Bharti Airtel’s Africa arm swung to a quarterly net profit from a year-earlier loss because of an increase in transaction value on its Airtel Money platform and higher data consumption on its network.
The Africa operations posted a net profit of $83 million in the March quarter, compared to a loss of $49 million a year earlier.
The improved earnings are significant for Bharti Airtel’s Africa arm, which is gearing up for an initial public offering in June-July, while it also battles a bruising tariff war with rival Reliance Jio at home.
Bharti Airtel will declare its March quarter earnings for India operations on 6 May. In the December quarter, Airtel’s profit had plunged 72% to ₹86 crore from ₹306 crore a year earlier.
Africa has proved to be a beacon of hope for the company, which is at present faced with a struggling India business.
Airtel Africa’s total revenue grew 6% year-on-year from $736 million to $781 million in the March quarter, while its earnings before interest, taxes, depreciation, and amortization improved 12% year-on-year from $307 million to $344 million in the March quarter.
The total megabytes (MBs) on the network surged 73.1% to 120.7 billion MBs from 69.7 billion MBs in the corresponding quarter last year while data customers grew by 5.1 million to 30 million in the quarter.
The company’s revenue from data services grew 30% year-on-year to $192 million. Earnings also received a boost from a 22% yearly rise in transaction value on the Airtel Money platform to $6.8 billion.
The average revenue per user, however, fell 3.1% year-on-year to $2.7 in the fourth quarter from $2.8 a year earlier.
Airtel Africa, the holding firm for Bharti Airtel’s operations in 14 countries in the continent, has 99 million customers across three regions—Nigeria; East Africa, comprising Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia; and the rest of Africa, which comprises Niger, Gabon, Chad, Congo Brazzaville, the Democratic Republic of the Congo, Madagascar and Seychelles. Nigeria alone accounts for half of its Ebitda and 40% of its total revenue.
Airtel established its presence in Africa in 2010 when it bought Kuwait-based Zain’s Africa operations for $10.7 billion.
Over the past few years, it has been trying to expand in Africa through local deals and has made three small acquisitions in Uganda and Congo Brazzaville besides Kenya.
In October 2017, Airtel also signed a deal with Millicom, which operates the Tigo brand, to combine their operations in Ghana. In December that year, Airtel’s Rwanda unit announced the acquisition of Tigo Rwanda Ltd, making Airtel the second-largest telecom operator in the east African nation.
Airtel said in February 2018 that it would consider an IPO for the Africa business. In October, the company said six investors, including Warburg Pincus, Temasek, Singtel, and SoftBank Group International, would invest $1.25 billion through a primary equity issuance in Airtel Africa.
Qatar Investment Authority, the sovereign wealth fund of the state of Qatar, said in January it would invest $200 million in the Africa arm.
These fundraises, which were used to bring down debt, led to the company’s net debt falling to $4 billion in the March quarter from $7.7 billion a year earlier.
This has also led to its net debt to Ebitda ratio (annualized) come down to 2.91 in the March quarter from 6.32 a year earlier.