758,151,504 1,879 5,265 (919) (3,416) 930 2,809 169 2,978 As of 1 April 2022
Profit for the period
Other comprehensive loss
Total comprehensive income/(loss) Transaction with owners of equity
Employee share-based payment reserve
Purchase of own shares
Transactions with NCI
Dividend to owners of the company
Dividend (including tax) to NCI As of 30 September 2022
Profit for the period
Other comprehensive income/ (loss)
Total comprehensive income /(loss)
Transaction with owners of equity
Employee share-based payment reserve
Transactions with NCI
Dividend to owners of the company
Dividend (including tax) to NCI
As of 31 March 2023
(Loss)/Profit for the period
Other comprehensive loss
Total comprehensive income/(loss)
Transaction with owners of equity
Purchase of own shares (net)
Employee share-based payment reserve
Cancellation of deferred shares (refer note 4(c))
Transactions with NCI (2)
Dividend to owners of the company
Dividend (including tax) to NCI
As of 30 September 2023
(1) Includes ordinary & deferred shares till 31 March 2023. Deferred shares have been cancelled during the six months ended 30 September 2023 as explained in note 4(c), therefore as on 30 September 2023, it includes only ordinary shares. Refer to note 12 for further details.
(2) Transactions with NCI reserve increased due to reversal of put option liability by $10m for dividend distribution to put option NCI holders. Any dividend paid to the put option NCI holders is adjustable against the put option liability based on the put option arrangement.
26
Consolidated Statement of Statement Flows
(All amounts are in US Dollar millions unless stated otherwise)
For the six months ended
30 September 2023 30 September 2022
12
516
417
383
(17)
(11)
654 184
236 185
0 –
(0) (2)
(1) 5
1,301
1,260
(38)
(28)
(7) (3)
8 (15)
139 71
(18) (22)
10 16
24 36
(71) (16)
1,348 1,299
(227)
(288)
1,121 1,011
(387)
(393)
(137) (88)
340 343
(581) (7)
- 2
(1) –
15 11
(751) (132) - 0
(2) (9)
0 –
384 563
(249) (789)
(165) (142)
(43) (43)
(123) (113)
(3) (2)
(211) (181)
(0) (28)
(412) (744)
(42)
135
(64)
(19)
841
847
735 963
Cash flows from operating activities
Profit before tax
Adjustments for –
Depreciation and amortization
Finance income
Finance costs
- Net loss on foreign exchange and derivative financial instruments
- Other finance costs
Loss on sale of property, plant and equipment, net
Share of profit of associate and joint venture accounted for using equity method
Other non-cash adjustments(1)
Operating cash flow before changes in working capital
Changes in working capital
Increase in trade receivables
Increase in inventories
Increase /(Decrease) in trade payables
Increase in mobile money wallet balance
Decrease in provisions
Increase in deferred revenue
Increase in other financial and non financial liabilities
Increase in other financial and non financial assets
Net cash generated from operations before tax
Income taxes paid
Net cash generated from operating activities (a)
Cash flows from investing activities
Purchase of property, plant and equipment and capital work-in-progress
Purchase of intangible assets and intangible assets under development
Maturity of deposits with bank
Investment in deposits with bank
Dividend received from associate
Purchase of other short term investment
Interest received
Net cash used in investing activities (b)
Cash flows from financing activities
Acquisition of non-controlling interests
Purchase of own shares by ESOP trust
Proceeds from exercise of ESOP shares
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Dividend paid to non-controlling interests
Dividend paid to owners of the company
Payment of deferred spectrum liability
Interest on borrowings, lease liabilities and other liabilities
Outflow on maturity of derivatives (net)
Net cash used in financing activities (c)
(Decrease)/Increase in cash and cash equivalents during the period (a+b+c) Currency translation differences relating to cash and cash equivalents
Cash and cash equivalent as at beginning of the period
Cash and cash equivalents as at end of the period (Note 11) (2)
(1) For the six months ended 30 September 2023 and 30 September 2022, this mainly includes movements in impairment of trade receivable and other provisions. (2) Includes balances held under mobile money trust of $720m (September 2022: $596m) on behalf of mobile money customers which are not available for use by the Group.
Notes to Consolidated Financial Statements
(All amounts are in US Dollar millions unless stated otherwise)
- Corporate information
Airtel Africa plc (‘the company’) is a public company limited by shares incorporated and domiciled in the United Kingdom (UK) under the Companies Act 2006 and is registered in England and Wales (registration number 11462215). The registered address of the company is First Floor, 53/54 Grosvenor Street, London, W1K 3HU, United Kingdom. The company is listed both on the London Stock Exchange (LSE) and Nigerian Stock Exchange (NGX). The company is a subsidiary of Airtel Africa Mauritius Limited (‘the parent’), a company registered in Mauritius. The registered address of the parent is c/o IQ EQ Corporate Services (Mauritius) Ltd., 33, Edith Cavell Street, Port Louis, 11324, Mauritius.
The company, together with its subsidiary undertakings (hereinafter referred to as ‘the Group’) has operations in Africa. The principal activities of the Group, its associate and its joint venture consist of the provision of telecommunications and mobile money services.
- Basis of preparation
These interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (IASB) and approved for use in the UK by the UK Accounting Standards Endorsement Board (UKEB). Accordingly, the interim financial statements do not include all the information required for a complete set of financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 March 2023. Further, selected explanatory notes have been included to explain events and transactions that are significant for the understanding of the changes in the Group’s financial position and performance since the latest annual consolidated financial statements.
These interim consolidated financial statements for the six months ended 30 September 2023 do not constitute statutory accounts as defined in section 434 of the UK Companies Act 2006 and are unaudited.
The information relating to the year ended 31 March 2023 is an extract from the Group’s published annual report for that year and does not constitute statutory accounts as defined in section 434 of the UK Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts: the report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the UK Companies Act 2006.
These interim consolidated financial statements apply the same accounting policies, presentation and methods of calculation as those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 March 2023. Further, there have been no changes in critical accounting estimates, assumptions and judgements.
On 25 May 2023, the amendments to IAS 12 ‘Income Taxes’ were released by IASB. These amendments relate to International Tax Reform “Pillar 2 income taxes” and clarify how the effects of the global minimum tax framework should be accounted for and disclosed. The amendments also provide a temporary mandatory exception from deferred tax accounting for the top-up tax, which would have been effective immediately if this exception was not provided. The Group using this exception has therefore not recognized or disclosed tax assets and liabilities relating to Pillar 2 income taxes. These amendments were endorsed by the UK Endorsement Board on 19 July 2023 and the Group is assessing the expected impact of these amendments which will be disclosed in the Group’s March 2024 annual report. On 23 March 2023, HM Treasury released draft legislation for the Global Minimum Tax rules in the UK which was substantively enacted on 20 June 2023, this legislation will apply to the Group w.e.f. 1 April 2024.
These interim consolidated financial statements of the Group for the six months ended 30 September 2023 were authorised by the Board of Directors on 29 October 2023.
- Basis of measurement
The Interim consolidated financial statements have been prepared on the historical cost basis except for financial instruments held at fair value and are presented in United States Dollars (USD), with all values stated in US$ million and rounded to the nearest million except when otherwise indicated. Further, amounts which are less than half a million are appearing as ‘0’.
3.1. Going concern
These Interim consolidated financial statements have been prepared on a going concern basis. In making this going concern assessment, the Group has considered cash flow projections (including scheduled bond repayment of $550m in May 2024) to December 2024 (going concern assessment period) under both base and reasonable worst-case scenarios taking into considerations its principal risks and uncertainties including a reduction in revenue and EBITDA and a devaluation of the various currencies in the countries in which the Group operates. As part of this evaluation, the Group has considered available ways to mitigate these risks and uncertainties and has also considered committed undrawn facilities of $271m expiring beyond the going concern assessment period, which will fulfill the Group’s cash flow requirement under both the base and reasonable worst-case scenarios.
