Good day, ladies and gentlemen, and welcome to the Airtel Africa results for half year ended 30 September 2022. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. For participants on the webcast, you may submit your question via the text box. If you should need assistance during the call, please signal an operator by pressing star then zero. Please note that this call is being recorded. I would now like to hand the conference over to Segun Ogunsanya, Chief Executive Officer of Airtel Africa. Please go ahead, sir.
Thank you. Hello, everyone, and thank you all for joining us today. Let me give you some brief highlights before handing over to Jaideep, who is our CFO. I'm very pleased that despite macroeconomic challenges, we have continued to deliver strategically, operationally and financially over the last six months. This is supported by a sustainability framework which is core to our company's purpose. Strategically, the key highlight is that we continue to invest for future growth. We have increased our CapEx and furthermore invested in spectrum across a number of our key markets. In Nigeria, our largest market, we have launched a commercial rollout of the mobile money service called SmartCash, which will drive financial inclusion across the country and supplement future growth. Operationally, we continue to expand our customer base, grow our ARPU, and increase 4G network coverage.
Both mobile money and data continue to be our growth engines, although voice continues to grow in double digits as well. Financially, I will let Jaideep talk through the details, but at a very headline level, we continue to deliver double-digit revenue growth in reported currency and further EBITDA margin expansion. We continue to strengthen our balance sheet by an early redemption of HoldCo debt and the board has declared an interim dividend up 90% over the year, reflecting very solid trends. As importantly today, we have published our first sustainability report. Slide four on your screen compares our performance versus our major objectives. Since the IPO, you can see we are on track or perform better in all respects. Let me now hand over to Jaideep to run through our financial performance over the last six months. Jaideep, please.
Thank you, Segun, and good afternoon, good morning to all of you. Let me start with key financial highlights. Slide six. In overall terms, we have delivered a good set of results for the first half of the year. We continued our revenue growth momentum and EBITDA margin expansion. Revenue growth for the half year was 16.9% with Q2 growth accelerating to 18.5% in constant currency. EBITDA grew by 17.8% in constant currency and EBITDA margin was at 48.9%, an improvement of 38 basis points in constant currency from the prior period. The first half of the year was impacted by higher Forex and derivative losses of about $160 million, resulting in a $0.007 decline in earnings per share, which came in at $0.068.
Our balance sheet position continued to strengthen. Our leverage ratio improved to 1.3 x from 1.5 x in the prior period. The board has declared an interim dividend of $0.0218 per share. Coming to the consolidated regional performance, revenue in Nigeria grew by almost 20%, supported by both customer base growth of 14.5% and ARPU growth of 6.8% despite NIN-related barring of voice outgoing calls. EBITDA margin for Nigeria was 50.7%, lower by 422 basis points in constant currency, primarily impacted by rising fuel prices. In East Africa, revenue grew by more than 16% with an EBITDA growth of over 20%. Margin reached 52.1%, an improvement of 168 basis points in constant currency.
In Francophone Africa, revenue grew by 13% and EBITDA grew by 23% in constant currency with an EBITDA margin of 47.9%, increasing by 397 basis points. However, normalizing for the one-off benefit in Q2, the margin was about 44.7%. Coming to mobile service performance, our mobile customer base grew by almost 10%, supported by growth across all regions. Nigeria grew by 14.5%, East Africa by 8% and Francophone Africa by 6%. Mobile services ARPU was $2.9 per customer per month, growing by 5.9% compared to the prior period, primarily attributable to data ARPU growth. Revenue for the first half of the year was $2.3 billion, which grew by 15.6% in constant currency.
EBITDA was $1.1 billion, grew by 11.2% in reported currency and 15.1% in constant currency with an EBITDA margin of 49%, which is in line with our prior period. Coming to performance of mobile money. Our mobile money customer base grew by 24%. Transaction value per customer increased by over 9%, resulted in 32% increase in the transaction value to $40 billion for the first half of the year. Our Q2 annualized transaction value now stands at $86 billion. Revenue for the half year was $332 million, a growth of 29.5% in constant currency. EBITDA was $165 million, growing by almost 25% in constant currency with an EBITDA margin of 49.6%.
