Q1 Results: Airtel Africa’s Revenue Rises To Three-Year High

Revenue of Bharti Airtel Ltd.’s Africa unit rose to its highest in three years during the quarter ended June as the continent’s second-largest mobile operator expanded its network, added more subscribers and its average revenue per user remained stable.

While Airtel Africa’s revenue jumped 7 percent year-on-year in the April-June period to $796 million, its operating profit rose 10 percent to $347.5 million, according to data compiled by BloombergQuint from the company’s filing on the London Stock Exchange. That’s because of operating leverage and cost cuts by the mobile operator. The company’s margins expanded 110 basis points to 43.7 percent during the period.

Airtel Africa’s revenue and earnings before interest, tax, depreciation and amortisation rose 10.2 percent and 12.8 percent, respectively, in constant currency terms. Its free cash flow—the cash a company can generate after accounting for capex—declined 29 percent to $102.4 million on account of capital expenditures incurred by the company on network modernisation and rollout of additional sites.

The company incurred a capital expenditure of $100 million in the first quarter. It has guided for a capex of $650-700 million for the full financial year.

Airtel Africa’s ARPU remained flat at $2.7 per user, while its total customer base increased to 99.7 million from 91.2 million last year.

The African unit’s net debt remained at $4 billion during Q1. That’s because the firm received the $670-million proceeds from its initial public offering on July 3. The shares were issued at $1.01 apiece and are currently trading more than 14 percent lower.

Its parent in a post-earnings conference call today reiterated its plan to deleverage through cash flow generation and asset monetisation. It looks to monetise the unused 4,500 towers in five African countries. Besides, it’s exploring opportunities to monetise its data centres and fibre assets. The company intends to keep Airtel Africa’s leverage between 2 times and 2.5 times, it said without giving any details about the timeline.

Bharti Airtel continues to gain footing in Africa even as its India business remains under pressure. It has been one of the worst-hit telecom operators since the launch of Mukesh Ambani’s Reliance Jio Infocomm Ltd. The Sunil Bharti Mittal-led company has shifted its strategy to focus on high-paying data-hungry customers and has started shedding flab by deactivating low revenue generating users and raised prices of its lowest tariff plans. Bharti Airtel now hopes that it will be able to turn its fortunes around by 2020.―Bloomberg Quint