* This is an increase from restated profit K18.285 billion in the same period last year
* Largely driven by the strong operating performance which contributed to a 25.9% increase in EBITDA
By Duncan Mlanjira
Airtel Malawi’s financial results for half year ended June 30, 2024 showcase strong revenue performance, customer base growth and sustained demand for data and voice that has translated into profit after tax of K21.331 billion.
Advertisement
This is an increase from restated profit K18.285 billion in the same period last year and it was largely driven by the strong operating performance which contributed to a 25.9% increase in earnings before interest, taxes, depreciation and amortization (EBITDA).
According to the financial statement released on Wednesday, “the increase in EBITDA was partially offset by an increase in finance costs following the significant currency devaluation which led to an increase in foreign exchange losses”.
Operating highlights include total customer base growing by 12.3% to 7.6 million with mobile data customers at 2.5 million as of June 30 while average revenue per user per month (ARPU) increased by 23.6% to K2,743 driven primarily by sustained growth in usage across both voice and data services.
Data traffic increased by 41% as demand for data services remains strong with data usage per data customer of 5.3 GB per month.
Financial performance
* Revenue grew by 37.1% to K117.857 billion, driven by broad-based growth across all business segments, reflecting the resilient demand for these essential services;
* Resilient demand for both voice and data services supported a 29.2% growth in voice revenue, and a 53.7% growth in data revenues;
* EBITDA increased by 25.9% to K51.237 billion, with an EBITDA margin of 43.5%, down from 47.3% in H1’23.
“The margin decline was impacted by the significant currency devaluation in November 2023 which contributed to increased inflationary pressure on our cost base, particularly electricity and fuel prices.
“We continue to focus on cost optimisation initiatives to offset these inflationary pressures”;
* Net finance costs increased by 184% to K20.495 billion, from restated finance cost K7.218 billion in the prior period, “largely as a result of higher foreign exchange losses and increase in interest on lease liabilities”.
Advertisement
Capital allocation
* Capex increased by 178.1% to K15.482 billion as we continue to invest for future growth;
* Leverage increased from 0.39x in H1’23 to 1.19x in H1’24, largely as a result of the revaluation of US$ balance sheet liabilities following the devaluation of the Malawi Kwacha.
“However, leverage has improved to 1.19x in H1’24 over 1.27x on 31 December 2023 on account of improved operational performance. Leverage remains well within the range of the industry peer-group.”
Given the increased uncertainty around the macroeconomic environment and the potential impact, Airtel Malawi’s Board of Directors “has not declared an interim dividend for the period”.
“The Board will continue to monitor the outlook and will consider a final dividend conclusion of the financial year ending 31 December 2024.”
Advertisement
Revenue
Revenue grew by 37.1% to K117.857 billion in the half-year from K85.976 billion in the prior period. The growth was driven by both customer base growth of 12.3% and increased usage supporting ARPU growth of 23.6%.
“The strong growth in revenue was driven by growth across all business segments, voice and data. Voice revenue increased by 29.2%, whilst continued growth in data usage per customer supported data revenue growth of 53.7%.”
EBITDA
EBITDA of K51.237 billion was up by 25.9%, supported by strong revenue growth. EBITDA margins declined by 387bps from 47.3% in H1’23 to 43.5% in the current period.
“EBITDA margins were primarily impacted by increased inflationary pressure on fuel and electricity prices, largely due to the significant currency devaluation in 2023. Other costs were also impacted by higher inflationary pressure.
Finance costs for the period increased from K7.218 billion (restated) in the prior period to K20.495 billion and the increase is primarily due to increase in foreign exchange losses to K10.164 billion in H1’24 from K3.869 billion (restated) in the prior period. Interest on lease liabilities increased to K7,683m in H1’24, compared to K3,738m in H1’23.
Advertisement
Outlook
Airtel Malawi pledges that it will “continue to focus on keeping communities and businesses connected in Malawi and supporting the Malawian economy”.
“The medium-term growth opportunity in Malawi remains attractive, with the telecommunication sector continuing to benefit from population growth and an increased need for connectivity.
“We remain focussed on executing our strategy to increase mobile penetration in Malawi through continued investment into under-served rural markets and driving increased data coverage to further enhance the digitalisation of the Malawian economy.
“We and the Malawian economy, remain exposed to FX volatility, continued scarcity of foreign currency and unfavourable agricultural output in the past season.
“Despite these headwinds, we will focus on the growth in customers and revenues through continued network investment and cost optimisation initiatives to limit the macro-economic challenges currently evident across the country.”
The company reports that in 2024, Malawi Revenue Authority introduced an additional corporate tax charge of 10% on taxable income in excess of K10 billion, saying the impact of this additional tax will impact its financial results for the year ended December 31, 2024.
Advertisement