Good day, ladies and gentlemen, and welcome to the Airtel Africa Results Presentation for the Year end of 31 March 2022. All participants are currently in listen-only mode, and there will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please also note that this event is being recorded. I would now like to turn the conference over to Mr. Segun Ogunsanya. Please go ahead, sir.
Thank you. Hello, everyone, and thank you all for joining us on today's Presentation and Conference Call. I will first cover the highlights and then hand over to Jaideep, who's gonna take you through our financial results for the year. After that, I will take you through some of our strategic and operational developments before we then open the floor for your questions. If you turn to slide number three, is the overall summary of our performance. With our continued strong revenue growth, our underlying EBITDA margin expansion, and our strengthened cash generation, we have not only delivered financially, but we have also delivered strategically, operationally, and sustainably. I'm gonna talk to these on slide number four.
Financially, I'm gonna ask Jaideep to talk through the details, but at a very headline level, we continue to deliver very strong revenue growth, underlying EBITDA margin expansion, which is now at 49%, and very strong earnings per share growth. As we do this, we continue to strengthen our balance sheet and improve our leverage position, now 1.3x . At the same time, reducing our foreign currency debt at record level. These very strong financial improvements are an output of our continued strong operational developments as we continue to expand our customer base, grow our ARPU by driving usage and invest in our network with almost 90% of our sites now on 4G. All our service segments, mobile money and data, continue to be our growth engines, with mobile money transaction alone reaching $64 billion this year.
Strategically, the highlight is our receipt of a full PSB license for us to develop our mobile money services in our largest operation, Nigeria. We have also brought in $550 million of investment into the mobile money business. We've bought out minorities in Nigeria, and we've completed tower sales in Tanzania, Madagascar, and Malawi, generating gross proceeds of $284 million. In addition, we have bought additional spectrum in Kenya and Malawi. On sustainability, which has always been at the core of our business, we have fully articulated our strategy with ambitions, goals, and commitments for our business, for our people, our community, and the environment. Sustainability now underpins our 6-pillar corporate growth strategy. On slide number 5, we have shown how the business is delivering against 6 key objectives, from mobile service revenue to dividend payout.
Now you can see the tracker on how we've delivered against all of the six key objectives. With this very brief introduction, I'm gonna hand over to Jaideep to take you through our financial performance for the year. Jaideep, please.
Thank you, Segun, and good morning and good afternoon to all of you. Let me start with the key financial highlights. Slide 7. In overall terms, we have delivered a strong set of results for financial year 2022. We continued our revenue growth momentum and our EBITDA margin expansion. Full year revenue was $4.7 billion, and underlying EBITDA was $2.3 billion. Revenue growth for the full year was 23.3%, with underlying EBITDA growth of 31.2% in constant currency. Underlying EBITDA margin improved to 49% for the year. That's about 3% improvement from prior year. Earnings per share before exceptional item almost doubled to $0.16. Our balance sheet position has continued to improve, and now our leverage ratio improved to 1.3x from 2x in prior year.
The board has recommended a final dividend of $0.03 per share. Therefore, the total dividend for the full year will be $0.05 per share. Coming to slide number 8, the regional performance. Revenue in Nigeria grew by almost 28%, supported by both customer base growth of 5.8% and ARPU growth of 33%. Customer base growth in Nigeria was impacted by the NIN/SIM regulation during the first half of the year, but returned to growth in the region in the second half of the year, adding about 4 million customers during second half of the year. Underlying EBITDA grew by 30% with a margin improvement of 114 basis points, and the margin now stands at 55%. In East Africa, revenue grew by more than 22% with an EBITDA growth of 32%.
Underlying EBITDA margin reached almost 50%, an improvement of 331 basis points in constant currency. In Francophone Africa, the customer base grew by almost 16% and revenue grew by 17%. Underlying EBITDA grew 28%. With an EBITDA margin expansion of 337 basis points, the EBITDA margin now stands at 41%. Coming to slide number 9. Performance of our key services. Voice.
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Can we just take Chris first?
Ladies and gentlemen, sorry for the delay in the presentation. Sir, we lost your line roughly the time that Jaideep started with his section. If you could please return to that page and just continue from there. We do apologize for the delay.
Sorry for this disturbance. The line got disconnected. Good morning and good afternoon to all of you. Let me start with the key financial highlights. In slide seven, overall terms, we have delivered a strong set of results for financial year 2022. We continued our revenue growth momentum and our EBITDA margin expansion. Full year revenue was $4.7 billion and underlying EBITDA was $2.3 billion. Revenue growth for the full year was 23.3% and underlying EBITDA growth of 31.2% in constant currency. Underlying EBITDA margin improved to 49% for the full year. That's about 3% improvement from prior year. Earnings per share before exceptional item almost doubled to $0.16.
Our balance sheet position has continued to improve, and now our leverage ratio improved to 1.3x from 2x in the prior year. The board has recommended a final dividend of $0.03 per share. Therefore, the total dividend for full year will be $0.05 per share. Coming to slide 8. Revenue in Nigeria grew by almost 28%, supported by both customer base growth of 5.8% and ARPU growth of 33%. Customer base growth in Nigeria was impacted by the NIN, SIM regulation during the first half of the year, but returned to growth in this region in the second half of the year, adding about 4 million customers during H2. Underlying EBITDA grew by 30% with a margin improvement of 114 basis points, and the margin now stands at 55%.
In East Africa, the revenue grew by more than 22% with an EBITDA growth of 32%. Underlying EBITDA margin reached almost 50%, and improvement of 331 basis points in constant currency. In Francophone Africa, the customer base grew by almost 16% and the revenue grew by 17%. Underlying EBITDA grew 28% with the underlying EBITDA margin expansion of 337 basis point to 41%. Coming to slide number 9. Performance of our key services. Voice contributed to half of the total revenue and grew by 15%. Data contributed 32% and mobile money almost 12%. Both data and mobile money services are growing about 35%. As you can see, our voice revenue growth of 15% was driven by growth of both our customer base and ARPU.