The drop in mobile money EBITDA margin was primarily due to kicking in of expenditure in Nigerian PSB operation, including the SmartCash launch. Coming to the next slide, all our key service segments of voice, data and mobile money contributed to 16.9% revenue growth in constant currency. Revenue in reported currency grew by 12.9%. The differential in growth rate between constant currency and reported currency was due to currency devaluation, mainly in Nigerian Naira, Central African Franc, Kenyan Shilling and Ugandan Shilling, and Malawian Kwacha, and partially offset by appreciation in Zambian Kwacha. On the next slide, we show the group EBITDA growing by 14.3% in reported currency to almost $1.26 billion. EBITDA has been adversely impacted by $37 million as a result of currency devaluation discussed previously.
The EBITDA margin was at 48.9%, an improvement of 38 basis points in constant currency. The improvement in margin was led by both revenue growth and slight improvement in operational efficiencies alongside disciplined cost control, which offset the rise in energy cost and inflationary cost pressures. Coming to the EPS, operationally, we are happy with our performance with double-digit growth in revenue and operating profit. However, FX has impacted. Foreign currency devaluation has impacted our EPS. Foreign exchange and derivative losses were higher by $160 million as a result of $31 million derivative losses and $147 million impact from the restatement of foreign currency liabilities across our OpCo. In particular, Nigerian naira devaluation had an impact of $30 million.
CFA devaluation, Central African franc devaluation impact of $45 million, and the balance came from devaluation of Malawian Kwacha, Ugandan Shilling and Kenyan Shilling. After normalizing the net impact of these Forex and derivative losses, the EPS before exceptional item and excluding the Forex impact, the EPS would have been $0.098, an increase of almost 21%. Coming to the normalized free cash flow. During the first half of the year, we have generated $394 million of cash from operation post-tax, out of which $195 million was reinvested for our future growth. Hence, our normalized FCF for the first half of the year was $173 million. Coming to our balance sheet. We continued to strengthen our balance sheet by firstly reducing our foreign currency debt, especially at a HoldCo level.
We have repaid bonds of $1 billion over the last 12 months as a result of strong cash upstream from our OpCo and proceeds received from the minority investment in Airtel Money and tower sales. As you can see, our upstreaming potential is very diversified across all regions, not making us overly reliant on a specific region. Secondly, our OpCo market debt increased by 34% to over $1.4 billion in line with our strategy to push down the debt at the OpCo level. Group leverage has improved to 1.3x compared to 1.5x in the prior period. The total weighted average interest rate was 6.4% vis-à-vis 5.5% in the prior period due to increase in base rate, increase in local currency OpCo debt, and the repayment of HoldCo bond, which had a lower rate.
Our capital allocation policy remains unchanged. As mentioned earlier, our priority remains to invest in the business and at the same time aim to further strengthen the balance sheet. Secondly, to return cash to shareholder through a progressive dividend policy. As mentioned earlier, the board has declared an interim dividend of $0.0218 per share in line with the existing dividend policy. As you can see in this chart, we have invested $310 million in tangible CapEx during the first half of the year. In addition to this, we have also invested $82 million for the purchase of spectrum in Kenya and DRC. In October, an additional investment of $89 million was made for spectrum in Zambia and Tanzania.
91% of our CapEx investment is geared towards growth initiative, which combined with the spectrum purchases ensures a strong, reliable and resilient network services for the future. Our investment decisions, coming to the next slide. Our investment decisions are made only if they meet stringent return criteria, which is clearly reflected in the trend of our return on capital employed, highlighted in the chart above. ROCE improved 390 basis points during the year and almost 9 percentage points in the last two years to reach 23.5%. I'll now hand over to Segun for strategic and operational update. Thank you.
Thank you, Jaideep. We'll be very helpful to provide some context around the very strong financial performance that Jaideep has just presented. We and the industry were not immune to the macro and geopolitical challenges that are very apparent across the world. However, we have adopted various initiatives to mitigate against these challenges. Macroeconomic pressures have continued to impact consumers across all of our markets. Telecoms is considered an essential service, but through affordable targeted offerings, we have been able to drive increased customer growth and higher usage, ultimately resulting in accelerating revenue growth in Q2. Our growth is not driven by price increases. Inflationary pressures, especially a rise in energy costs, has been particularly challenging. We have an embedded culture within our various OpCo to continue to seek out efficiencies, with the result being an expansion in EBITDA margin despite these factors.
