Airtel Africa Plc

Good afternoon, ladies and gentlemen, and welcome to the Airtel Africa Q1 2026 results call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star then zero. Please note that this call is being recorded. I would now like to turn the conference over to Sunil Talda. Please go ahead, sir.

Good afternoon, welcome and thank you for joining us on today's call. I'm joined on the line by our new CFO, Kamal Dua, who, as you know, has taken over following Jaideep's retirement after the AGM earlier this month. I want to welcome him to his new role and wish him well as we continue advancing a strategy and delivering value to our shareholders. Alistair Jones, our head of investor relations, also joins us on the call. We will shortly be answering your questions, but first I would like to provide you with a brief overview of the performance over the last quarter. I am pleased to report that we have continued to see strong growth across our markets, reflecting our focused strategy, disciplined execution and resilient business model. I believe the scale of opportunity across the footprint is best captured by the very strong and accelerating constant currency revenue growth of almost 25% and EBITDA growth of almost 33%. Importantly, we are very encouraged by more stable macro environment, which has resulted in strong reported currency performance. With this backdrop, it gives us increased confidence in enormous opportunity that is on offer, enabling us to advance digital and financial inclusion to support economic progress across our markets. Our strategy of providing a great customer experience is at the center of these results. The continued increase in smartphone penetration to approximately 46% and almost 46 million mobile money customers is testament to our relentless focus on providing a service to our customers that is differentiated and most importantly reliable. One innovative example of this inaction is the rollout of ATL SpamAlert, It's an AI-powered solution which uses technology to protect our customers from the risk of fraud and drives increased trust. We've seen a very positive customer reaction to this offering, and we will continue to differentiate our services and invest in new capabilities to meet our evolving customer needs. Smartphone penetration remains low, and the significant growth opportunity can only be captured if we consistently enhance our customer proposition. this focus strategy has been underpinned by continued success and cost efficiencies and the robust capital structure allows us to continue investing in the future to drive further shareholder returns let me now briefly run through the results over the last quarter revenues reached 1.4 billion dollars which was 24.9 growth in constant currency this was an acceleration from 23.2 growth in quarter four as the full impact of tariff adjustments in Nigeria came into effect. But importantly, we also saw an acceleration in francophone revenue growth to 16.4%, reflecting sustained success in our strategy in that region. Given the more stable currencies, this translated into a strong growth of 22.4% in reported currency. Before discussing our performance across our two main reporting segments, I wanted to highlight our performance on a regional basis in the last quarter, including both mobile services and mobile money. In Nigeria, demand for data services and the impact of tariff adjustments contributed to a very strong 48.9% growth in revenues. In East Africa, revenue growth remained strong at 20.3%. While in Francophone Africa, growth accelerated to 16.4%, as mentioned earlier. Let me begin by focusing on the performance of the mobile services segment, which continues to show compelling growth rates. Over the year, quarter one revenues increased 23.8% in constant currency and almost 21% in reported currency. Another acceleration from the prior period. This level of growth clearly reflects the continued demand for data services in particular and our ability to capture this inherent demand through strong on-ground execution. Ensuring a strong distribution network to reach new and existing customers while continuing to invest in the network is fundamental to driving higher SIEM penetration and customer growth. The total customer base reached 169.4 million up 9%, with data customers of 75.6 million, up 17.4%. Despite the continued expansion of our customer base, ARPU levels continue to rise with ARPU growth of 13.5%. Voice traffic across our network continue to see double-digit growth, supporting overall voice revenue growth of almost 14% in constant currency. However, data continues to be a service where demand remains substantial. data traffic continued to increase growing 47 percent as data usage per customer increased 26 percent to 7.8 gigabytes per month however smart smartphone usage per per customer reached 9.6 gigabytes per month which highlights the overall scale of the data opportunity as smartphone penetration which remains low at 45.9 percent remains a substantial support for the growth overall Overall data revenues increased approximately 38% in constant currency. We remain confident that low unique customer penetration levels across our footprint combined with still very low usage means there remains a long runway for both voice and data revenue growth across all the three regions. Now on to a very significant growth engine for us, the mobile money business. The mobile money growth story is also very compelling. and this quarter's performance is no exception. In constant currency, revenue growth also accelerated to 30.3% with 31% growth in reported currency. The unbanked population across the markets provides a unique opportunity for us as we invest in our technology and the range of financial services to drive financial inclusion