Similarly, our data and mobile money revenue growth of about 35% was driven by both the customer base increase and ARPU growth. Data ARPU growth was mainly as a result of increased 4G penetration and 4G data usage per customer increased to 5.5 GB per month, much higher than our total average data usage per customer of 3.4 GB per month. Mobile money ARPU growth of 12% was driven by growth of cash-in, cash-out transactions, merchant payment, P2P transfers, and mobile service recharges. Coming to slide 10. This shows the incremental revenue contribution from our key services. Revenue in reported currency grew by 21.3%, while in constant currency growth of 23.3%. The differential was due to currency devaluation, mainly in Nigeria and Malawi, offset by appreciation in the Zambian kwacha and Ugandan shilling.
All our key services segments of voice, data and mobile money contributed to the revenue growth. Coming to slide 11. Our underlying EBITDA grew by 29% in reported currency, and absolute EBITDA for the full year was $2.3 billion. Currency devaluation had an adverse impact of $26 million due to devaluation in Nigerian naira and Malawian kwacha, offset by appreciation of Zambian kwacha and Ugandan shilling, partially. The underlying EBITDA margin improved to 49%, an increase of 296 basis points in constant currency. The improvement in margin was led by both revenue growth and improved operational efficiencies and disciplined cost control. EBITDA flow-through for the period was more than 60% during the last financial year. Coming to slide 12. Our mobile money customer base grew by almost 21%, mainly in East African market.
Mobile money customer base penetration reached 20.4%, an increase of 2 percentage points. The total transaction value increased to more than $64 billion, driven by an increase in usage per customer by almost 14% and also the customer base growth of 21%. Underlying EBITDA was $270 million, growing by 38% in reported currency and by 34% in constant currency with the EBITDA margin of nearly 49%. Coming to Slide 13. Our cash flow generation for the full year was $622 million, largely as a result of our improved EBITDA performance and higher intangible CapEx in the prior year, partially offset by increased cash taxes resulting from higher operating profit. Slide 14. Our capital allocation policy remains unchanged.
As mentioned earlier, our priority is to invest in the business and at the same time continue to aim at further strengthening the balance sheet. CapEx for the full year was $656 million, in line with our guidance. CapEx guidance for the next year is slightly increased to now between $700 million and $750 million, including the cost of now rolling out of our PSB operation in Nigeria. Our leverage ratio improved to 1.3x from 2x in the prior year. During the year, we repaid $915 million of bonds in May 2021, and in March 2022, we repaid $505 million of bond a year earlier than their March 2023 redemption date.
We are able to make these repayments because of our increased cash generation and by using the proceeds from Airtel Money minority investment and tower sales. As mentioned earlier, in the first half of the year, the board has approved a revision to our dividend policy with a new base dividend of $0.05 per share for financial year 2022 from the earlier base dividend of $0.04 with a progressive dividend growth of mid- to high single-digit % in the subsequent years. The board has recommended a final dividend of $0.03 per share. Therefore, the total dividend for the full year will be $0.05 per share in line with our dividend policy. Slide 15. We continue to strengthen our balance sheet by firstly reducing our leverage now at 1.3x EBITDA. Secondly, reducing our foreign currency debt, especially at HoldCo.
We have repaid total bonds of $1.4 billion during the year as a result of strong cash upstreaming across our OpCos and proceeds from minority investment in Mobile Money and tower sales. Over the last four years, our HoldCo debt was brought down to $1 billion from $2.7 billion. The remaining HoldCo debt of $1 billion falls due in May 2024. Thirdly, increasing our debt at OpCo level and whenever possible in local currency. Our OpCo market debt increased by 35% to nearly $1.3 billion. The total weighted average interest rate was 5.6% versus 4.9% in the prior year, largely due to the repayment of the Euro bond in May 2021, which carried a lower interest rate of 3.4%. EPS.
Next slide. EPS. Earnings per share before exceptional item almost doubled over the prior year to 16 cents from 8.2 cents. This increase in EPS was largely contributed by the expansion of operating profit, partially offset by the increase in tax. We have made significant progress in delivering against our strategic initiative. During the year, we sold approximately 2,600 towers across three OpCos with total gross proceeds of $284 million, out of which we have received $240 million so far. Secondly, we also received proceeds of $550 million from our investor in Airtel Money business. In Nigeria, our buyback of 8.22% of minority shareholding has been completed successfully. As you can see on the right side of the slide, there are several future opportunities that we are currently working on.
Thank you very much. Now I will hand over back to Segun for the strategic and operational update.
Thank you, Jaideep. I would now like to remind you of the tremendous opportunities we are addressing. If you turn to slide number 19, we've highlighted the opportunity presented by our markets. Fundamentally, the population and industry dynamics of our markets continue to furnish us with huge opportunity. We have some of the strongest population growth rates in the world and the most youthful populations, with very young people continue to be key drivers of digitization. Most young people are digital first and digital only. They consume data only on mobile devices. Moreover, our markets have very low rates of customer penetration of both mobile voice and mobile data services compared to more developed markets, but also when compared to emerging markets. If you turn to slide number 20, it shows the opportunity for greater usage by our customers.
Customer usage levels in our footprint for both voice and data remains significantly lower than those of developed markets and in many emerging market territories. Banking penetration levels continue to be very low, affording us an opportunity to help governments to drive financial inclusion in the countries through mobile money solutions. If you turn to slide number 21, you're very familiar with this slide. Our 6-pillar strategy remains fundamentally unchanged. It has helped us continue to deliver strong double-digit revenue growth across our regions and services. Since we last showed you this slide, we've added 2 new elements. One is on digitalization. Our focus on digitalization encompasses the transformation of our products and services and of our internal systems and processes as well. This will increasingly function as a catalyst or an accelerator for each of our 6 strategic pillars.