Currency volatility across the region is not something new, nor something we can control. Our strong constant currency performance has ensured double-digit reported revenue and EBITDA growth. Finally, excess liquidity remains a challenge in some of our markets, but we have succeeded in obtaining significant cash from our OpCo to De-risk our balance sheet. Slide number 20, excuse me, shows our group strategy which remains unchanged. The strategy is clearly working. However, we're not resting on laurels, but instead, we continue to seek ways to enhance our service offerings to transform the lives, which is fundamental pillar of our growth strategy. We continue to deliver double-digit revenue growth across all three service offerings, voice, data, and mobile money. In an environment impacted by very high inflation, we continue to offer affordable services with our growth algorithm anchored on growing customers and usage in what are very underpenetrated markets.
Slide 22 provides a snapshot of the voice opportunity. We're exposed to markets with some of the strongest population growth rates in the world, as well as some of the most youthful populations. This, combined with very low levels of voice penetration across our markets, provides significant scope for growth. We also see significant usage upside as it remains way below global peers. Very key to capturing this opportunity is to continue to extend the coverage of the network, expand our distribution reach, and provide affordable offerings. The positive structural demand dynamics for voice underpins our very strong voice revenue growth, which resulted in 12% growth for the group. All of our regions reported double-digit constant currency revenue growth. In Nigeria, voice revenues and ARPU was impacted by the NIN registration requirements. However, we have seen voice revenue growth accelerate to 13% in the second quarter.
If voice is an underpenetrated service, data is even more so, as only 36%, excuse me, of our customers are data customers, less than half of which are on 4G. Only 16% of our total customer base is on 4G. We continue to invest into our network to increase the breadth and depth of our 4G network, which has resulted in 14 percentage point increase in 4G penetration of data customers over the last two years. However, with penetration still way below 50%, we see huge scope for further upside, particularly as almost 90% of our sites can offer 4G services to customers. The consumption of data services across our data customer base also remains very low in the global context, reflecting the scale of the opportunity.
Rising 4G penetration and coverage, combined with transparent and affordable offerings, will provide a foundation for considerable growth in the future. Even here on data revenues, slide 25, our strategy is working as we delivered double-digit revenue growth across all three regions, driven by both ARPU and customer growth. Slide 26 shows an overview of our mobile money business. The key to mobile money remains the provision of our core services in an assured manner that builds trust through ease of use and confidence with our focus on float availability. So customers know they can access their cash with ease as and when they need it. Alongside this core, we continue to develop our ecosystem of financial services for emerging and more sophisticated services. We have been able to increase mobile money penetration in nearly all of our markets.
In four countries, we have penetration rates way over 50%, and there are several more where we believe we can significantly grow penetration. Slide 27 demonstrates the continued evolution of our mobile money ecosystem. We're seeing the digital wallet cash in and cash out services as the major source of mobile money revenue. There is a very huge growth potential for this from increasing our penetration with new customers. There is also a continued diversification of the business towards additional payment solutions and also more sophisticated financial services. This slide number 28, reflects on the successes achieved today in our mobile money business and our strategies to drive future revenue growth. The foundation behind the strong growth in both the transaction value and ARPU is confidence in the brand.
Furthermore, the expansion of our distribution network continues to bring new customers onto the platform, particularly in more rural areas. The increased services on offer across the platform, supported by our strong partnership ecosystem, will add to transaction frequency and further support continued growth. The result has been very encouraging. We doubled the unit growth across both the East Africa and Francophone regions. Slide number 31. Highlight the opportunity from a new full PSB, our mobile money business in Nigeria, where we are very strongly positioned. Nigeria is a market with over 200 million people and a GDP of $400 billion, with unbanked population estimated to be 55% of adults. Our very strong presence across the market, alongside our investment into distribution network, positions us well to maximize the opportunity available to us.
