- Strong growth recorded with an increase of 9.8% y/y
- Impressive Revenue growth in Nigeria by 23.2% y/y
- Interim dividend declared US 0.03/share (N10.86/share) which implies a dividend yield of 3.5%
Growing subscriber base sustains Revenue growth
Airtel Africa recorded an 8.4% y/y growth in Revenue to US$1.6bn from US$1.5bn in H1 2020. Growth within the quarter remained strong, climbing higher by 6.0% q/q and 9.8% y/y. Revenue growth was driven by an impressive increase in total customer base which rose 10.4% y/y to 103.9m from 94.1m. The data customer base grew impressively recording upper bound double-digit growth of 17.7% to 31.9m from 27.1m. Across business segments, growth was broad-based with Mobile Money leading the way surging 46.5% y/y while Data Revenue was up 37.8% y/y. Voice Revenue grew the slowest at 3.2% y/y. Across regions, growth in Nigeria was the most impressive with Revenue growing by 23.2% y/y to US$640.0m. Also, East Africa Revenue was up 5.8% y/y to US$578.0m while the Rest of Africa region saw Revenue fall 6.5% y/y to US$426.0m.
Operation efficiency sustained on sub-inflationary OPEX growth
Total business expenses grew but at a slower rate to Revenue, growing at a sub-inflationary rate of 5.7% y/y to US$931.0m for H1 2020 from US$881.0m in H1 2019. Consequently, EBITDA grew impressively by 10.9% y/y to US$719.0m in H1 2020 from US$649.0m in H1 2019. We like to note a modest improvement in operating efficiency evidenced in EBITDA margin expansion of 0.9ppt to 43.8%.
Lower leverage…Good Cheer
The sticking point of concern for us on Airtel Africa has been the high leverage of the company. However, the company has taken significant efforts at deleveraging its books during this financial period. Net Debt to EBITDA was down to 2.3x as at H1 2020 as against 5.1x as at H1 2019. This was evident in the 50.4% y/y decline in Net Debt to US$3.2bn as at H1 2020 from US$6.4bn in H1 2019. Against this backdrop, Net finance costs edged lower by 32.0% y/y to US$148.0m for H1 2020 from US$218.0m in H1 2019. Consequent on this, Profit before tax surged 159.0% y/y to US$228.0m for H1 2020.
Interim dividend declared…Dividend yield of 3.5%
Airtel Africa was able to declare an interim dividend to investors in line with the company policy of a dividend payout of 80.0% if Net Debt to EBITDA prints at 2.5x or below. The company declared a dividend of US$0.03 (N10.86) per share which implies a dividend yield of 3.5% based on last Friday’s closing price of N308.
Overall view – Efficient Operations, Sustained Growth, Solid Company
Overall, we are very impressed with the numbers posted by the company. Key operating metrics, particularly on the subscriber base, continue to climb, the company has sustained efficiency while Revenue from growth supporting business units continue to accelerate. What impresses us the most is the significant decline in leverage level which is significantly healthy for profits. Going forward, we remain very optimistic about the company’s future growth which should result in better returns for investors.
Airtel Africa H1 2020 Earnings Highlights
FSDH RESEARCH