Underpinning the whole group strategy is sustainability, describing our very strong commitment to both driving sustainable development and acting as a responsible business. We have a slide on this a little later in the presentation. If you turn to slide number 22, we're gonna speak to our network pillar. We've continued to add new network sites, around 3,400 in the new year, with 1,400 of these in rural areas. We have also maintained a very strong focus on modernizing and increasing capacity with almost 90% of our sites now on 4G. Our overall data capacity of the network increased by over 40% to 16,900 terabytes per day. Our network uptime has gotten to over 99.5%, and our network now covers 11 million more people than we did last year.
We've added about 10,000 kilometers of fiber, increasing our total fiber footprint to about 65,000 kilometers. If you turn to slide number 23, it shows our network strategy in action in one of our countries, Uganda, where we recently got an award as the fastest mobile network at the 2022 Mobile World Congress. It is a function of our nationwide 4G network availability, which now covers over 90% of the population, and also our very extensive fiber rollouts in Uganda. If you turn to slide number 24, we're gonna speak about distribution, which is also one of our key pillars of our strategy. Here you can see how we have continued to ascend both our exclusive and non-exclusive distribution infrastructure.
Ladies and gentlemen, we do apologize for this. We will be getting the presenters back online shortly. Ladies and gentlemen, we do apologize for the technical difficulties. We have been rejoined by our main presenters. Sir, you can continue.
Our apologies to our guest. I think I got cut off on slide number 24, where I spoke about distribution, and I was talking about what we did in DRC when we got cut off. Let me just start on slide number 25. Slide 25 shows our DRC case study, demonstrating our distribution pillar strategy in action. DRC is a very large country, the largest by land size in Africa, but very low population densities. We have vast distances, can be very disruptive towards customers' abilities to physically engage and transact. We therefore chose to establish a goal here that no customer, none, should have to travel more than 1 kilometer to use any of our services. We can achieve this by establishing a kiosk for every 2,500 people and an Airtel Money branch for every 10,000 people.
We've already grown our customer acquisition outlets in DRC by 36% this year, and the number of Airtel Money branches has increased by 67%. This focus on distribution has helped us to drive up DRC customer numbers by almost 21% this financial year. If you move to slide number 26, it speaks about our data pillar. Our network design using single RAN technology with increasing fiber rollout has helped us to create a network with significant data capacity and the flexibility to further expand with only limited marginal investments. We have generally invested in 4G ahead of our many peers, and across the group, almost 88% of our sites are now 4G capable, up 11% over the previous year.
When combined with our smart data bundle packages, these measures have helped to drive both data customer base growth up more than 15% and customer data usage by almost 50%. Kenya in East Africa is a great example of our data strategy in action. You can see on this slide number 27, how a 26% increase in the number of our 4G sites, coupled with 1,000 km of additional fiber, have helped us double our network capacity. Together with further improvements in our distribution, this helped us to drive our data customer usage up by over 57%. Our Kenya data revenues have grown by over 30%. Moving on to slide number 28. It speaks to our Mobile Money strategy.
Lack of traditional banking infrastructures in most of our markets in Africa and very long distances that users must travel to find a branch means that the number of customers who are able to access traditional banking services is far lower than even the numbers who have bank accounts. Our focus, therefore, is largely on expanding the distribution network to make it easier for customers to both digitize and get access to their cash and to transact where necessary. Accordingly, you can see that we've grown our exclusive channel numbers, those outlets exclusively owned by us, by over 44% this year, and our multi-brand agents by almost 42%. Being closer to the customers help us to drive uptake by almost 21% to about 26 million customers by the end of the financial year.
This has helped to drive digital cash rotation with customer transaction values up by nearly 14%. A combination leading to total transaction value growth of 37% for the year to over $64 billion. Next slide speaks more on our mobile money business. The key to mobile money remains the provision of our core services in an assured manner that first builds trust through good ease of use that comes with being physically close to our customers and through the reliability that comes with those touch points having a short flow all of the time. Customers know that they can access the cash with relative ease when they choose. Alongside this core is our developing ecosystem of financial services for imagined and more sophisticated services.
It is very important for us to develop this ecosystem now to serve our more sophisticated customers who may already be banked and have the smartphones and apps required, as well as to be prepared for the broader transition of the market in this direction. While many African markets are way ahead of other countries in terms of their use of mobile money, our portfolio markets includes a mix of penetration levels indicating significant remaining potential for us to bring new customers onto the platform. We have been able to increase mobile money penetration in nearly all of our markets. In four countries, we have penetration rates of over 50%, and there are several more where we believe we can significantly grow penetration. Excluding Nigeria, where we just got the license, the overall penetration rate across our mobile money markets is now 31%.
With the new PSB license in Nigeria, we should commence operations sometime this year. Slide number 30. It shows the continued evolution of our mobile money ecosystem. We still see the digital wallet cash in and cash out services as the major source of mobile money revenue. There's huge potential for this from increasing our penetration with new customers, but there is also a continued diversification of the business towards additional payment solutions and also more sophisticated financial services. Slide 31 talks about the opportunity from our new PSB license in Nigeria, where we are very strongly positioned to deliver against this opportunity. Nigeria is a market of 200 million people, the most populous in Africa, and a cash economy of $440 billion with an unbanked population estimated to be more than half of the adult population.
We already have 44 mobile service customers in Nigeria and more than 30,000 exclusive shops which are being transformed into mobile money outlets. We are in the final stages of developing our operations. We hired some staff. We're establishing distribution lines, developed and now testing some of our platforms all for a launch around the second quarter of this year. We hope that the business will begin to make very meaningful contributions to our group numbers in financial year 2024. Slide number 32 is win with people. In particular, I would point out the significant progress we've made in the diversity of our scope, adding 5 percentage points this year to the level of female representation, more diversity. We continue to be highly multicultural, with 35 different nationalities represented and one of the most ethnically diverse boards in the FTSE 100. Now on sustainability.