As a recent survey in Nigeria pointed out, the majority of respondents indicated that the main reason why they don't have a bank account was because of trust in the service being offered and the lack of availability of the service. Solving these two issues are the bedrock of our strategy as we invest in our distribution network. Over 31,000 exclusive agents so far, and in technology and systems to ensure that customers as well as agents are confident in the security of their data as well as the safety of their cash. Slide 30 takes us to our sustainability strategy, which was launched a year ago. It was based on our four key pillars and demonstrates our contribution to six of the UN Sustainable Development Goals, which we believe we can have the biggest impact.
We are delighted to announce that our first sustainability report 2022 has been published today. This is a very, very important milestone for Airtel Africa. As our first standalone sustainability report, it shows the first steps taken to achieve the ambitious goals which we have set a year ago. The report covers the journey over the last year and provides an update on our progress towards delivering on our goals and targets. It describes our alignment with ESG supporting framework and standards. In this slide, we summarize the key highlights that are fully detailed in the report, and I look forward to continuing to report on our progress on sustainability, which remains a core part of our strategy. Lastly from me on slide 32, a few words on summary and outlook.
As you have seen from our results, our focus has contributed to strong operational and financial performance, and we continue to demonstrate positive developments on nearly every key metric. Our near-term focus will remain on investing in our network and on further expanding the distribution to be closer to our customers, while at the same time building new services for future growth, such as the rollout of our Nigeria mobile money business. We remain mindful of the currency and repatriation risk, which is largely outside of our control. These results continue to demonstrate the effectiveness of our strategy, sound execution, and the resilience of our business despite the uncertain macroeconomic environment. For the remainder of the financial year, we anticipate sustained growth in the business alongside EBITDA margin resilience.
With that, I'd like to thank all of you for your attention today, and will now open the floor for questions. Thank you.
Thank you. Ladies and gentlemen, if you would like to ask a question, you're welcome to press star and then one on your touchtone phone or on the keypad on your screen. If you wish to withdraw the question, you may press star and then two to remove yourself from the question queue. Once again, if you would like to ask a question, you're welcome to press star and then one. For participants on the webcast, you may submit your question via the text box at the bottom of the screen. Our first question is from Maurice Patrick of Barclays. Please go ahead.
Well, morning, guys, or afternoon. Thank you for taking the questions. Just a couple from me, please, if I can. First one, if you could just help us understand a bit more about the total energy costs that you have and, how much that's actually going up and things like, you know, the extent to which you hedge, how much energy are you using, gigawatt hours, you know, what's happening. Some more detail really in terms of the energy consumption and costs and hedging would be helpful. Just a second question on mobile money. I've seen some signs of maybe sort of Wave retrenching a little bit, new entrants being perhaps not quite so disruptive as they were.
If you could provide a bit of commentary in terms of how you're seeing some of the competition in these markets, that'd be very helpful. Thank you.
Can you repeat the question on mobile money again, please?
Hello?
Can you repeat questions on Airtel Money? It wasn't very clear.
Oh, the question wasn't clear?
No.
Okay. Sorry, shall I try again?
Yes, please.
Okay. On Airtel Money, if you could talk a bit about the levels of competition from some of the disruptive entrants, that would be helpful. I read some articles about.
Mm-hmm.
New entrant called Wave that was maybe retrenching and cutting back a bit in some of their new markets. Some commentary on the competition on Airtel Money would be helpful. Thank you.
Okay. Let me talk about countries where we have some fintech players that are competing with us. Specifically, if you look at Uganda, where you have a new Wave. Wave is a major competitor to us in Uganda. If you look at the ecosystem, the customer base that we have, we've actually gone way beyond what Wave have done. We have a different set of advantages which position us way beyond the typical fintech operators. One, we have a captive customer base in our GSM network. Two, we have a lot of analytics. And three, we have very deep distribution infrastructure. In most of our countries, the primary entrance into financial system is through the agent infrastructure, and we develop a very wide agent infrastructure to capture a lot of our customers and to onboard our customers into the financial system.
To a very large extent, we do have a very different profile and a very different set of competitive advantages in this market for those who are unbanked. Beyond those who are unbanked, we're also going to selling advanced financial services. We're offering loan products, we're offering investment products, insurance products to the customer base. The sales are quite different for us, and I'm very confident that we stand a very good chance of winning in the various markets where we're competing against the fintech companies. We're very strong in distribution. We're very strong in offering the advanced products like savings, loans, and investment. Combine this together, we have unique set of competitive advantages over them. On the further, if you want to
Yeah.