Having considered all the factors above impacting the Group’s businesses, the impact of downside sensitivities, and the mitigating actions available including a reduction and deferral of capital expenditure, the directors are satisfied that the Group has adequate resources to continue its operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the interim consolidated financial statements.
- Significant transactions/new developments
a) The directors recommended on 10 May 2023 and shareholders approved on 4 July 2023, a final dividend of 3.27 cents per ordinary shares for the year ended 31 March 2023, which was paid on 26 July 2023 to the holders of ordinary shares on the register of members at the close of business on 23 June 2023.
b) In June 2023, the Central Bank of Nigeria (CBN) announced changes to the operations in the Nigerian Foreign Exchange Market, including the abolishment of segmentation, with all segments now collapsing into the Investors and Exporters (I&E) window and the reintroduction of the ‘Willing Buyer, Willing Seller’ model at the I&E window. As a result of this CBN decision, the Nigerian Naira devalued against US Dollar by approximately 62% (i.e. US Dollar appreciated against Nigerian Naira by approximately 38%) in the month of June 2023. Nigeria Naira was at NGN 752 per USD at the end of the month of June 2023.
In the month of June 2023, the devaluation of the Naira against the US Dollar resulted in a foreign exchange loss of $383m on the translation of US Dollar monetary items held by the Group’s Nigerian subsidiaries (where the functional currency is the Nigerian Naira) at the new exchange rate referenced above and a loss on derivative financial instruments of $88m primarily on account of fair value changes considering the foreign exchange movement referenced above.
This change announced by CBN led to a material impact on the Group’s financial statements and in line with the Group’s policy on exceptional items and alternative performance measures, the impact of this change is of such size, nature and incidence that its exclusion is considered necessary to explain the underlying performance of the Group and to improve the comparability between periods. Therefore, the group has presented the net loss on foreign exchange and derivative financial instruments arising specifically from this devaluation of the Naira in the month of June 2023 and which amounts to $471m (out of total loss on foreign exchange and derivative financial instruments in Group’s Nigerian subsidiaries for the six months ended 30 September 2023 amounting to $552m), alongside the corresponding tax impact of $154m as exceptional items.
Additionally, on account of translation from Naira to US Dollar (presentation currency of the Group) of all the assets and liabilities (including Goodwill) pertaining to the Group’s Nigerian subsidiaries using the closing exchange rate at 30 June 2023 and income and expenses at the average exchange rates for June 2023, the Group incurred a foreign exchange translation loss recorded in other comprehensive income amounting to $577m in the month of June 2023.
c) During the six months ended 30 September 2023, the company completed the cancellation and extinction of all of its deferred shares (3,081,744,577 shares) of USD $0.50 nominal value each (the “Capital Reduction”), which was approved by shareholders at the annual general meeting of the company held on 4 July 2023, and was sanctioned by the High Court of England and Wales (the “High Court”) on 15 August 2023 and became effective on 18 August 2023 on its certification by the Companies House. The effect of the Capital Reduction is to create additional distributable reserves of $1541m which will be available to the company going forward and may be used to facilitate returns to shareholders in the future, whether in the form of dividends, distributions, or purchases of the company’s own shares. Accordingly, and in line with the High Court approval, the carrying value of the deferred shares ($1,541m) has been transferred to retained earnings. - Segmental information
The Group’s segment information is provided on the basis of geographical clusters and products to the Group’s Chief Executive Officer (chief operating decision maker – ‘CODM’) for the purposes of resource allocation and assessment of performance.
The Group’s reporting segments are as follows:
Nigeria mobile services – Comprising of mobile service operations in Nigeria;
East Africa mobile services – Comprising of mobile service operations in Uganda, Zambia, Tanzania, Kenya, Malawi and
Rwanda;
Francophone Africa mobile services – Comprising of mobile service operations in DRC, Gabon, Niger, Chad, Congo B, Madagascar and Seychelles;
Mobile money*- Comprising of mobile money services across the Group.
*Mobile money services segment consolidates the results of mobile money operations from all operating entities within the Group. Airtel Money Commerce B.V. (AMC BV) is the holding company for all mobile money services for the Group, and as of 30 September 2023, it controls all mobile money operations excluding operations in Nigeria. It is management’s intention to continue work to transfer the Nigerian mobile money services operations into AMC BV, subject to local regulatory approvals.
Each segment derives revenue from the respective services housed within each segment, as described above. Expenses, assets and liabilities primarily related to the corporate headquarters and centralised functions of the Group are presented as unallocated items.
The amounts reported to CODM are based on the accounting principles used in the preparation of the financial statements. Each segment’s performance is evaluated based on segment revenue and segment result.
The segment result is Underlying EBITDA (i.e. earnings before interest, tax, depreciation and amortization before exceptional items). This is the measure reported to the CODM for the purpose of resource allocation and assessment of segment performance. During the six months ended 30 September 2023 and 30 September 2022, EBITDA is equal to underlying EBITDA since there are no exceptional items pertaining to EBITDA.
Inter-segment pricing and terms are reviewed and changed by management to reflect changes in market conditions and changes to such terms are reflected in the period in which the changes occur.
The ‘Eliminations’ column comprises inter-segment revenues eliminated upon consolidation.
Segment assets and segment liabilities comprise those assets and liabilities directly managed by each segment. Segment assets primarily include receivables, property, plant and equipment, capital work in progress, right-to-use assets, intangibles assets, inventories and cash and cash equivalents. Segment liabilities primarily include operating liabilities. Segment capital expenditure comprises investment in property, plant and equipment, capital work in progress, intangible assets (excluding licenses) and capital advances.
Investment elimination upon consolidation and resulting goodwill impacts are reflected in the ‘Elimination’ column.
Summary of the segmental information and disaggregation of revenue for the six months ended and as of 30 September 2023 is as follows:
Revenue from external customers
Voice revenue
Data revenue
Mobile money revenue (1)
Other revenue (2)
Total revenue from external customers Inter-segment revenue
Total revenue
EBITDA
Less:
Depreciation and amortisation Finance costs
- Net loss on foreign exchange and derivative financial instruments
- Other finance costs
Finance income
Share of profit of associate and joint venture accounted for using equity method
Profit before tax
Other segment items
Capital expenditure
East
Nigeria Francophone Mobile Others
Africa
mobile mobile Africa mobile money (unallocated) Eliminations Total
services services
services
414 440 315 - - - 1,169
385 309 221 - - - 915
- - - 323 - - 323
78 66 66 - 6 - 216
877 815 602 323 6 - 2,623
1 7 3 93 5 (109) -
878 822 605 416 11 (109) 2,623
474 408 264 214 (58) - 1,302
156 145 103 9 4 - 417
654
236
(17)
(0)
12
109 107 77 10 9 - 312 As of 30 September 2023
Segment assets 1,786 2,229 1,605 1,063 25,385 (22,070) 9,998
Segment liabilities 1,683 2,397 2,342 840 13,158 (13,400) 7,020
Investment in associate and – – 5 – – – 5 joint venture accounted for using equity method (included in segment assets above)
(1) Mobile money revenue is net of inter-segment elimination of $93m mainly for commission on sale of airtime. It includes $63m pertaining to East Africa mobile services and the balance $30m pertaining to Francophone Africa mobile service.
(2) This includes messaging, value added services, enterprise, site sharing and handset sale revenue.