to support economic growth and transformation. We have almost 46 million customers using the services But with almost 170 million GSM customers, this provides a massive captured market to sell these financial services to even more customers. The broadening range of services on offer and our enhanced digital offering will be key to driving continued transaction value on the platform, which reached 162 billion on an annualized value, a growth of 35% and help sustain continued ARPU growth. Now coming to overall EBITDA performance, our cost efficiency program, which we launched a year ago, continues to deliver results. In quarter one, we reported EBITDA margins of 48%, an increase of 45.3% a year ago, and another sequential improvement from 47.3% in the prior quarter. We will continue to focus on additional cost efficiency measures in order to drive EBITDA margin expansion. The cost efficiency measures continued operating momentum and more stable fuel prices all contributed to 32.7% growth in constant currency EBITDA and approximately 30% growth in reported currency EBITDA to $679 million of EBITDA in the last quarter. EBITDA margins in Nigeria have returned to very heavy levels of 55.6% with East Africa margins remaining strong at 51.9% The strong rebound in growth in the Francophone region has also contributed to an improvement in EBITDA margins to 44.2% in the quarter. Below the EBITDA line, our financial results have benefited from more stable currency environment across the region. Given this backdrop and the strong growth across the business, basic earning per share came in at 3.4 cents during the quarter, up from 0.2 cents in the prior year. As many of you know, we have been working extensively on our de-dollarization strategy, which I'm pleased to say has been very successful with 95% of our OPCOT debt, excluding lease liabilities, now based in local currency. Leverage for the group of 2.2X improved from 2.3X the end of March, but has increased over the last year, primarily as a result of the extension of our tower lease agreements with ATC and IHS, which added approximately $1.3 billion of debt onto our balance sheet. However, on a least adjusted basis, leverage has remained flat at 0.98 YY and we continue to see this as a sustainable capital structure. This will allow us to continue investing across our markets with our CapEx plan for this year remaining intact. and we therefore re-trade our $725 to $750 million CapEx guidance for the year. This investment will continue to support the strong levels of growth we enjoy across the continent and will underpin our attractive shareholder return policy. In May, we launched the second tranche of our share buyback which will return up to $55 million of cash to shareholders This buyback alongside the consistent dividend policy once again highlights our commitment to shareholder returns. As you can see, this quarter's performance has resulted in strong growth trends in both the operational KPIs but also in financial terms. Very briefly, I thought it worth broadly discussing the key factors that underpin this growth and why we continue to see a very compelling outlook for the investment case. Firstly, we operate across a diverse range of markets with three main factors supporting the growth proposition. First is the size of the addressable market. We operate across markets with a total population of over 600 million people, growing at 3% annually. Not only is the scale of this significant, but it's also the age profile of these markets which will continue to underpin the opportunity. We estimate that by 2030, there will be an additional 76 million people reaching the age of 15 years and older, which will be our customers for the future. The second is the growth in telecom services. With unique SIM penetration between 40 to 50% and data voice usage remaining low in a global context, the ability to sustain industry-leading growth rates in telecom services is encouraging. Smartphone penetration remains low and this will continue to underpin the strong growth outlook. And finally, one cannot ignore the vast opportunity that mobile money brings to this group. With over 90% of transactions in cash and 65 to 70% of adults unbanked, the financial services proposition we offer to a young, digitally savvy population is clearly unparalleled and will be another key attribute of our growth proposition. Secondly, our relentless focus on efficiencies and returns will ensure that the flow through of the revenues will continue to drive profitable growth. And thirdly, our refreshed strategy puts a great customer experience at the center of everything we do. Without this and the sustained network investments to offer these services, the ability to capture this growth will be compromised. It is this strategy that will be fundamental to the success. Importantly, in order to ensure sustained value creation for all stakeholders, And to be able to achieve these strategic objectives, I'm very pleased with the strong risk management framework we have in place, which has consistently mitigated risks that we face. And our track record is testament to the tireless work we undertake to ensure risks are mitigated. We will maintain this rigorous approach to protect and create value for all stakeholders. And with that, I would now like to open the line for questions, for which I'm joined by Kamal. Operator, now I hand over to you to facilitate Q&A sessions, please.

Thank you, sir. Ladies and gentlemen, for those on the call, if you would like to ask a question, please press star and then one now. If you decide to withdraw the question, please press star and then two. Again, to ask a question, please press star and then one now. The first question we have comes from Ganesh Rao of Barclays. Please go ahead.