The first question, if I understand, the first point is on the derivative loss or the way we do our hedging and therefore the cost associated for that. We enter into several derivative instruments across our OpCo for different reasons, including hedging against our exposure on sourcing foreign currency. The example of derivatives that we use for deliverable forwards, non-deliverable forwards, cross-currency swap, options, et cetera. These derivative instruments are mark-to-market at every period. While in the past we had some gains, this time around we suffered losses. The impact of that restatement is about $30 million on the overall outstanding derivative instruments net of $365 million. Now, coming to the other part of the question on the fuel.
On the margin compression, actually primarily if you see Nigeria margin compression has come out because of the fuel price increase, and that was the main driver. We have had increase in the fuel price from about NGN 300 per liter in quarter four last financial year, which was January, February, March, vis-a-vis NGN 750+ in quarter two this year, which is July, August, September. Which is more than 120% increase in the price of fuel. This is the major driver of the compression of the margin. Not only in Nigeria, by the way, a few other countries in East Africa do experience this increase in the fuel cost.
Unlike Nigeria, most of the East African countries, the grid power availability is much better than Nigeria, which has resulted in much lower impact in the overall operating cost. Just to give you a flavor of the impact, a 10% increase in the fuel price in Nigeria from the current level may lead to network operating cost increase by 7%. Which is about, roughly about $10 million a quarter. That's the impact of 10% increase. Our total energy cost as a part of our overall OpEx is 27%. The overall, if I take only network operating expenditure, network OpEx, then the percentage of fuel cost is about 52%. Hope that answers your question.
Can I just replay that back to you? 27% of total OpEx revenues minus EBITDA is energy, and 52% of network OpEx.
I apologize. Your voice is very distant, it's very far away.
Sorry. Yeah, if I could replay those numbers back to you because the audio's not great, maybe on my side. Can I just replay back? 27% of OpEx, so revenues minus EBITDA is energy. Is that right?
27% of the total OpEx is our fuel cost.
Yep. How much has it gone up, like, in, like, percentage terms, you know, dollar terms, constant currency, anything's fine?
Yes. As I mentioned that in Nigeria, the fuel price has gone up by 120%.
Yeah.
between this year, January, February, March, versus July, August, September. The price was NGN 300 a liter, has moved up to.
NGN 750 a liter in this quarter. That's the impact of the fuel price increase in Nigeria as well as in the overall Africa level.
Okay. I was looking for a group number, but if you don't have it's fine. Okay. Thanks, guys.
Our next question is from Rohit Modi of Citi. Please go ahead.
Thanks for the opportunity. Just a couple of questions from my side. Firstly, trying to get more color on your Nigeria subscriber base. There has been a slowdown in terms of net adds. This has slowed down sequentially. I can't compare it with last year, given there was a KYC going on. Just wanted to understand, is this a seasonality or there is a competitive intensity that is growing in the market that's the reason there has been a slowdown in the net adds? Secondly, I wanted to understand, the impact of barred SIM, which I believe is mostly on the voice revenue side. Now voice revenue is still increasing 11.9%.
If I include the other, you know, $26 million impact, does that mean that voice revenue growth was actually more than 25%, in this quarter if you include the barred SIM impact as well?
Let me take the question about the net addition first. If you recollect, I mean, by the end of March, we got instruction from the government in Nigeria to disconnect a number of customers. As of September of this year, we've reconnected about 5.7 million of those customers. About 13 million were disconnected, but we've connected 5.7 million We currently have over 5 million that are still barred. It is very unlikely that this customer will come back, hence we are not very actively pursuing them. What we've done is to enhance our distribution infrastructure to gain a lot more customers. If you look at our customer growth in Nigeria, we're more or less back to the normal trend. What affected the net add was those customers that we couldn't get back because they didn't have NIN.
To replace them, we've gained a lot more customers. The net addition you see in Q2 is not represented by usual net addition. We're into Q3 now. We're beginning to see an upsurge in gross adds that will be reflected in our Q3 numbers. If you look at overall customer growth for the group, we've grown customer base by almost 10%, 9.5%, and that's a reflection of our focus on expanding the customer base. That has been the key driver of the growth in our revenues.