You can see a summary of our sustainability strategy on slide number 33. These are four key pillars of how our business, our people, communities, and environment, and how we address the material topics which were identified through consultation with many stakeholders early in 2021. It also demonstrates our contribution to six of the UN SDG goals, which we believe can have the biggest impact. Our sustainability strategy now underpins our group strategy and our well-established corporate purpose of transforming lives. It demonstrates our commitment to developing the infrastructure and services that will drive both digital and financial inclusion for people across Africa. We have nine work streams, each with a goal or a commitment which addresses the business material topics and enables the group to continue delivering sustainable growth and upholding the best governance standards.
I undertook a deep dive of these work streams in the first half, but let me highlight one development since those results is our unique partnership with UNICEF. We're engaged in a 5-year Pan-African partnership, providing both financial and in-kind contribution of about $57 million spread over 5 years up to 2027. The purpose is to accelerate the rollout of digital learning through connecting schools to the Internet and ensuring free access to learning platforms across 13 countries in Africa. By providing equal access to quality digital learning, particularly for the most vulnerable children, this partnership will help to ensure that every child can reach their full potential. We're targeting over 1 million children in Africa for this. Finally, we have made tremendous strides in our environmental pillar.
The last few months, with help from Carbon Trust, we expect to publish our pathway to Net Zero very soon. Followed by our first sustainability report towards the end of the year. Then finally from me on slide number 34, a few words on the outlook. As you have seen from our results, our financial, operational, strategic, and sustainability fundamentals remain very strong. We continue to demonstrate positive developments on every key metric. From an outlook perspective, we remain very excited about the long-term opportunities for our business. We continue to build on our strong track record of milestone deliveries. Our near-term focus remain on improving our network quality and availability and on further expanding our distribution to be closer to our customers. These are the fundamentals of our business.
This year, we have added focus on ensuring a successful rollout of our Nigerian mobile money business. Going forward, we continue to actively mitigate all of our material risks. There are many. The world is currently facing increasing inflationary pressures for which we cannot be totally immune, but which we seek to contain as much as possible as we continue to target both revenue growth ahead of the market and further moderate margin expansion for the year ahead. With that, I would like to thank all of you for your attention today. We'll be pleased to take your questions. Thank you.
Thank you very much, sir. Ladies and gentlemen, at this time, if you do wish to ask a question, please press star and then one on your touchtone phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. Participants on the webcast may submit their questions in a text box at the bottom of the page. Our first question is from Jonathan Kennedy-Good of JP Morgan. Please go ahead.
Good afternoon and congrats on the results. 3 questions from me. Just on the pace of a rollout that we should be expecting in Nigeria for Mobile Money, do we see significant revenues coming through in the second half? And on the cost side, will there be enough revenue to offset costs, or will it be margin dilutive? Another question just on your longer term outlook there. Obviously Nigeria has higher ARPUs than the remaining regions you disclosed. Just wondering whether we should think about, you know, Mobile Money ARPU as higher than the group average. I think that it's currently sitting at about $1.90 for the group.
Finally on cash upstreaming. Can you give us a sense of whether you recently repatriated money from Nigeria, and if so, at what kind of exchange rate? Thank you.
Well, let me start with the mobile money business. We've been preparing for this for the last two years, so I can confirm that we're ready for the rollout. Of course, in the early days, revenues would slowly increase. We don't expect a very significant contribution to our revenue in the current financial year. We're gonna spend the next few months to scale up the business. We expect significant performance in the next financial year, 2024. In terms of cost as well, remember we've got a very strong foundation upon which we're building our mobile money business in Nigeria. Like I said, we prepared for this in the last, I mean, two, three years. I don't expect a significant cost uptick coming from the rollout of our mobile money business. We've already developed the IT infrastructure required.
We've already rolled out the sales infrastructure. We're hiring some people. We expect, I mean, a material amount to be spent is on marketing and a bit on distribution, but overall the impact is not gonna be strong in the bigger context of metrics in Nigeria. I would ask Jaideep to speak about the cash upstreaming. Jaideep, you want to take that from Nigeria?
As you know that we operate in 14 countries, and we continue to maintain sufficient cash balance and upstream across various geography, including Nigeria. We have done about $140 million of upstream in the past, in the last financial year, and we continue to do that in the current financial year. Obviously, the cost is slightly higher than the official rate. Normally, the cost comes to around between NGN 480-490 NGN per dollar as a upstreaming cost. I mean, that's an additional cost which we incur.
Thank you.
In the bigger picture, we've upstreamed close to $900 million in the last financial year anyway, from a number of countries in Africa. Some from sale of towers, some from remittances of the profit we've made. At the OpCo, we're not under any stress in terms of cash balances available to meet any of our obligations. Yes, Nigeria is one of our very significant operations, but we continue to mitigate the risk of cash outflows from Nigeria by being able to repatriate money from many out of the balance 14 countries we have in our portfolio.
Thank you. Just a point of clarification. My understanding from your comments is that you upstreamed about $140 million from Nigeria and about $900 million in total from all the opcos, including some asset sales. Would that be fair?
Yes.
Yes.
Total is in the range of, let's say between $850 million and $900 million, which included the tower sale proceeds of about $240 million, and the balance is through dividend and shareholder loan repayment.
Thank you. That's very helpful. Thank you.
Thank you very much. The next question is from Maurice Patrick of Barclays. Please go ahead.
Yeah, thanks, guys. Just a couple of questions from my side, please. The first one just on your mobile money momentum. I sort of note the, you know, having sort of looked at the Orange results, they saw a fairly material slowdown, in fact decline in their mobile money revenues. They cited the impact of Wave specifically. Just curious to hear a bit about whether you are seeing any impact of that on your business. Maybe whilst you talk about that, what sort of defensive mechanisms are you putting in place for likely new entrants would be helpful. Then the second question, if I may, just on the CapEx. I think at the IPO, we sort of talked about $600 million-$700 million. Obviously this year a bit higher.
Is most of the delta about the Nigeria PSB? I guess should we expect once you've rolled out mobile money in Nigeria, that maybe CapEx falls back to that $600 million-$700 million level? Thank you very much.