Summary of the segmental information and disaggregation of revenue for the six months ended 30 September 2022 and as of 31 March 2023 is as follows:
Nigeria mobile services East
Africa mobile services
Francophone
Africa mobile services Mobile money Others
(unallocated) Eliminations
Total
Revenue from external customers
Voice revenue 511 417 298 – – – 1,226
Data revenue 431 257 176 – – – 864
Mobile money revenue (1) – – – 259 – – 259
Other revenue (2) 96 61 56 – 3 – 216
Total revenue from external customers 1,038 735 530 259 3 – 2,565
Inter-segment revenue 2 6 2 73 – (83) –
Total revenue 1,040 741 532 332 3 (83) 2,565
EBITDA 533 362 244 165 (49) – 1,255
Less:
Depreciation and amortisation 156 123 92 8 4 – 383
Finance costs
- Net loss on foreign exchange and derivative financial instruments 184
- Other finance costs 185
Finance income (11)
Share of profit of associate and joint venture accounted for using equity method (2)
Profit before tax 516
Other segment items
Capital expenditure 134 90 59 20 7 – 310
As of 31 March 2023
Segment assets 2,634 2,255 1,599 945 25,485 (21,752) 11,166
Segment liabilities 2,193 2,393 2,359 742 12,839 (13,168) 7,358
Investment in associate and joint venture accounted for using equity method (included in segment assets above) – – 4 – – – 4
(1) Mobile money revenue is net of inter-segment elimination of $73m mainly for commission on sale of airtime. It includes $49m pertaining to East Africa mobile services and balance $24m pertaining to Francophone Africa mobile services.
(2) This includes messaging, value added services, enterprise, site sharing and handset sale revenue.
- Income tax expense
For the six months ended30 September 2023 30 September 2022
197 235
(172) (49)
25 186
Current tax
Deferred tax
Income tax expense
The tax charge for the six months ended 30 September 2023 has been calculated for each operating country by applying the best estimate of the effective rate of tax expected to apply for the period ending 31 March 2024 on the pre-tax profits of the six months period using rates substantively enacted by 30 September 2023. The charge is adjusted for discrete items (if any) occurring in the interim period as required by IAS 34 ‘Interim Financial Reporting’.
Tax charge for the six months ended 30 September 2023 also includes the related tax impacts arising out of withholding tax (‘WHT’) on unremitted earnings and cross charge to Group entities and deferred tax asset recognition based on the projected profitability in operating countries, wherever applicable.
- Exceptional items
Underlying profit before tax excludes the following exceptional itemsFor the six months endedSeptember 2023 September 2022
12
516
471
471 –
483 516
Profit before tax
Add: Exceptional items
Finance costs
- Net exchange loss and loss on derivative financial instruments (1)
Underlying profit before tax
Underlying profit after tax excludes the following exceptional items:
For the six months ended September 2023 September 2022
(13) 330
471 –
(154) –
- (42)
317 (42)
304 288
(Loss)/Profit after tax
-Exceptional items (as above) - Tax on above exceptional items (1) – Deferred tax asset recognition (2)
Underlying profit after tax
(1) This pertains to impact of material currency devaluation in Nigeria, refer to note 4(b) for details.
(2) During the six months ended 30 September 2022, the Group had recognised deferred tax assets in Airtel Kenya. Airtel Kenya had carried forward losses and temporary differences on which deferred tax was not previously recognised. Considering Airtel Kenya’s profitability trends, that tax losses were utilised and on the basis of forecast future taxable profits, the Group had determined that it was probable that taxable profits would be available against which the tax losses and temporary differences could be utilised. Consequently, the deferred tax asset recognition criteria were met, leading to the recognition of an additional deferred tax asset of $42m during the six months ended 30 September 2022.
Profit attributable to non-controlling interests include benefit of $0m and nil during the six months ended 30 September 2023 and 30 September 2022 respectively, relating to the above exceptional items.
- Earnings per share (‘EPS’)
The details used in the computation of basic EPS:
For the six months ended
30 September 2023 30 September 2022
(55) 296
3,751,042,649 3,753,179,654
(1.5 cents) 7.9 cents For the six months ended
(Loss)/Profit for the period attributable to owners of the company
Weighted average ordinary shares outstanding for basic
EPS (1)
Basic (Loss)/Earning per share
The details used in the computation of diluted EPS:
30 September 2023 30 September 2022 (55) 296
3,751,042,649
3,759,599,604
(1.5 cents) 7.9 cents
(Loss)/Profit for the period attributable to owners of the company
Weighted average ordinary shares outstanding for diluted
EPS (1)(2)
Diluted (Loss)/Earning per share
(1) The difference between the basic and diluted number of shares at the end of September 2022 being 6,419,950 shares relates to awards committed but not yet issued under the Group’s share-based payment schemes.
(2) The 5,714,418 shares granted under different share-based plans are not included in the calculation of diluted earnings per share for the six months ended 30 September 2023 as these are anti-dilutive on account of losses during the period. These options could potentially dilute basic earning per share in future.
- Property, plant and equipment (‘PPE’)
The following table presents the reconciliation of changes in the carrying value of PPE for the six months ended 30 September 2023 and 30 September 2022:
Leasehold Plant and Furniture & Office Capital work in
Improvements Building Land Equipment Fixture Vehicles Equipment Computer Total progress (2)49 47 26 3,045 62 22 55 703 4,009 1892 – 0 249 12 0 6 31 300 306
(0) – – (12) (3) (0) (1) (1) (17) (299)
(4) (3) (3) (302) (5) (1) (4) (45) (367) (8)
47 44 23 2,980 66 21 56 688 3,925 1884943
25
3,249
70
22
61
696
4,215 212
0 0 – 241 5 0 9 22 277 304
(0) (1) – (20) (4) 0 1 0 (24) (277)
(5) (5) (2) (910) (8) (0) (10) (94) (1,034) (46)
44
37
23
2,560
63
22
61
624
3,434
193 44
20
- 1,003
23
20
32
653
1,795
- 1 1 – 184 5 0 6 15 212 –
(0) – – (12) (3) (0) 1 (3) (17) –
(4) (2) – (201) (3) (1) (3) (42) (256) –
41 19 – 974 22 19 36 623 1,734 – 42
19
- 1,137
30
20
39
633
1,920
1 1 – 181 6 0 8 18 215 –
0 (0) – (26) (4) 2 4 1 (23) –
(4) (3) – (507) (4) (1) (9) (85) (613) –
Gross carrying value
Balance as of 1 April 2022
Additions / capitalization
Disposals / adjustments (1)
Foreign currency translation impact
Balance as of 30 September 2022
Balance as of 1 April 2023 Additions / capitalization
Disposals / adjustments (1)
Foreign currency translation impact
Balance as of 30 September 2023
Accumulated Depreciation
Balance as of 1 April 2022
Charge
Disposals / adjustments (1)
Foreign currency translation impact
Balance as of 30 September 2022
Balance as of 1 April 2023
Charge
Disposals / adjustments (1)
Foreign currency translation impact
Balance as of 30 September 2023
Net carrying value
As of 1 April 2022
As of 30 September 2022
As of 1 April 2023
As of 30 September 2023
39
5
6
7
5 17
27
25
24
20 –
26
23
25
23 785
2,042
2,006
2,112
1,775 28
39
44
40
35 21
2
2
2
1 42
23
20
22
19 567
50
65
63
57 1,499
2,214
2,191
2,295
1,935 –
189
188
212
193
(1) Related to the reversal of gross carrying value and accumulated depreciation on retirement/ disposal of PPE and reclassification from one category of asset to another.
(2) The carrying value of capital work-in-progress as at 30 September 2023 and 30 September 2022 mainly pertains to plant and equipment.