Got it. Any color in terms of when we can see any KPIs on Airtel Money in Nigeria?
On Airtel Money in Nigeria, we're very deliberate in how we like to address the market. The initial focus has been on creating trust in the brand, and we focus on two key requirements. One is on the IT system and second is on distribution system. We're very confident that we have the right IT system in place, very resilient, that will give customer a lot of assurance that their money is safe. We've now increased our distribution infrastructure. We've got almost 31,000 agents who are ready to serve our customers. The initial focus twofold. One, create a very stable platform. Second, create a very efficient, fit for purpose distribution infrastructure. We've done both. Now we're focusing attention on customer addition, and this is what's going to be our main focus in Q3.
Thanks.
Thank you.
Our next question is from Madhvendra Singh of HSBC. Please go ahead.
Yes. Hi. Thanks for taking my question. I have two questions, again on Nigeria. Firstly, could you share the amount of cash you have been able to upstream from Nigeria in second quarter, and if you have done any further cash upstreaming in the month of October? And if you could share the rates as well, how different they have been compared to the historical, like levels you have upstreamed at. Second question is on the data revenues in Nigeria. If you could share what percentage of data revenues in Nigeria are coming from customers where the SIM NIN registrations haven't been completed, or, you know, they have not been verified.
Let me take the first question and then the fourth. We operate in 14 countries, and in the last 12 months we've actually upstreamed $1.1 billion. Out of this $1.1 billion, about $373 million came from Nigeria, $434 million from East Africa and Francophone Africa, $334 million. We actually have a very diversified source of upstreaming. Nigeria alone is not gonna cause a lot of pains. In the last six months as well, we've upstreamed $500 million. Out of the $500 million, over $200 million came from Nigeria with the balance coming from 13 other OpCo. You can see how diversified we are in terms of providing dollar balances at local level.
Of course, we do have challenges in Nigeria, but we've been able to use a number of instruments to upstream the amounts I mentioned, over $200 million in the last six months and close to $400 million in the last twelve months. We're not also too concerned about the naira balances in Nigeria. Nigeria is the largest OpCo and we've got a very strong appetite for growth in Nigeria. There are a lot of CapEx requirement in Nigeria. Some are naira denominated. We have no major expenses we're gonna make in the next couple of months in Nigeria in terms of payment for spectrum. In terms of the auction that has been announced by the government a few days ago, the new auction for 3.5 GHz spectrum.
Despite the amounts of money we've been able to upstream from Nigeria, we still require sufficient naira balances to continue the expansion of our business in Nigeria, mainly payment for spectrum and also investing behind the distribution infrastructure in Nigeria. We're not too worried and we're fairly confident that the structures we put in place would ensure the health of our business in Nigeria and the overall future of our OpCo in the other countries where we operate in.
The second question on data revenues?
If you look at data revenues in Nigeria, we've grown data revenues in Nigeria by about 27% in the first six months of the year. In the last quarter, we actually grew by 9%, an acceleration from the first quarter. We've more or less, I mean, gone through the data customers who they now have NIN. Although despite them not having NIN, they actually still allowed to receive phone calls and to actually engage in data session. We only bar them from making outgoing calls. The impact on data revenue was not huge because those customers were still able to access the internet on our network, even though they've been barred from making outgoing calls.
Exactly. That's why I'm wondering if these numbers get disconnected eventually, whether that will impact your data revenue trends in any case.
I think we've almost cycled out of the impact. If you check, most of those customers, they probably have a second SIM on our network, a second SIM somewhere else. Nigeria is a multi-SIM country, so after six months, I mean, I believe that most of the customers who are gonna come to us with the NIN, they've done so. The impact of the NIN issues we've faced in the first quarter is almost fully cycled out.
My final question is on the price, pricing trend in Nigeria. Have you been able to push through any price increases in Nigeria? I also saw some articles talking about government not approving some price hikes. If you could talk about, you know, that, give some details what happened and what is likely to happen in the next you know, few quarters.
