Revenue: $1.27 billion in Q3, 21.3% growth in constant currency. Reported Currency Revenue Growth: 2.5% in Q3. Nigeria Revenue Growth: 35% in constant currency over nine months. East Africa Revenue Growth: 23% in constant currency. Francophone Revenue Growth: 10.2% in constant currency. Mobile Services Revenue Growth: 18.8% in constant currency over nine months. Voice Revenue Growth: Almost 10% over the period. Data Revenue Growth: Over 31% in Q3. Mobile Money Revenue Growth: Over 31% in constant currency in Q3. Transaction Value: Increased over 30% to $146 billion. EBITDA: $1.68 billion for nine months, 15.3% growth in constant currency. EBITDA Margin: 46.9% in Q3, a 160-basis-point recovery from Q1. Basic EPS: $0.036 for the quarter ended December 31. EPS Before Exceptionals: $0.013 for the quarter ended December 31. Local Currency Debt: 92% of OpCo debt in local currency as of December. Leverage: 2.4 times, increased due to tower lease agreements. Lease Adjusted Leverage: 1.1 times. Share Buyback Program: Up to $100 million launched in December.

Warning! GuruFocus has detected 9 Warning Signs with AAFRF.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Airtel Africa PLC (AAFRF) reported a strong constant currency revenue growth of 21.3% in the latest quarter, showing an acceleration from previous quarters. The company saw a significant increase in mobile money customer base by 18% to over 44 million, reflecting its focus on financial inclusion. In Nigeria, Airtel Africa PLC (AAFRF) achieved a remarkable constant currency growth of almost 35%, indicating strong market performance. The mobile services segment experienced a sustainable growth with a constant currency revenue increase of 18.8% over the first nine months. Airtel Africa PLC (AAFRF) has successfully reduced its foreign currency debt, with approximately 92% of OpCo debt now in local currency, mitigating currency volatility risks.

Negative Points

Reported currency revenue growth was only 2.5% in the third quarter due to foreign exchange headwinds. The company faces challenges with currency volatility impacting financial results, despite some recent currency appreciations. Leverage for the group increased to 2.4 times, primarily due to the extension of tower lease agreements. There is uncertainty regarding the impact of the approved price increases in Nigeria, with potential competitive and demand elasticity concerns. In Francophone Africa, there was a slight dip in margins due to higher marketing spends, despite revenue growth acceleration.

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Q & A Highlights

Q: Can you provide more details on the price increase situation in Nigeria and its expected impact on margins? A: Sunil Taldar, CEO, explained that the Nigerian authorities have approved a price increase, which is a positive development for the industry. However, the competitive response and demand elasticity are uncertain, making it difficult to predict the exact impact on margins. The additional revenue from the price increase is expected to support EBITDA margin progression.

Q: What proportion of your revenue in Nigeria is affected by the price increase, and how does this compare to your competitors? A: Sunil Taldar, CEO, stated that approximately 75% of Airtel Africa's revenue in Nigeria is subject to the price increase. The company has been focused on keeping prices low to encourage usage and take-up, and it remains to be seen how competitors will react to the price adjustments.

Q: Could you provide an update on the mobile money IPO and where you plan to list it? A: Sunil Taldar, CEO, confirmed that the mobile money IPO is on track for July 2025. The company is preparing for the IPO and will provide more details on the listing geography and other specifics closer to the time.

Q: How is Airtel Africa managing its upstreaming of cash given the challenges in Nigeria? A: Jaideep Paul, CFO, explained that due to accumulated losses in Nigeria, upstreaming from this region will be challenging for the next 12 to 18 months. However, upstreaming from East Africa and Francophone Africa will continue, and the company does not plan to increase debt at the HoldCo level.

Q: What are the key areas of focus for capital expenditure in the coming quarters? A: Sunil Taldar, CEO, mentioned that the company maintains its CapEx guidance of $725 million to $750 million for the year, with investments focused on sustaining growth and improving customer experience. The CapEx is expected to be at the lower end of the guidance range.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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