35
- Goodwill
The following table presents the reconciliation of changes in the carrying value of goodwill for the six months ended 30 September 2023 and 30 September 2022
Goodwill
Balance as of 1 April 2022 3,827
Foreign currency translation impact (251) Balance as of 30 September 2022 3,576Balance as of 1 April 2023 3,516 Foreign currency translation impact (527) Balance as of 30 September 2023 2,989 - Cash and bank balances (‘C&CE’)
For the purpose of the statement of cash flows, C&CE are as follows:
As of 30 September 2023 30 September 2022
Cash and cash equivalents as per statement of financial position
Balance held under mobile money trust 720 596
Bank overdraft (414) (288)
735 963 - Share capital
As of
30 September 2023 1,879 31 March 2023
1,879
- 1,541
1,879 3,420 Issued, subscribed and fully paid-up shares
3,758,151,504 Ordinary shares of $0.50 each
(March 2023: 3,758,151,504)
Nil deferred shares of $0.50 each
( March 2023: 3,081,744,577)
Terms/rights attached to equity shares
The company has followings two classes of ordinary shares:
• Ordinary shares having par value of $0.50 per share. Each holder of equity shares is entitled to cast one vote per share and carry a right to dividends.
• Deferred shares of $0.50 each. These shares have been cancelled and extinguished during the period ended 30th September 2023. For details, please refer to note 4(c).
- Borrowings
Non-current As of
30 September 2023 31 March 2023
44 43
(9) (8)
35
35
1,048 964
553 554
1,601 1,518
(703) (320)
898
1,198
933 1,233
As of
30 September 2023 31 March 2023
0 1
0
1
245 255
414 361
659 616
712 328
1,371 945
Secured
Term loans
Less: Current portion (A)
Unsecured
Term loans(1)
Non- convertible bonds (1) (2)
Less: Current portion (B) Current
Secured
Term loans(1)
Unsecured
Term loans(1)
Bank overdraft
Current maturities of long-term borrowings (A+B) (1) Includes debt origination costs.
(2) It includes impact of fair value hedges.
- Contingent liabilities and commitments
(i) Contingent liabilities
As of
30 September 2023 31 March 2023
14 16
20 20
9 9
5 5
76 82
124 132
(a) Taxes, duties and other demands (under adjudication / appeal / dispute)
-Income tax
-Value added tax
-Customs duty & Excise duty
-Other miscellaneous demands
(b) Claims under legal and regulatory cases including arbitration matters (1)
The reduction of $8m in contingent liabilities during the six months ended 30 September 2023 is primarily due to currency devaluation in subsidiaries.
(1) One of the subsidiaries of the Group is involved in a dispute with one of its vendors, with respect to invoices for services provided to a subsidiary under a service contract. The original order under the contract was issued by the subsidiary for a total amount of Central African franc (CFA) 473,800,000 (approximately $1m). In 2014, the vendorinitiated arbitration proceedings claiming a sum of approximately CFA 1.9 billion (approximately $3m) based on the court award. Multiple court proceedings have happened from 2015 onwards and in mid-May 2019, the lower courts imposed a penalty of CFA 35 billion (approximately $57m), based on which certain banks of the subsidiary were summoned to release the funds. The subsidiary immediately lodged an appeal in the Supreme Court for a stay of execution which was granted. Subsequently, the vendor filed an appeal before the Common Court of Justice and Arbitration (CCJA). Quite unexpectedly, in April 2020, the CCJA lifted the Supreme Court stay of execution. In May 2021, the Commercial Division of the High Court maintained new seizures carried out by the Vendor. The subsidiary appealed and the Court of Appeal determination on the seizures is pending as of April 2022. In March 2022 the CCJA interpreted its judgment of March 2019 to indicate that the daily penalty could not be maintained after its ruling dated 18 November 2018.
Separately, in December 2020 the subsidiary initiated criminal proceedings against the vendor for fraud and deceitful conduct. In February 2021, the investigating judge issued an order to cease the investigation which was appealed by the Subsidiary. In March 2022, the Court Appeal quashed the investigative judge order and allowed the investigation into the Vendor to resume. Testimony in the criminal investigation case happened on 26 April 2022 in front of the criminal court of appeal where the honourable judge has further re-examined the facts from the representatives of the subsidiary against this case. A stay of execution was issued on 30 May 2022 by the Chamber of Accusation in favour of subsidiary till the time criminal investigation is completed.
As per the law no civil action can be initiated against the subsidiary while criminal proceedings are ongoing. On 30 November 2022 subsidiary was notified that plaintiff has appealed in the court of cassation against the stay of execution dated 30 May 2022. Subsidiary has filed its response on 26 January 2023. On 08 May 2023, the subsidiary filed an application in the Commercial court to seek a cease-and-desist order against the vendor. The matter is pending before the Commercial court.
The Group still awaits the ruling on the merits of the case, and the outcome of the criminal investigations, and until that time has disclosed this matter as Contingent Liability for $57m (included in the closing contingent liability). No provision has been made against this claim.
In addition to the individual matters disclosed above, in the ordinary course of business, the Group is a defendant or co-defendant in various litigations and claims which are immaterial individually.
There are uncertainties in the legal, regulatory and tax environments in the countries in which the Group operates, and there is a risk of demands, which may be raised based on current or past business operations. Such demands have in past been challenged and contested on merits with appropriate authorities and appropriate settlements agreed. Other than amounts provided where the Group believes there is a probable settlement and contingent liabilities where the Group has assessed the additional possible amounts, there are no other legal, tax or regulatory obligations which may be expected to be material to the financial statements.
(ii) Guarantees:
Guarantees outstanding as of 30 September 2023 and 31 March 2023 amounting to $13m and $9m respectively have been issued by banks and financial institutions on behalf of the Group. These guarantees include certain financial bank guarantees which have been given for sub-judice matters and the amounts with respect to these have been disclosed under capital commitments, contingencies and liabilities, as applicable, in compliance with the applicable accounting standards.
(iii) Commitments
The Group has contractual commitments towards capital expenditure (net of related advances paid) of $362m and $313m as of 30 September 2023 and 31 March 2023 respectively.
- Related Party disclosure
a) List of related parties i) Parent company
Airtel Africa Mauritius Limited ii) Intermediate parent entity
Network i2i Limited
Bharti Airtel Limited
Bharti Telecom Limited
iii) Ultimate controlling entity
Bharti Enterprises (Holding) Private Limited. It is held by private trusts of Bharti family, with Mr. Sunil Bharti Mittal’s family trust effectively controlling the company. iv) Associate:
Seychelles Cable Systems Company Limited
v) Joint Venture
Mawezi RDC S.A.
