Airtel Africa Plc

Good day, ladies and gentlemen, and welcome to Airtel Africa's nine-month 24 results. All participants will be in listen-only mode, and there will be an opportunity to ask questions later during the call. If you should need assistance during the conference, please signal an operator by pressing star and then zero. Please note that this event is being recorded. I will now hand the conference over to Shogun Ogunsanya. Please go ahead, sir.

Thank you for joining us on today's call. And as always, joined by our CFO, Jaydeep, and our Deputy CFO and Head of Investor Relations, Pierre. You're going to be asking your question very shortly. But first, I'd like to provide you with a brief overview of the performance over the last nine months. We have reported a strong operating performance in constant currency with revenue growth of 20%, leading to reported revenues of $3.86 billion over the nine-month period. In Q3 third quarter, we saw constant currency revenue growth accelerate from 19% in Q2 to 21% in Q3, reflecting continued success in astrology across all of our three regions. The strong top-line performance Combined with further cost efficiencies, EBITDA 21.9% take point higher in constant currency terms, leading to an industry-leading EBITDA margin of 49.4% for the group. Given the strength of this performance to date, and according to leverage, the board has approved a share buyback scheme of up to $100 million. starting in early March 2024, over a 12-month period. On a reported currency basis, our results have been impacted by the recent currency devaluation we've seen across a number of markets, particularly in Nigeria, where following the sharp devaluation in June, there was a further 22.5% devaluation over the last quarter. And in Malawi, the currency devalued by 44% in November, This has led to a decline in reported revenues of 1.5% over the nine-month period, with EBITDA largely stable over the year. This backdrop has led to a decrease in US dollar liabilities in our up-course, resulting in a significant increase in our finance costs, which has impacted our EPS for the period. The recent currency moves do not impart the strategy across our markets, which is to maximize the growth of our business in order to limit the impact of currency admins. We will continue to invest as our mission to transform lives by providing essential, reliable services at an affordable level becomes even more important. Before discussing our performance across our two main reporting segments, I'd like to highlight our Q3 constant currency performance on a regional basis, including both mobile services and mobile money. In Nigeria, we saw an acceleration of our growth to 24.7% in Q3, resulting in a nine-month growth of almost 23%. In East Africa, revenue growth of 25.3% was over one percentage point faster than the previous quarter. The Francophone African region Also saw a similar acceleration in growth to 10.6%. Now, I begin by focusing on the performance of the mobile services segment, our voice and data business. The strong demand for services across our footprint, combined with our focus on affordability in the current inflationary environment, led to a 9.1% increase in the customer base, which when combined with a growth of 8.6%, resulted in constant currency revenue growth of 18.6%. In Nigeria, constant currency mobile service revenue grew 22.7% over the nine-month period. And in East Africa, it grew by 21.2%. Francophone country was up 10.3%. Trends in voice remain very encouraging. With revenue growth of over 11% in constant currency, The very low levels of SIEM penetration and increased minutes across our network continue to support the overall performance. This growth is further supported by 20.5% growth in data revenues, as our focus remains on increasing and improving the network coverage and capacity to drive increased data adoption. We currently have over 34 million 4G customers across the 14 countries. It has increased by almost 45% over the year, and only 23% of our total customers and 55% of our data customers are currently using 4G, giving us the confidence in sustained data growth going forward. The mobile money business continues to see a very strong performance, with 33% constant currency revenue growth in Q3, which is an acceleration from the previous quarter. and it is the fastest growing mobile money business in Africa. This strong growth was driven by continued customer growth of almost 20% and further enhancement of the mobile money ecosystem, driving transaction value almost 35% higher in constant currency. As previously noted, the strong top line performance combined with a continued focus on cost efficiencies, supported EBITDA growth of 21.9% in constant currency terms, resulting in a 47 basis point expansion in our EBITDA margin to 49.94% in the nine-month period. This margin improvement was particularly pleasing given the increased energy cost and FX pressures in the period. It is a reflection of our focus on cost optimization. And as I mentioned earlier, finance costs were materially impacted by the exceptional currency devaluation seen in Nigeria in June and more