Okay. Let me start with the last one about CapEx. We've provided for $30 million in the current full year CapEx for rollout of PSB Nigeria. It's a very significant part of the CapEx. About $30 million we've made provision for in the total CapEx of $700 million-$750 million. I'll now go to your first question about Wave and the impact on our Mobile Money business, yeah. We have a common market where Wave operates, I believe it's in Uganda. We've got about 8 million customers in Uganda, and Wave has got thousands of customers. Our models are not exactly the same. We've got unique advantages over the new FinTech companies who are operating in our markets, and three clear things set us apart. One is our distribution infrastructure.
We've got a combination of owned retail outlets and third-party outlets. The owned ones are very unique to us. They work exclusively for us, and the numbers are huge. The second thing we have going for is a captive customer base. Got about 120 million customers who use us for mobile services. They are potential customers for mobile money services. That's also unique to us. The third one is on our ability to create an ecosystem. An ecosystem of banks, an ecosystem of switches, an ecosystem of technology partners that would rather work with a company with 120-130 million customers and a very small company, very few customers. Finally, the platform that we've created, very unique.
We're able to serve the bottom end of the customer who rely on USSD and SMS, and we're able to serve the high end of the customer who work on smartphones with applications. Those factors clearly distinguish us from FinTech companies who are entering this space. It's gonna be a lot more difficult for them to overcome this unique advantage, especially our distribution reach. We're still in Airtime. We've developed and delivered a distribution infrastructure that can reach a lot more people at a lot less amount than what most of the competitors are able to do.
Okay. That's great. Thank you very much, Segun, for those answers.
Thank you very much. The next question is from Rohit Modi of Citi. Please go ahead.
Thanks for the opportunity. Just two questions from my side. Apologies in advance if this has been answered and I couldn't hear it, if I missed it. Firstly on the NIN registrations. It's been almost a month since the ban. If you can give more color in terms of consumer behavior you have seen after that, in terms of, you know, usage of data, sub-data, data packs for the customers who got the ban on their voice, outgoing voice. Do you see they are still recharging for data or you see, you know, no use of SIM cards for those customers? Secondly, on East Africa, there's been a small decline in number of subscribers in East Africa. Just if you can get more color in terms of the business as usual, are you seeing any competition in these specific countries?
Thank you.
Let me speak about NIN. As some of you may be aware, at the end of March 2022, the government asked us that for any customer who has not been able to attach his NIN is like an identity number, to his SIM card, we should bar them from making outgoing calls. This we've done. They're still able to use our services for data, for SMS, but they're unable to make outgoing calls. After we banned close to 12 million customers, we've received the NIN from like 4 million of them, 3.6 million of them. We've successfully added about 1.6 million of the NIN numbers to the SIM cards, and they've resumed their using our full services, outgoing calls, data and SMS. That we've done.
We're still working with a large number of customers who've been unable to give us correct NIN or who don't have NIN. What we've done is to open a lot of outlets to make it easier for those customers to walk into any of those outlets, present their right identity and get registered for NIN. Of course, the process is not as fast as we'd like it to be, but we continue to engage all the regulatory agencies in the country to make this a painless exercise for the customers who've been unable to attach the NIN to the SIM card. Yes, we see some impact on our revenue. If you're unable to make outgoing calls, of course it affects overall outgoing voice revenue. But we've also seen a bit of SIM consolidation.
We've seen a lot more customers who are transferring their usage to the SIM card that has been properly registered. Some headroom coming from non-NIN and a bit of increased usage coming from SIM consolidation. We're gonna continue to work with all the relevant authorities in Nigeria to mitigate impact of this required regulation which is meant to ensure security in the country. I think there was a second question on East Africa. In East Africa we had some headwinds coming from change in the ways we register customers in two of our countries. We don't give guidance country by country, but sometime middle of the year, regulators in two of our key countries changed the way customers are registered, requiring a lot of biometric registration. This affected the ease with which customers register for our services and slowed our customer addition process.
We've fully recovered from this. We've provided enough devices for customers to do biometric registration, so I can confidently say that, I mean, the headwinds that came from these new ways of onboarding customers in two of our countries in East Africa, we've put those behind us as we made progress in Q1.
Thank you.
Yep.
Thank you very much. Ladies and gentlemen, just a reminder, if you wish to ask a question, please press star and then one. The next question is from Madhvendra Singh of HSBC. Please go ahead.
Hello. Yes. Hi. Thanks for taking my question. I have four questions. Some of them are quite quick, so shouldn't be huge time-consuming ones. You know, the first question is on the data revenue growth trends, especially in Nigeria. Just looking at the numbers for the fourth quarter, the growth was around 32% if I'm right. When I compare that with what MTN did in the country, it was around 54%, 55%. Just wondering, is there any specific reason why Airtel should be growing slower than MTN in Nigeria on data side? Or are you happy with this current growth run rate in Nigeria?
The second question is just trying to understand the CapEx increase for the next year. Is it mostly because of Mobile Money? Because I kind of remember you said $30 million is what you were planning to spend on Mobile Money in Nigeria. Another question is on the, you know, the network configuration currently. I could see that now bulk of your data is getting carried on the 4G network. Should we start expecting the 3G network also getting, let's say, phased out anytime soon? You know, if that were not to be the case, then how much of the voice traffic probably is getting carried on the 3G network versus the 4G network?
Very quick one on the net income side. If you could just remind me about how much was the one-off gains and, you know, in the quarter and the year. Thank you.
Yes, I will take two of the questions, and Jaideep would answer two of the other questions there. Let me start with the data revenue in Nigeria. Am I happy with the growth? No, I'm not happy with it. There is plenty of scope to grow faster. Unfortunately, we had a number of problems in January and February with our fiber infrastructure, and that affected the data revenue for the first two months. We fully recover from this, and we had a decent growth in March, the last month of the quarter. Of course, the growth we had in March was not sufficient to accelerate our normal growth rate. That's what happened. We're back to normal trends in Q1, and I'm very optimistic that we've recycled the bad January, February disruption that came through network challenges.
