Airtel Africa Records 36.5% Decline in Six-month Profit

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By Goddy Egene

Telecommunications firm, Airtel Africa Plc’s results for the half-year ended September 30, 2020, showed that its profit after tax fell 36.5 per cent to $144.6 million, from the $227.7 million recorded in the corresponding period of 2019.

It, however recorded a revenue of $1.815 billion in the period under review, showing an increase of 10.7 per cent from $1.64 billion in the corresponding period of 2019.

Net financing cost rose 29 per cent from $148 million to $191 million, while profit before tax fell 11 per cent to $280 million from $315.7 million in 2020. The company recommended an interim dividend of 15 cents per share.

Commenting on the results, analysts at FSDH Research said in line with their expectations, data and mobile money business segments were the key growth frontiers as revenue from both businesses surged 26.4 per cent and 24.3 per cent to $548 million and $181 million, respectively. Voice revenue grew marginally by 1.9 per cent to $972 million after recording a decent recovery in Q2 2020 (up 6.8 per cent q/q).

“We were also impressed by the below revenue growth in operating expenses (opex), which grew 9.2 per cent to $1.0 billion in H1 2021 from $937 million in H1 2020. The biggest driver of growth in opex were employee benefits (up 27.9 per cent), network operating expenses (up 11.1 per cent) and other expenses (up 14.5 per cent).

“The controlled growth in opex fed into decent growth in EBITDA and operating profit, both of which grew 12.0 per cent and 19.5 per cent to $800 million and $472 million in H1 2021,” they said.

FSDH Research noted that improvement in key operational metrics such as the growth in Data customer base (up 24.1 per cent to 39.6 million) and growth in overall customer base (up 12 per cent to 116.4 per cent) reflected sustained growth opportunities in the different regions the company operates which bodes well for revenue growth prospects.

However, the analysts said they remained concerned that prior year’s one-off derivative gains and non-recurring income dents overall business performance. “Pre-Tax profit declined 11.4 per cent to $281 million in H1 2021 from $317 million in H1 2020 largely due to one-off non-operating Income of $70 million recorded in H1 2020. Excluding the one-off prior year’s non-operating income, pre-tax profit would have edged higher by 13.8 per cent,” they said.

According to them, despite the 11.4 per cent dip in pre-tax profit, income tax expense surged higher by 54.5 per cent to $136 million in H1 2021 from $88 million in H1 2020.

“This implies effective tax rate expanded 20.6ppts to 48.4 per cent in H1 2021. As a result, net income for H1 2021 dipped faster, down 36.7 per cent to $145 million from $229 million in H1 2020.