recently in Malawi in November, which resulted in a $330 million after-tax charge impacting our earnings per share. After adjusting for these losses, EPS before exceptional items came in at 7.1 cents, down 35%, reflecting the many currency headwinds, which impacted FX losses and transition in part of the currency weakness in operating results. As many of you know, the net has continued to see product pressure on Q3, resulting in a $140 million FX loss after tax, which we've not classified as an exception item in this quarter. If you adjust for the impact of this narrative evaluation over the full nine-month period, EPS before accepting Athens would have been 12.5 cents. Briefly, in terms of the balance sheet at the end of December, our leverage ratio has reduced to 1.3 times. EBITDA from 1.5x, that's by the impact of connection on EBITDA, our net debt declined to under $3.3 billion from over $3.6 billion a year ago. One of our key priorities over the last few years has been the de-risking of our balance sheet by reducing OATCO debt and reducing other dollar-based debt. At the end of December, we had $560 million of cash at the OATCO This will allow us to fully repay the 550 million OCO debt that is due for repayment in May of 2024. Our capital allocation policy remains unchanged. Our priority is to continue to invest in the business to ensure we future-proof our officials for sustained growth. And we therefore reiterate our previous speaker's guidance of $800 to $825 million for this financial year. The success of our balancing to leveraging has also enabled us to capitalize on other new opportunities, such as our new data center business that we launched in December last year. Furthermore, we will continue to actively reduce our balancing effects exposure and continue to upstream cash from our various hookers to support our shareholder return priorities. As you have seen from our results, Our focus has contributed to strong operational and financial performance, and we continue to demonstrate positive momentum on all of our key operating metrics. Our next time focus will remain on investing in our network and on further expanding our distribution infrastructure to be closer to our customers, at the same time building new services for future growth. Clearly, Our reported results have been impacted by the currency devaluation across a number of markets, mentioned Nigeria, Malawi, Zambia, Iberian Kenya. But let me briefly highlight three ways which we aim to limit the impact that this has on our business. First, our priority is to maximize supply and growth to offset potential currency weakness. This is our chief reinvestment into improving network coverage and capacity. to drive very strong subscriber growth and facilitate increased usage. All of this is underpinned by an attractive customer proposition and user experience. If you look at what we've done over the last five years, it will help provide some context. In constant currency, over the last five years, keeps the revenues have increased by more than 18% CAGR and EBITDA by over 22% CAGR. Incorporating the latest currency movements, this is translated into reported currency 5-year KIGA of 9.6%, almost 10% in reported currency, and EBITDA of over 12%. I think this reflects the strength of the business model, despite the macro headwinds which we sometimes face. Secondly, we look to limit the impact of RFS as an operational performance by minimizing foreign exchange-based costs. Once again, over the last five years, despite the currency headwinds, our Q3 reported the bid damages have expanded 5.7 percentage points, reflecting once again the substance of our strategy. And finally, we have to reduce the amount of foreign exchange liabilities in our balance sheet. Currently, 40% of our market rate is in foreign currency. A year ago, it was 55%. However, excluding the outcome bond, which is due for repayment in May, our foreign nursing debt amounts to only 21% of total market debt. It is this strategy that we believe differentiates us. Our approach to the market, the scale of the opportunity, and the willingness to invest significant capital into the market to capture this opportunity has not changed. We are confident that this approach will continue to support our investment case and further enhance shareholder value. In the light of this performance and given the strength of our balance sheet, which is clear from the results we have published today, the board has approved the intention to launch a share buyback program of up to $100 million beginning in early March over a 12-month period. And with that, I'd now like to open the line for questions. for which I'm going to be joined by JD Anpere, operator, and now hand over to you to facilitate the Q&A session. Thank you.

Thank you very much, sir. Ladies and gentlemen, if you do wish to ask a question, please press star and then one to join the question queue. You will hear a confirmation tone that you have joined the queue. If you do wish to withdraw your question, please press star and then two to remove yourself from the list. Our first question is from John Kouridis of Deutchen Numis. Please go ahead.