Talking about the CapEx increase, Jaideep would give more color to the CapEx increase. On your third questions about network configuration, if I give you a mix of the devices on a network, very top level, about 65% of devices on a network, they're still 2G devices, so 2G is still very, very important. About 15% are 3G devices, relatively important, and circa 20% are the 4G devices. Most of the data revenue, the 20% of devices which are 4G, they're actually responsible for about 80% of data traffic and over 70% of the revenue. So 3G is there. It's becoming less and less important. Can we completely shut down 3G infrastructure? No, because 15% still have devices that are 3G enabled.
We're still gonna continue to ride our 3G network for the next couple of years as we watch the evolution from 2G speed to 4G with a very small termination from the 3G devices. We still have couple of years to go with our 3G devices and 3G network. Jaideep, you want to speak to the net income and the CapEx increase?
Yeah. On the CapEx increase, is your question relating to next year, Madhvendra Singh?
Yes.
Okay. Next year, as already mentioned, that we have planned for approximately $30 billion for the PSB rollout. That's specifically in Nigeria. We also have additional CapEx planned for all other countries, roughly of between $25 million-$30 million. That's about, let's say $50 billion-$60 billion CapEx allocated for Airtel Money. In most of the other countries, it is used in expanding the distribution.
The one-off gains in the net income?
Yes. Coming to one-off gain. Let me first tell you the full year one-off gain. One-off gain includes Tanzania, Malawi, Madagascar sale of towers, and that's about almost $107 million. We have prepayment of bond cost, $19 million. Tanzania, we have provided for a consortium related expenditure one-off, $12 million. We have a settlement or agreement on account of Kenya's spectrum license. That's about $20 million. Net-net, $60 million has been taken into exceptional item above PBT. We have Tanzania sale and lease back of tower related some impact and some gain on account of tax on the Tanzania settlement.
Net-net exceptional item which has been booked is $62 million in the current full year. Out of which Q4 has got $52 million because as you know that Tanzania and Malawi, we have concluded the tower sale in Q4, therefore the profit on sale of tower has primarily come in quarter four.
That's very helpful. Thank you very much.
Thank you. The next question is from Faisal Al Azmeh of Goldman Sachs. Please go ahead.
Yes. Hi, and thanks for the opportunity to ask questions. Just a quick question on my end or three quick questions on my end. Maybe the first is just on your leverage profile targets. What's the target leverage structure that you aim to achieve over the coming years? At what point do you feel you would have room to upgrade your dividend policy? Is it more related to a certain net debt to EBITDA ratio? Or do you feel more comfortable to up the dividend once you've localized a certain amount of debt at the OpCo level? That's my first question. My second question relates to your margin profile.
You've achieved a meaningful uplift in the group's margins over the past few years. At what point do you feel that we've reached a normalized level and the upside would be limited, or do you still see room to achieve higher margins on a two-year basis? And then thirdly, what's the update on the listing of the Mobile Money business, and any update on that would be helpful. Thank you.
Let me start with the last one on the listing of the Mobile Money business. Last year in March 2021, when we announced that, we're selling down some minority stake, we mentioned that within four years we're gonna do an IPO. That guidance has not changed. We're still looking at four-year period within which we're gonna do IPO, so we've done only one year. Just take that as a guidance and we're still open to IPO within four years. On the leverage, Jaideep is gonna give you more flesh, but we don't have any specific target for leverage anymore. We have some policies on how we're gonna strengthen our balance sheet, and Jaideep will give you very specific steps we're gonna take to strengthen our balance sheet.
Also, on the margin, of course, there's some scope for moderate margin expansion, like I said in my opening statement. Given the inflationary environment coming from different crises in different parts of the world, we expect a moderate expansion of margin. I'm handing over the mic to Jaideep to give you more flavor. Jaideep, please.
Okay. Let me first give you the broad breakdown of this $1.3. If you look at our net debt table, you will see a lease liability, which is the finance lease obligation because of the IFRS 16 accounting, which we do for all the sites, which are taken. Now, this is 0.7x out of $1.3, and this is like a long-term, you know, debt for us. This will continue to grow little bit every year because we are expanding our network. Every time we put up a site, this lease obligation goes up. Obviously, for the full year. There is a payment which goes against this FLO, so it's a plus and minus every year.
That's what you see that this is going up because of the renewal of the leases, putting additional sites. Now, if you leave that 0.7x, which is coming out because of the FLO, effectively, if you look at the rest of the other thing, that means we have, excluding FLO, we have a leverage of about 0.6x, let's say, 0.6x-0.7x kind of a thing, right? Now, I would not be able to, you know, articulate any particular target, but I can tell you certain other things and give a color to it. Our whole objective is to strengthen our balance sheet on two key focus areas. One is continue deleveraging our business, which we have done, by the way, from IPO till now.
From 3x it has come down to 1.3x, which includes this 0.7x because of the FLO. The second is by de-risking the balance sheet through reducing the amount of foreign currency debt, and especially at the HoldCo level, and push down the debt at a operating unit level. If you'll also notice that we have now left with only $1 billion of one bond, which is falling due in 2024 at HoldCo level. Rest, every debt has been pushed down to the OpCo, which gives us two benefits. One, as we push down more in local currency, we de-risk our balance sheet from any possible devaluation impact. The second, we get a tax shield on the interest cost, which is, which is a very significant amount.
Both are strengthening our balance sheet, and this initiative will continue as we keep focusing. Of course, expansion of margin is the other element which we'll be looking at. You asked another question on the margin profile and how we are looking at it. As we explained in the past, we follow a very simple model, that every incremental increase in the revenue has to have a minimum flow through into our EBITDA margin. That's a model we follow across, and that's what you have seen for last three years. Of course, we are very conscious about the inflationary pressure as we move forward.