vi) Other entities with whom transactions have taken place during the reporting period a. Fellow subsidiaries
Nxtra Data Limited
Bharti Airtel Services Limited
Bharti International (Singapore) Pte Ltd
Bharti Airtel (UK) Limited
Bharti Airtel (France) SAS
Bharti Airtel Lanka (Private) Limited
Bharti Hexacom Limited
b. Other related parties
Singapore Telecommunication Limited vii) Key Management Personnel (‘KMP’)
a. Executive directors
Olusegun Ogunsanya
Jaideep Paul
b. Non-Executive directors
Sunil Bharti Mittal
Awuneba Ajumogobia
Douglas Baillie
John Danilovich Andrew Green
Akhil Gupta
Shravin Bharti Mittal
Annika Poutiainen Ravi Rajagopal
Kelly Bayer Rosmarin
Tsega Gebreyes
c. Others
Ian Basil Ferrao
Michael Foley (till June 2023)
Razvan Ungureanu
Luc Serviant (till May 2023)
Daddy Mukadi Bujitu
Neelesh Singh (till December 2022)
Ramakrishna Lella
Edgard Maidou (till June 2023)
Rogany Ramiah
Stephen Nthenge
Vimal Kumar Ambat (till October 2022)
Ashish Malhotra (till June 2022)
Vinny Puri (till June 2022)
C Surendran (till December 2022)
Olubayo Augustus Adekanmbi (till November 2022)
Anthony Shiner (since June 2022)
Apoorva Mehrotra (since October 2022)
Oliver Fortuin (since June 2023)
Martin Frechette (since June 2023)
Carl Cruz (since May 2023)
Anwar Soussa (since August 2023)
(b) The details of significant transactions with the related parties for the six months ended 30 September 2023 and 30 September 2022 respectively, are provided below:
For the six months ended
30 September 2023 30 September 2022
Sale / rendering of services
Bharti Airtel (UK) Limited 42 36
Bharti Airtel Limited 5 5
Purchase / receiving of services
Bharti Airtel (France) SAS 9 8
Bharti Airtel (UK) Limited 19 19
Bharti Airtel Limited 6 4
Network i2i Ltd. 2 6
Dividend Paid
Bharti airtel Mauritius Limited 69 63
(c) Key management compensation (‘KMP’)
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director, whether executive or otherwise. For the Group, these include executive committee members. Remuneration to KMP were as follows:
For the six months ended
30 September 2023 30 September 2022
5 5
2 2
1 0
1 1
1 1
10 9
Short-term employee benefits
Performance linked incentive
Share-based payment
Other long term benefits
Other benefits
- Fair Value of financial assets and liabilities
The details as to the carrying value, fair value and the level of fair value measurement hierarchy of the group’s financial instruments are as follows:Carrying value as of Fair value as of30 September 202 3 31 March 202 3 30 September 202 3 31 March 202 3
19
4
19
4
0 9 0 9
0 4 0 4
0
0
0
0
161 145
161 145
429 586 429 586
363 127 363 127
720 616 720 616
172
176 172
176
1,864 1,667 1,864 1,667
0
5
0
5
0 0 0 0
118 43 118 43
0
0
0
0
552 554
537 540
264 227 243 210
829 780 829 780
659 617 659 617
562 569 562 569
399 460 399 460
703 582 703 582
518 680 518 680
4,604 4,517 4,568 4,486
Financial assets
FVTPL
Derivatives
- Forward and option Level 2 contracts
- Currency swaps and Level 2
interest rate swaps
Other bank balances Level 2
Investments Level 2 Amortised cost
Trade receivables
Cash and cash equivalents
Other bank balances
Balance held under mobile
money trust
Other financial assets Financial liabilities
FVTPL
Derivatives - Forward and option Level 2 contracts
- Currency swaps and Level 2
interest rate swaps - Cross currency swaps Level 3
- Embedded derivatives Level 2
Amortised cost
Long term borrowings – Level 1 fixed rate
Long term borrowings – Level 2 fixed rate
Long term borrowings –
floating rate
Short term borrowings
Put option liability Level 3
Trade payables
Mobile money wallet
balance
Other financial liabilities
The following methods/assumptions were used to estimate the fair values:
• The carrying value of bank deposits, trade receivables, trade payables, balance held under mobile money trust, mobile money wallet balance, short-term borrowings, other current financial assets and liabilities approximate their fair value mainly due to the short-term maturities of these instruments.
• Fair value of quoted financial instruments is based on quoted market price at the reporting date.
• The fair value of non-current financial assets, long-term borrowings and other financial liabilities is estimated by discounting future cash flows using current rates applicable to instruments with similar terms, currency, credit risk and remaining maturities.
• The fair values of derivatives are estimated by using pricing models, wherein the inputs to those models are based on readily observable market parameters. The valuation models used by the Group reflect the contractual terms of the derivatives (including the period to maturity), and market-based parameters such as interest rates, foreign exchange rates, volatility etc. These models do not contain a high level of subjectivity as the valuation techniques used do not require significant judgement and inputs thereto are readily observable.
• The fair value of the put option liability (included in other financial liability) to buy back the stake held by non-controlling interest in AMC BV is measured at the present value of the redemption amount (i.e. expected cash outflows). Since, the liability will be based on fair value of the equity shares of AMC BV (subject to a cap) at the end of 48 months (from the first close date), the expected cash flows are estimated by determining the projected equity valuation of the AMC BV at the end of 48 months (from the first close date) and applying cap thereon.
During the six months ended 30 September 2023 and 31 March 2023 there were no transfers between Level 1 and Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.
The following table describes the key inputs used in the valuation (basis discounted cash flow technique) of the Level 2 and Level 3 financial assets/liabilities as of 30 September 2023 and 31 March 2023:
Financial assets / liabilities Inputs used
-Currency swaps, forward and option contracts, and other bank balances Forward foreign currency exchange rates, Interest rates
-Interest rate swaps Prevailing/forward interest rates in market, Interest rates
-Embedded derivatives Prevailing interest rates in market, inflation rates
-Other financial assets / fixed rate borrowings / other financial liabilities Prevailing interest rates in market, Future payouts, Interest rates Reconciliation of fair value measurements categorised within level 3 of the fair value hierarchy – Financial Assets/(Liabilities) (net)
- Cross Currency Swaps (‘CCS’)
For the six months ended
30 September 2023 30 September 2022
(43) (3)
(121) 2
4 –
42 –
(118) (1)
For the six mon ths ended
Opening Balance
Recognised in finance costs in profit and loss(unrealized)
Repayment of Interest
Foreign currency translation impact recognised in OCI
Closing Balance
- Put option liability
30 September 2023 30 September 2022Opening Balance 569 579
Liability derecognised by crediting transaction with NCI reserve(1) (10) (8) Recognized in finance costs in profit and loss (unrealized) 3 3
Closing Balance 562
(1) Put option liability was reduced by $10m (30 September 2022 $8m) for dividend distribution to put option NCI holders. Any dividend paid to the put option NCI holders is adjustable against the put option liability based on put option arrangement.
- Events after the balance sheet date
No material subsequent events or transactions have occurred since the date of statement of financial position except as disclosed below:
- The interim dividend of 2.38 cents per share was approved by the Board on 29 October 2023 and has not been included as a liability as at 30 September 2023.
Appendix
Additional information pertaining to three months ended 30 September 2023 Condensed Consolidated Statement of Comprehensive Income
(All amounts are in US Dollar millions unless stated otherwise)
For three months ended
Income
Revenue otes
6 30 September 2023 30 September 2022
1,246 1,308
Other income
9 5
1,255 1,313 Expenses
Network operating expenses
223
259
Access charges 78 100
License fee and spectrum usage charges 60 58
Employee benefits expense 7 79 70
Sales and marketing expenses 64 57
Impairment loss on financial assets 1 1
Other expenses 8 130 127
Depreciation and amortisation
9
197 195
832
867 Operating profit 423 446
Finance costs
– Net loss on foreign exchange and derivative financial instruments
10
84 114
– Other finance costs 10 115 98
Finance income (9) (6)
Share of profit for associate and joint venture accounted for using equity method
Profit before tax
(0) (0)
233 240 Income Tax expense
Profit for the period
12
95 88
138
152
Profit before tax (as presented above) 233 240
Add/(Less): Exceptional items – –
Underlying profit before tax 233 240
Profit after tax (as presented above) 138 152
Add/(Less): Exceptional items – (21)
Underlying profit after tax 138 131
Other comprehensive income (‘OCI’)
Items to be reclassified subsequently to profit or loss:
Net loss due to foreign currency translation differences
(104)
(91)
Tax on above (10) (2)
Share of OCI of associate
Items not to be reclassified subsequently to profit or loss:
Re-measurement loss on defined benefit plans (0) 0
(114) (93)
(1)
(1)
Tax on above
Other comprehensive loss for the period
Total comprehensive income for the period 0 0
(1) (1)
(115) (94)
23 58
For three months ended
otes 30 September 2023 30 September 2022 Profit for the period attributable to: 138 152
Owners of the company 115 133
Non-controlling interests 23 19 Other comprehensive loss for the period attributable to: (115) (94)
Owners of the company (106) (95)
Non-controlling interests (9) 1 Total comprehensive income for the period attributable to: 23 58
Owners of the company 9 38
Non-controlling interests 14 20 Alternative performance measures (APMs)
Introduction
In the reporting of financial information, the directors have adopted various APMs. These measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be directly comparable with other companies APMs, including those in the Group’s industry.
APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.
Purpose
The directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Group.
APMs are also used to enhance the comparability of information between reporting periods and geographical units (such as like-for-like sales), by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid users in understanding the Group’s performance. Consequently, APMs are used by the directors and management for performance analysis, planning, reporting and incentive-setting purposes.
The directors believe the following metrics to be the APMs used by the Group to help evaluate growth trends, establish budgets and assess operational performance and efficiencies. These measures provide an enhanced understanding of the Group’s results and related trends, therefore increasing transparency and clarity into the core results of the business.
The following metrics are useful in evaluating the Group’s operating performance:
APM Closest equivalent IFRS measure Adjustments to reconcile to
IFRS measure Table reference1 Definition and purpose
Underlying EBITDA and margin Operating
profit • Depreciation and amortisation
• Exceptional items Table A The Group defines underlying EBITDA as operating profit/(loss) for the period before depreciation and amortisation and adjusted for exceptional items.
The Group defines underlying EBITDA margin as underlying EBITDA divided by revenue.
Underlying EBITDA and margin are measures used by the directors to assess the trading performance of the business and are therefore the measure of segment profit that the Group presents under IFRS. Underlying EBITDA and margin are also presented on a consolidated basis because the directors believe it is important to consider profitability on a basis consistent with that of the Group’s operating segments. When presented on a consolidated basis, underlying EBITDA and margin are APMs.
Depreciation and amortisation is a non-cash item which fluctuates depending on the timing of capital investment and useful economic life. Directors believe that a measure which removes this volatility improves comparability of the Group’s results period on period and hence is adjusted to arrive at underlying EBITDA and margin.
Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period-to-period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at underlying EBITDA and margin.
Underlying profit / (loss) before tax Profit / (loss) before tax • Exceptional items Table B The Group defines underlying profit/(loss) before tax as profit/(loss) before tax adjusted for exceptional items.
The directors view underlying profit/(loss) before tax to be a meaningful measure to analyse the Group’s profitability.
Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period-to-period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at underlying profit/(loss) before tax.
APM Closest equivalent IFRS measure Adjustments to reconcile to
IFRS measure Table reference1 Definition and purpose
Effective tax rate Reported tax rate • Exceptional items
• Foreign exchange rate movements
• One-off tax impact of prior period, tax litigation settlement and impact of tax on permanent differences Table C The Group defines effective tax rate as reported tax rate (reported tax charge divided by reported profit before tax) adjusted for exceptional items, foreign exchange rate movements and one-off tax items of prior period adjustment, tax settlements and impact of permanent differences on tax.
This provides an indication of the current on-going tax rate across the Group.
Exceptional tax items or any tax arising on exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period-to-period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at effective tax rate.
Foreign exchange rate movements are specific items that are non-tax deductible in a few of the entities which are loss making and/or where DTA is not yet triggered and hence are considered to hinder comparison of the Group’s effective tax rate on a period-to-period basis and therefore excluded to arrive at effective tax rate.
One-off tax impact on account of prior period adjustment, any tax litigation settlement and tax impact on permanent differences are additional specific items that because of their size and frequency in the results, are considered to hinder comparison of the Group’s effective tax rate on a period-to-period basis.
Underlying profit/(loss) after tax Profit/(loss) for the period • Exceptional items Table D The Group defines underlying profit/(loss) after tax as profit/(loss) for the period adjusted for exceptional items.
The directors view underlying profit/(loss) after tax to be a meaningful measure to analyse the Group’s profitability.
Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period-to-period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at underlying profit/(loss) after tax.
Earnings per share before exceptional items EPS • Exceptional items Table E The Group defines earnings per share before exceptional items as profit/(loss) for the period before exceptional items attributable to owners of the company divided by the weighted average number of ordinary shares in issue during the financial period.
This measure reflects the earnings per share before exceptional items for each share unit of the company.
Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period-to-period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at earnings for the purpose of earnings per share before exceptional items.
Operating free cash flow Cash generated from operating activities • Income tax paid
• Changes in working
capital
• Other non-cash items
• Non-operating income
• Exceptional items
• Capital expenditures Table F The Group defines operating free cash flow as net cash generated from operating activities before income tax paid, changes in working capital, other non-cash items, non-operating income, exceptional items, and after capital expenditures. The Group views operating free cash flow as a key liquidity measure, as it indicates the cash available to pay dividends, repay debt or make further investments in the Group.
Net debt and leverage ratio Borrowings
• Lease liabilities
• Cash and cash equivalent
• Term deposits with banks
• Deposits given against borrowings/ nonderivative financial instruments
• Fair value hedges Table G The Group defines net debt as borrowings including lease liabilities less cash and cash equivalents, term deposits with banks, deposits given against borrowings/nonderivative financial instruments, processing costs related to borrowings and fair value hedge adjustments.
The Group defines leverage ratio as net debt divided by underlying EBITDA for the preceding 12 months.
The directors view net debt and the leverage ratio to be meaningful measures to monitor the Group’s ability to cover its debt through its earnings.
APM Closest equivalent IFRS measure Adjustments to reconcile to
IFRS measure Table reference1 Definition and purpose
Return on capital
employed No direct equivalent • Exceptional items to arrive at underlying EBIT Table H The Group defines return on capital employed (‘ROCE’) as underlying EBIT divided by average capital employed.
The directors view ROCE as a financial ratio that measures the Group’s profitability and the efficiency with which its capital is being utilised.
The Group defines underlying EBIT as operating profit/(loss) for the period adjusted for exceptional items.
Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period-to-period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at underlying EBIT.
Capital employed is defined as sum of equity attributable to owners of the company (grossed up for put option provided to minority shareholders to provide them liquidity as part of the sale agreements executed with them during year ended 31 March 2022), non-controlling interests and net debt. Average capital employed is average of capital employed at the closing and beginning of the relevant period.
For quarterly computations, ROCE is calculated by dividing underlying EBIT for the preceding 12 months by the average capital employed (being the average of the capital employed averages for the preceding four quarters).
1 Refer “Reconciliation between GAAP and Alternative Performance Measures” for respective table.
Some of the Group’s IFRS measures and APMs are translated at constant currency exchange rates to measure the organic performance of the Group. In determining the percentage change in constant currency terms, both current and previous financial reporting period’s results have been converted using exchange rates prevailing as on 31 March 2023 for all countries, except Nigeria. For Nigeria the constant currency exchange rate used is 752.2 NGN/USD which is prevailing rate as on 30 June 2023.Reported currency percentage change is derived based on the average actual periodic exchange rates for that financial period. Variances between constant currency and reported currency percentages are due to exchange rate movements between the previous financial reporting period and the current period. The constant currency numbers only reflect the retranslation of reported numbers into exchange rates as of 31 March 2023 (Nigeria as of 30 June 2023) and are not intended to represent the wider impact that currency changes has on the business.
