Airtel Africa Reports Higher Revenues and Profits in Q3

Airtel Africa Plc (LON: AAF) posted strong third-quarter results thanks to growth in Data, Mobile Money, and Voice.

Airtel Africa is a telecommunications company in Africa, a subsidiary of the Indian company Bharti Airtel.

Revenues & Earnings

Looking at results for the nine months ended December 31, 2021, revenues increased in all key services such as Voice, which increased 16.1%; Data and Mobile Money both increased by 37.2%.

There was underlying revenue growth across all regions, with Nigeria having increased by 29%, East Africa by 24.4%, and Francophone Africa by 19%.

Underlying EBITDA increased 31.3% to $1.7 billion and a margin of 48.8%, an increase of 326 basis points driven by revenue growth and improved operational efficiency.

Operating profit increased 43.1% to $1.15 billion for the nine months ending December 31, 2021.

After-tax profit nearly doubled to $514 million as revenue rose 21.7% to $3.4 billion.

Basic EPS was $0.117, an increase of 113.8%, primarily due to higher earnings. EPS before special items increased to $0.115 from $0.05 in the prior period.

The customer base grew by 5.8% to 125.8 million, with penetrations seen in mobile data and mobile money.

In Nigeria, there was a strong return to customer growth with 1.9 million net additions in the third quarter, bringing the total customer base to 3.1 million.

CEO Commentary

Airtel CEO Segun Ogunsanya said, “I am particularly pleased with developments in Nigeria, where in November we received approval in principle for both a payment service bank (mobile money) license and a super-agent license. We are now working closely with the Central Bank to meet all its conditions to receive the final operating licenses and commence operations. This will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services.”

“We continued to strengthen our balance sheet, with our leverage ratio now 1.4 times underlying EBITDA, thanks both to the continued increases in operating cash flow delivery and to the $550 million of cash that has now been received from minority investments into our mobile money business,” added Ogunsanya.

Wall Street’s Take

Three days ago, J.P. Morgan analyst Jonathan Kennedy-Good kept a Buy rating on AAF with a 190p price target. This implies 22.8% upside potential.

Overall, AAF scores a Moderate Buy consensus rating based on two Buys.

The average Airtel Africa price target of 165.50p implies 7% upside potential from current levels.

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