We will continue to drive our EBITDA margin expansion as we progress in the subsequent years through our this incremental flow-through model, so that whenever there's a, let's say, $100 increase in the revenue, we should be looking at at least $50-$55 of flow through in the EBITDA margin, and therefore expansion of the EBITDA margin. The dividend policy, obviously, this is a subject matter of the board, and I can't comment on that. As you have seen that as we improved our leverage in last October, board has reviewed the dividend policy, increased the base dividend by 25%, with a mid- to high- growth as we progress in the subsequent years.
In appropriate time, I'm sure board will relook at this, and then we will definitely keep you posted as board relooks at the dividend policy in that time.
Thank you.
Thank you very much. The next question is from Evgenii Annenkov of Bank of America. Please go ahead.
Hi, good afternoon. Thank you for the presentation. I have two brief questions, please. First one, sorry, is follow up on cash upstreaming from Nigeria. You mentioned $140 million upstreamed last year. But can you please tell us what was the last time you upstreamed it and at what rate? Second question, maybe if you can quantify impact on your margins from energy costs rising. Thank you.
Let me take the second question about the impact of energy costs. Because energy is almost, I mean, 20% of operating expenses across all of our cos. Most of the energy is used at site locations in very distant rural areas where we don't have grid power. With no grid power, the towers rely on diesel power generators, in some instances on solar power generators to generate power for the cell sites. We need to just have a good mix of diesel powered sites and sites which are powered by grid and powered by solar. Most of those sites are actually owned by our partners, our tower cos, who are the ones that pass on the cost of energy to us.
Some in a direct pass-through, but most in a manner that the complete increase in fuel cost is not passed on to us. What we continue to do is we engage some of those partners to find ways of saving on energy. One, through conversion of some of the sites to outdoor sites that don't require a lot of power. In some instances, we also ask them to convert the sites to sites that use a lot of green energy. Again, no diesel is involved. Finally, in some sites where we're the anchor tenant. As an anchor tenant, the moment the second tenant comes, there is a discount that we do get on our rent. To just, I mean, combine all these three things together, being an anchor tenant, meaning that the second tenant comes on, you get some discount.
Number two, the conversion of some of the sites to outdoor sites where you don't use a lot of energy. Finally, a cost shared formula. We have some of the tower costs. The full impact of the energy cost is not passed on to us, so we do have, I mean, some mechanism in place to ensure that the full increase in inflation that is coming from fuel is not, I mean, passed on to us. On your first question around the remittance from Nigeria, we did $145 million like Jaideep mentioned. In the last couple of months we've done some additional, but I will allow Jaideep to now give you the figure as to what we've done.
We've done $145 million in the last financial year, and we also did another $100 million a couple of weeks ago out of Nigeria. Jaideep?
Yeah. In April we continue to focus on this upstream, and April also we did upstream. I won't be able to give the exact rate because it's a very specific transaction, but we continue to do the upstream and the end of April we have done another upstream.
Thank you. Fees for NGN 480-NGN 490 was for the last year or April inclusive?
No, no. The April was not inclusive in the last year. This April obviously will come in this financial year.
No, no. I mean, the FX rate that you mentioned, it was for last year average, NGN 480-NGN 490.
Yes. That was last year.
Was applicable for April.
That was last year average. I won't be commenting on this year rate, but last year average was 480-490 NGN.
Thank you.
Thank you very much. The next question is from Ria Quadri of Meristem Securities. Please go ahead.
All right. Thank you for the presentation. I would like to ask that, there's this buzz that mobile network operators are trying to like increase their tariffs. I would like to ask if Airtel Africa is going to implement this, and how is it going to impact on your margins? Thank you.
I believe you're talking specifically about Nigeria.
Yes.
I've seen the headlines in some newspapers that mobile network operators want to increase tariffs in Nigeria, and I've seen the response from the regulator. This is a regulatory decision. I don't think any network operator can increase price without the leave of regulators. I'm unable to comment on this unless you have the final view of the regulator.
All right.
It's very specific to Nigeria by the way, out of the 14 countries where we operate in.
Okay. That's fine. Thank you.
Thank you very much. The next question is from Alastair Jones of Renaissance Capital. Please go ahead.
Hi there. Just come back to the CapEx question again. Apologies for that and apologies if I didn't hear it clearly first time around. Just the guidance for the $700 million-$750 million this year. I know your guidance historically in the medium term has been $650 million-$700 million. Once the PSB rollout has been done, which has largely driven that exceptional cost, is your sort of medium-term outlook guidance sticking at similar rates at $650 million-$700 million? Or is that something you'll address at a later stage? That's the first question.
Just secondly, on the mobile money in Nigeria, obviously you talked a lot in the presentation around exclusivity and the importance and insurance of float and availability of float and cash, et cetera. How does that work in a Nigerian context where it's my understanding it is not an exclusive distribution sort of franchise? How do you sort of navigate around those issues in the Nigerian market as you roll out PSB? Thank you.
Let me take the Nigeria PSB question first. If you look at the number of adults without bank accounts in Nigeria, it is said to be around 50%. More than half of Nigerians don't have bank accounts. We have maybe two spaces we're looking at. One space is a space where you're not in the financial system at all. You don't have a bank account, you don't have a wallet. That particular space is where we're gonna use our distribution reach to fill. Making sure people who don't have anything, who keep their money either in their house, under the bed or somewhere, we're gonna have them open a wallet where they can safely store value in any of our 30,000 outlets that we've created in Nigeria.
That's a unique proposition, and we have a unique way of reaching those many customers who are not part of the financial system at all. That is one piece. The second piece where I expect slightly more competition is in the area where we have slightly more sophisticated customers who do have bank accounts, but who we're also gonna target with mobile money applications. Those are slightly more sophisticated and maybe slightly more competition will happen in that space. We're going to offer them a richer proposition, a lot more financial products that is way beyond the traditional just mobile wallet, beyond the mobile payments. We're gonna look at stuff like being intermediary for insurance, intermediary for loans, intermediary for investment. That's additional value where we're gonna come to play. Remember, we've got over 40 million customers in Nigeria as we speak.
