Airtel is having a good time in Africa, even after a rumored exit from the continent. Airtel Africa profits after tax for the quarter ended March we’re $154.52M. This is almost 3 times the profits from the last quarter of 2016-17.
This is the second positive profit margin in the eight years of operation in Africa. The telecom company owes the spike in profits to lower interest on it’s finance costs.
“Africa revenues grew by 10.7 per cent year-on-year led by strong growth in data and Airtel money transaction value. Mobile data traffic has grown by 88 per cent to 70 billion megabytes in the quarter as compared with 37 billion MBs in the corresponding quarter last year.
Data customers increased by 48 per cent to 24.9 million from 16.9 million in the corresponding quarter last year.” said Airtel Africa chief executive Raghunath Mandava.
Airtel Africa stay
Airtel’s stay in Africa hasn’t been a bed of roses due to stiff competition from other players like MTN Group. The company was once rumored to leave some East African countries like Kenya, Tanzania and Rwanda. However, the company categorically denied these reports labeling them as incorrect.
“Our operations in the 15 African countries haven’t been a successful experiment and we now need a change of strategy,” said Mr Sunil Mittal.
Nigeria is Airtel’s most profitable market, followed by Ghana. As of March 2017, Airtel has 78 million subscribers in the continent.
Acquisitions and Mergers
In May 2008, Airtel was exploring the possibility of buying South Africa based telecom company, MTN Group. However, these negotiations did not materialize but Airtel Africa had another idea.
In Jun 2010, Airtel struck a deal to buy Zain’s mobile operations in 15 African countries for $8.97 billion. This made Airtel the world’s fifth largest wireless carrier by subscriber base.
On 4 March 2017, Airtel and Millicom International Cellular agreed to merge their operations in Ghana. This created the country’s second largest mobile operator.
This brought Airtel Africa profit increase
“We had a tax assessment settlement in Nigeria, which resulted in interest not charged on the VAT,” said Airtel chief finance officer for Africa Jaideep Paul.
Airtel Money customer base increased to 11.5 million leading to a 45% boost in transaction value. Also, the data customer base grew by 5.9% of the entire customer base.
“We have seen a net revenue growth of 13.4 per cent year-on-year, while the operations expenditure has declined 5.4 per cent in the past year. The business has entered into a sustainable positive cashflow era, which gives us confidence that the investment rationale seven years ago is still valid today.” said Mr. Nilanjana Roy.
“Our strategy in Africa is centred on strengthening our distribution model and enhancing the consumer experience via network modernisation.”