Reconciliation between GAAP and alternative performance measures
Table A: EBITDA and margin
Description Unit of measure Half year ended
September 2023 September 2022
Operating profit $m 885 872
Add:
Depreciation and amortisation
$m
417
383
Exceptional items $m – –
EBITDA $m 1,302 1,255
Revenue $m 2,623 2,565
EBITDA margin (%) % 49.6% 48.9%
Table B: Underlying profit / (loss) before tax
Description Unit of measure Half year ended
September 2023 September 2022
Profit before tax $m 12 516
Exceptional items (net) $m 471 –
Underlying profit before tax $m 483 516
Table C: Effective tax rate
Description Unit of measure Half year ended
September 2023 September 2022
Profit before taxation Income tax
Tax rate % expense Profit before taxation Income tax
Tax rate % expense
Reported effective tax rate (after EI) $m 12 25 207.7% 516 186 36.0%
Exceptional items (provided below) $m 471 154 – 42
Reported effective tax rate (before EI) $m 483 179 36.9% 516 228 44.1%
Adjusted for:
Foreign exchange rate movement for loss making entity and/or non-DTA operating companies & holding companies
$m
46 –
47 –
One-off adjustment and tax on permanent differences $m – 28 5 (3)
Effective tax rate $m 529 207 39.0% 568 224 39.4%
Exceptional items
- Deferred tax asset recognition
$m – – –
42
- Net exchange loss and loss on derivative financial instruments. $m 471 154 – –
Total $m 471 154 – 42
Table D: Underlying profit / (loss) after tax
Description Unit of measure Half year ended
September 2023 September 2022
(Loss)/Profit after tax $m (13) 330
Operating and Non-operating exceptional items $m 471 0
Tax exceptional items $m (154) (42)
Non-controlling interest exceptional items $m (0) (0)
Underlying profit after tax $m 304 288
Table E: Earnings per share before exceptional items
Description Unit of measure Half year ended
September 2023 September 2022
(Loss)/Profit for the period attributable to owners of the company $m (55) 296
Operating and Non-operating exceptional items $m 471 –
Tax exceptional items $m (154) (42)
Non-controlling interest exceptional items $m (0) –
Profit for the period attributable to owners of the company- before exceptional items $m 262 254
Weighted average number of ordinary shares in issue during the period. Million 3,751 3,753
Earnings per share before exceptional items Cents 7.0 6.8
Table F: Operating free cash flow
Description Unit of measure Half year ended
September 2023 September 2022
Net cash generated from operating activities $m 1,121 1,011
Add: Income tax paid $m 227 288
Net cash generation from operation before tax
Less: Changes in working capital
Increase in trade receivables $m
$m 1,348 1,299
28
38
Increase in inventories $m 7 3
(Increase)/Decrease in trade payables $m (8) 15
Increase in mobile money wallet balance $m (139) (71)
Decrease in provisions $m 18 22
Increase in deferred revenue $m (10) (16)
Increase in other financial and non-financial liabilities $m (24) (36)
Increase in other financial and non-financial assets $m 71 16
Operating cash flow before changes in working capital $m 1,301 1,260
Other non-cash adjustments $m 1 (5)
Operating exceptional items $m – –
EBITDA $m 1,302 1,255
Less: Capital expenditure $m (312) (310)
Operating free cash flow $m 990 945
Table G: Net debt and leverage
Description Unit of measure As at As at As at
September 2023 March 2023 September 2022
Long term borrowing, net of current portion $m 933 1,233 1,085
Short-term borrowings and current portion of long-term borrowing $m 1,371 945 907
Add: Processing costs related to borrowings $m 7 7 5
Add/(less): Fair value hedge adjustment $m (3) (5) (7)
Less: Cash and cash equivalents $m (429) (586) (655)
Less: Term deposits with banks $m (357) (117) (5)
Add: Lease liabilities $m 1,805 2,047 1,948
Net debt $m 3,327 3,524 3,278
EBITDA (LTM) $m 2,621 2,575 2,468
Leverage (LTM) times 1.3 1.4 1.3
Table H: Return on capital employed
Description Unit of
measure Half year ended
September 2023 September 2022
Operating profit (preceding 12 months) $m 1,770 1,675
Add:
Operating exceptional items
$m –
32
EBIT (preceding 12 months) $m 1,770 1,707
Equity attributable to owners of the Company $m 2,809 3,444
Add: Put option given to minority shareholders $m 562 574
Gross equity attributable to owners of the Company $m 3,371 4,018
Non-controlling interests (NCI) $m 168 148
Net debt (refer Table G) $m 3,327 3,278
Capital employed $m 6,867 7,444
Average capital employed 1 $m 7,155 7,277
Return on capital employed % 24.7% 23.5%
(1) Average capital employed is calculated as average of capital employed at closing and opening of relevant period.
Independent review report to Airtel Africa plc Conclusion
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2023 which comprises the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of financial position, the interim condensed consolidated statement of cash flows, the interim condensed consolidated statement of changes in equity and related notes 1 to 17.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2023 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, “Interim Financial Reporting”.
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible for assessing the group’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for expressing to the company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
29 October 2023
Glossary
Technical and Industry Terms
4G data customer A customer having a 4G handset and who has used at least 1 MB on any of the Group’s GPRS, 3G and 4G network in the last 30 days.
Airtel Money (mobile money) Airtel Money is the brand name for Airtel Africa’s mobile money products and services. The term is used interchangeably with ‘mobile money’ when referring to our mobile money business, finance, operations and activities.
Airtel Money ARPU
Mobile money average revenue per user per month. This is derived by dividing total mobile money revenue during the relevant period by the average number of active mobile money customers and dividing the result by the number of months in the relevant period.
Airtel Money customer base Total number of active subscribers who have enacted any mobile money usage event in last 30 days.
Airtel Money customer penetration The proportion of total Airtel Africa active mobile customers who use mobile money services. Calculated by dividing the mobile money customer base by the Group’s total customer base.
Airtel Money transaction value Any financial transaction performed on Airtel Africa’s mobile money platform.
Airtel Money transaction value per customer per month Calculated by dividing the total mobile money transaction value on the Group’s mobile money platform during the relevant period by the average number of active mobile money customers and dividing the result by the number of months in the relevant period.
Airtime credit service A value-added service where the customer can take an airtime credit and continue to use our voice and data services, with the credit recovered through subsequent customer recharge. This is classified as a Mobile Services product (not a Mobile Money product).
ARPU Average revenue per user per month. This is derived by dividing total revenue during the relevant period by the average number of customers during the period and dividing the result by the number of months in the relevant period.
Average customers The average number of active customers for a period. Derived from the monthly averages during the relevant period. Monthly averages are calculated using the number of active customers at the beginning and the end of each month.
Capital expenditure An alternative performance measure (non-GAAP). Defined as investment in gross fixed assets (both tangible and intangible but excluding spectrum and licences) plus capital work in progress (CWIP), excluding provisions on CWIP for the period.
Constant currency The Group has presented certain financial information that is calculated by translating the results at a fixed ‘constant currency’ exchange rate, which is done to measure the organic performance of the Group and represents the performance of the business in a better way. Constant currency amounts and growth rates are calculated using closing exchange rates as of 31 March 2023 for all reporting regions and service segments except for Nigeria region and service segment. For the Nigeria region and service segment, constant currency amounts and growth rates have been calculated using the closing exchange rate prevailing as of 30 June 2023
In June 2023, the Central Bank of Nigeria (CBN) announced changes to the operations in the Nigerian Foreign Exchange Market, including the abolishment of segmentation, with all segments now collapsing into the Investors and Exporters (I&E) window and the reintroduction of the ‘Willing Buyer, Willing Seller’ model at the I&E window. As a result of this CBN decision, the Nigerian naira has devalued against US Dollar by approximately 62%. This change announced by CBN led to a material impact on the Group’s financial statements and for better
representation of the performance of the business and comparability the closing exchange rate prevailing as of 30 Jun 2023 i.e. NGN 752.2/USD has been used for calculation of constant currency amounts and growth rates of Nigeria region and service segment.