I don't think any of the emerging fintech has this captive customer base. These are customers who are using us for data activity to access the internet. They're using us for making phone calls. They're already captive on our system. They are the ones we're gonna offer these two unique opportunities. For the very low-end, opportunities to have a mobile wallet, use SMS, use USSD. For the slightly more sophisticated customers, opportunity to use the app that we've already created to access financial products. That's the wide band that we're looking at. In terms of the CapEx guidance, Jai, I think we'll come back again. I mean, we're very clear that in the short term, we are adding a small amount for our investment in Nigeria, the PSB. That is $30 million, $40 million we've seen.
The normal range is between 650 and 700. Jaideep, do you want to give more flavor to this?
Yeah. I would say in medium term we'll continue to be in the range of $700 million. Between $700 million,-$725 million-$730 million. One of the reason for that why we are slightly increasing it, because as we expanding our network within our footprint cover increasing the coverage area and also increasing the 4G penetration across the footprint. As you've seen that today we have almost reached 80%, but there is still some way to go. With all these things, and with the increase in data usage, that gives us the courage of maybe improve increasing the CapEx from earlier guidance of $600-$650 to probably around $700 odd million. Between $700 million-$725 million.
That I think should be broadly okay in the medium term.
Thank you.
Thank you very much. The next question is from Farouk Miah of All- Africa Partners. Please go ahead. Farouk, your line is open. Would you like to ask your question? It would appear that we have some technical difficulties on that line as well. We have no further questions in the queue at the moment. Would you like to proceed with questions from the webcast?
Yes. Thank you. Thank you, Chris. There are quite a few questions on the webcast, so we'll take just a few of them, but we'll get back to each individual question separately from the IR team. The first question, Segun, is on Q3, Q4 trends and any insights on, you know, the trends that you've seen, particularly in terms of growth between Q3 and Q4.
If you look at Q4, Q3, two key indices, I mean, account for the slowdown in Q4. One is, of course, the lower number of days. In Q4, we have 90 days, in Q3 we have 92 days. There's a 2.2% differential coming from lower number of days in Q4. The bigger one is on the sale of towers in Tanzania. We lost the revenue from towers which we sold.
Site share.
I mean, site share tower. After we sold our towers to a third party. That's a significant amount.
Yeah. 6 million.
$6 million. If you normalize for those two impacts, the impact of two less days in Q4 and impact of the site-sharing revenue that we lost from Tanzania is more or less the normal run rate we expect for Q4 versus Q3.
Thank you. Any comment on the inflationary environment that you see across Africa and in Nigeria in particular? Next one is also on Tanzania Mobile Money. Whether you can comment on whether the business is returning to growth or not.
On Tanzania Mobile Money, we still expect another quarter. This first quarter will still be very challenging for us. After this first quarter, we're gonna start cycling levels affected the quarters of last year. We continue to also work with the government, continue to work with the various agencies in Tanzania, showing them that it's probably in the best interest of the economy, best interest of customers to have lower level of charges so that we can stimulate financial inclusion. We're engaging with government on this. Hopefully, we'll reach a sweet spot that'll be good for the economy and good for the customers who are moving away from digital transaction back to the traditional cash economy. Hopefully, we would get to a sweet spot with the government.
In terms of inflation, yes, fuel inflation, food inflation is affecting the wallets of our customers and we're not immune, I mean, from this impact as well. What we continue to do is to find ways of mitigating any impact. Finally, if you look at the first few months of the year, we had COVID which affected most of our customers, who couldn't go out for daily activities. Most of our countries are open now. As we look at the impact of inflation, we should look at the sweet spot that almost all of economies in Africa, they open up now. For those who also get paid on a daily basis, they are back to work. We also expect some increase in cash that is available. It's a mixed bag of fruits.
One, of course, inflation affecting the wallet coming from fuel and food, and certainly a lot more people are able to have a bigger wallet because they are back to work now after the COVID lockdowns of the last few quarters.
Next one is more on Nigeria. To comment on these tariff increases and whether the regulator needs to approve. What is the process in terms of price increases? The strong growth in voice you are experiencing in Nigeria, is that sustainable?
Let me take the growth first, 'cause if you look at the output that we derive from Nigeria, our voice output grew, our data output grew. It's still a country that we have many untapped opportunities. We've still not covered all of the country in terms of population. As we continue to expand our 4G footprint, we expect a lot more of data revenue. As I speak now, almost all of our towers in Nigeria, they're covered by 4G, so we expect some acceleration in data revenue to come from this. Beyond this, we expanding our coverage a lot more of the rural communities where it wasn't very financially viable to do that years ago. Now we're taking a different view. We're expanding coverage to those areas.
While I expect a lot more of voice revenue, a lot more of data revenue, as we now launch Mobile Money, we're gonna have a third pillar of growth in Nigeria. Nigeria will continue to be a very important part of our portfolio. In terms of price increase, like I said earlier, we don't have the pricing power. Pricing is determined by the regulator. Of course, telcos are able to make recommendation to the regulator, but ultimately, the regulator will decide whether to say yes or no. I leave that to the regulators in Nigeria to do what is best for the country.
Last one, how do you see your regulatory and tax environment across your main markets?
There are different levels of maturity, and we continue to comply with all the rules and regulations in each of the 14 countries where we operate. We don't make the rules, we just have to comply with the rules. If you reckon that then there is a lot of improvement to be made, we engage the regulators, we engage governments. I've been to a number of countries talking to ministers, talking to regulators, just finding a sweet spot that would benefit the economy, benefit the operators, and be in the greater interest of the customer, and that's what we are after. Yes, we comply with rules. If there is a rule that we reckon is not customer friendly, is not operator friendly, we engage regulators and find ways of making them more friendly in the bigger interest of all stakeholders.
Thank you. Thank you all then for joining the call, and look forward to seeing you, as many of you as possible in the next few days. Operator, you can now close the call. Thank you.
Thank you.
Thank you.
Thank you very much.
Thank you very much. Ladies and gentlemen, that then concludes this event and you may disconnect.