Customer Defined as a unique active subscriber with a unique mobile telephone number who has used any of Airtel’s services in the last 30 days.
Customer base The total number of active subscribers that have used any of our services (voice calls, SMS, data usage or mobile money transaction) in the last 30 days.
Data ARPU Data average revenue per user per month. Data ARPU is derived by dividing total data revenue during the relevant period by the average number of data customers and dividing the result by the number of months in the relevant period.
Data customer base The total number of subscribers who have consumed at least 1 MB on the Group’s GPRS, 3G or 4G network in the last 30 days.
The proportion of customers using data services. Calculated by dividing the data customer base by the total Data customer penetration customer base.
Data usage per customer per month Calculated by dividing the total MBs consumed on the Group’s network during the relevant period by the average data customer base over the same period and dividing the result by the number of months in the relevant period.
Digitalisation
We use the term digitalisation in its broadest sense to encompass both digitisation actions and processes that convert analogue information into a digital form and thereby bring customers into the digital environment, and the broader digitalisation processes of controlling, connecting and planning processes digitally; the processes that effect digital transformation of our business, and of industry, economics and society as a whole through bringing about new business models, socio-economic structures and organisational patterns.
Diluted earnings per share Diluted EPS is calculated by adjusting the profit for the year attributable to the shareholders and the weighted average number of shares considered for deriving basic EPS, for the effects of all the shares that could have been issued upon conversion of all dilutive potential shares. The dilutive potential shares are adjusted for the proceeds receivable had the shares actually been issued at fair value. Further, the dilutive potential shares are deemed converted as at beginning of the period, unless issued at a later date during the period.
Earnings per share (EPS) EPS is calculated by dividing the profit for the period attributable to the owners of the company by the weighted average number of ordinary shares outstanding during the period.
Foreign exchange rate movements for non-DTA operating companies and holding companies Foreign exchange rate movements are specific items that are non-tax deductible in a few of our operating entities, hence these hinder a like-for-like comparison of the Group’s effective tax rate on a period-to-period basis and are therefore excluded when calculating the effective tax rate.
Indefeasible Rights of Use (IRU) A standard long-term leasehold contractual agreement that confers upon the holder the exclusive right to use a portion of the capacity of a fibre route for a stated period.
Information and communication technologies (ICT) ICT refers to all communication technologies, including the internet, wireless networks, cell phones, computers, software, middleware, videoconferencing, social networking, and other media applications and services.
Interconnect user charges (IUC) Interconnect user charges are the charges paid to the telecom operator on whose network a call is terminated.
Lease liability Lease liability represents the present value of future lease payment obligations.
Leverage An alternative performance measure (non-GAAP). Leverage (or leverage ratio) is calculated by dividing net debt at the end of the relevant period by the EBITDA for the preceding 12 months.
Minutes of usage Minutes of usage refer to the duration in minutes for which customers use the Group’s network for making and receiving voice calls. It includes all incoming and outgoing call minutes, including roaming calls.
Mobile services Mobile services are our core telecom services, mainly voice and data services, but also including revenue from tower operation services provided by the Group and excluding mobile money services.
Net debt An alternative performance measure (non-GAAP). The Group defines net debt as borrowings including lease liabilities less cash and cash equivalents, term deposits with banks, processing costs related to borrowings and fair value hedge adjustments.
Net debt to EBITDA (LTM) An alternative performance measure (non-GAAP) Calculated by dividing net debt as at the end of the relevant period by EBITDA for the preceding 12 months (from the end of the relevant period). This is also referred to as the leverage ratio.
Network towers or ‘sites’ Physical network infrastructure comprising a base transmission system (BTS) which holds the radio transceivers (TRXs) that define a cell and coordinates the radio link protocols with the mobile device. It includes all groundbased, roof top and in-building solutions.
Operating company (OpCo) Operating company (or OpCo) is a defined corporate business unit, providing telecoms services and mobile money services in the Group’s footprint.
Operating free cash flow An alternative performance measure (non-GAAP). Calculated by subtracting capital expenditure from EBITDA.
Operating leverage An alternative performance measure (non-GAAP). Operating leverage is a measure of the operating efficiency of the business. It is calculated by dividing operating expenditure (excluding regulatory charges) by total revenue.
Operating profit Operating profit is a GAAP measure of profitability. Calculated as revenue less operating expenditure (including depreciation and amortisation and operating exceptional items).
Other revenue Other revenue includes revenues from messaging, value added services (VAS), enterprise, site sharing and handset sale revenue.
Reported currency Our reported currency is US dollars. Accordingly, actual periodic exchange rates are used to translate the local currency financial statements of OpCos into US dollars. Under reported currency the assets and liabilities are translated into US dollars at the exchange rates prevailing at the reporting date whereas the statements of profit and loss are translated into US dollars at monthly average exchange rates.
Smartphone A smartphone is defined as a mobile phone with an interactive touch screen that allows the user to access the internet and additional data applications, providing additional functionality to that of a basic feature phone which is used only for making voice calls and sending and receiving text messages.
Smartphone penetration Calculated by dividing the number of smartphone devices in use by the total number of customers.
Total MBs on network Includes total MBs consumed (uploaded and downloaded) on the network during the relevant period.
EBIT Defined as operating profit/(loss) for the period adjusted for exceptional items.
EBITDA An alternative performance measure (non-GAAP). Defined as operating profit before depreciation, amortisation and exceptional items.
EBITDA margin An alternative performance measure (non-GAAP). Calculated by dividing EBITDA for the relevant period by revenue for the relevant period.
Revenue An alternative performance measure (non-GAAP). Defined as revenue before exceptional items.
Unstructured
Supplementary Service
Data Unstructured Supplementary Service Data (USSD), also known as “quick codes” or “feature codes”, is a communications protocol for GSM mobile operators, similar to SMS messaging. It has a variety of uses such as WAP browsing, prepaid callback services, mobile-money services, location-based content services, menu-based information services, and for configuring phones on the network.
Voice minutes of usage per Calculated by dividing the total number of voice minutes of usage on the Group’s network during the relevant period by the average number of customers and dividing the result by the number of months in the relevant
customer per month period.
Weighted average number The weighted average number of shares is calculated by multiplying the number of outstanding shares by the of shares portion of the reporting period those shares covered, doing this for each portion and then summing the total.
Abbreviations
2G Second-generation mobile technology
3G Third-generation mobile technology
4G Fourth-generation mobile technology
5G Fifth-generation mobile technology
ARPU Average revenue per user
bn Billion
bps Basis points
CAGR Compound annual growth rate
Capex Capital expenditure
CSR Corporate social responsibility
DTA Deferred Tax Asset
EBIT Earnings before interest and tax
EBITDA Earnings before interest, tax, depreciation and amortisation
EPS Earnings per share
FPPP Financial position and prospects procedures
GAAP Generally accepted accounting principles
GB Gigabyte
HoldCo Holding company
IAS International accounting standards
ICT Information and communication technologies
ICT (Hub) Information communication technology (Hub) IFRS
IFRS International financial reporting standards
IMF International monetary fund
IPO Initial public offering
KPIs Key performance indicators
KYC Know your customer
LTE Long-term evolution (4G technology)
LTM Last 12 months
m Million
MB Megabyte
MI Minority interest (non-controlling interest)
NGO Non-governmental organisation
OpCo Operating company
P2P Person to person
PAYG Pay-as-you-go
QoS Quality of service
RAN Radio access network
SIM Subscriber identification module
Single RAN Single radio access network
SMS Short messaging service
TB Terabyte
Telecoms Telecommunications
Unit of measure Unit of measure
USSD Unstructured supplementary service data