As a strategy, we don't use any price to grow revenue. We grow revenue by growing volumes, by expanding our customer base. That, I mean, we've done very well in the last quarter, in the last 7.5 years. Of course, where we have the very high levels of inflation, we may selectively require price increase. Despite that, I mean, we do comply with all local directions. In Nigeria, we took a price increase, I believe, towards the end of September. Sometime in October, the government asked us to reverse the price increase. We have reversed the price increase. We continue to engage the regulators so that we can appropriately price, I mean, our offerings. As a policy, as a strategy, we don't really depend so much on pricing to grow our business. We focus more on base expansion and on expanding usage.
That is what we're gonna continue to do as we engage the government for appropriate pricing when required.
Just to clarify, the instruction from the government, you do not see that as a risk to your growth outlook in the next quarter and so on?
Like I said, I mean, we're very clear on our own pillars of growth. One clear pillar that has worked for us in the past that we're gonna continue to rely on is on base expansion, customer growth, customer base. We continue to do that. Of course, I mean, pricing would help. Is it that without the pricing we're not gonna grow? I don't think so. Without the pricing, we still continue to grow, but we will engage government as an industry to reflect the inflation in the pricing formula for our products in Nigeria.
Just to add one more point on what Segun said. That quarter two growth of Nigeria, what you see here is without any price increase. The price increase impact was nothing, actually practically nothing in quarter two, and that tells us the growth story of Nigeria. If you see the other KPIs, the customer base growth and the usage growth, that is leading to the Nigeria growth.
Great. Okay. I mean, you're not worried about the government, you know, let's say frowning on the price increases kind of headlines. You know, even if you don't get any price increases, you are happy?
No. We are definitely looking forward for the price increase more to, you know, neutralize the impact of the inflationary fuel price increase and so on and so forth. It will help us to restore back more than growth, probably the EBITDA margin, if there is a price increase which happens. That's what we are looking for. Because the pressure is more on the OpEx side because of the fuel price increase and the inflationary pressure. We'll be definitely looking forward to engage with the regulator and see if we can get a price increase. As far as growth, the organic basic growth is concerned, we are not very worried about the price increase or not price increase.
To actually summarize, I mean, is it nice to have? Is it a must-have? I don't think so. We continue engagement with the government to find a sweet spot that works for us, works for government, and works for the customers as well. Without pricing, we will continue to expand our business, grow our franchise in Nigeria and in each of the 14 countries where we operate.
Thank you very much for answering the questions in detail. Thank you.
Ladies and gentlemen, just another reminder, if you would like to ask a question, you're welcome to press star and then one. Our next question is from Tajudeen Ibrahim of Chapel Hill Denham. Please go ahead.
Yes, good afternoon. Good morning, everyone. Thank you so much for this opportunity, and congratulations on your numbers. I have gotten two questions to ask. The first is around the energy cost, and I remember the last time we were on this call with you said that management, you know, plans to work around the energy, you know, increase, you know, by working with tower companies to move, you know, the energy sources from diesel to battery and solar power. I would like it if you can, you know, give us an update on that front because it doesn't look like diesel prices are going to moderate anytime soon. That's the first one. The second one is around, you know, 5G license in Nigeria.
I understand that there will be another auction in December of this year that is costing around $273.6 million. Should we expect you to be at that auction? How willing are you to ensure that you win at the auction and you have 5G on to compete favorably in Nigeria? Thank you very much.
Okay, I'll take the second question first. On the 5G auction, it's gonna be December seventeenth, if I recall it. We're certainly gonna bid, and we would put in an offer for the price that we believe is relevant to the opportunity presented by 5G. So definitely we're gonna be bidding in December for the spectrum to be auctioned by the Nigerian regulator. On your first question on fuel, I mean, Nigeria is heavily dependent on diesel to power our towers. We've done a number of things to mitigate impact of a diesel increase on our business. The first thing we did was to negotiate with the two partners we have on how we can share the cost, the impact of the increase.
We had an agreement with both of them on a manner that, I mean, not all of the fuel price increase will be passed on to us. We're working through that agreement now. The second thing we've done is to engage our partners on how to replace some of the diesel generators with energy friendly sources of power. With one of the partners, most of the new sites we're gonna be deploying in the country would actually be powered by a combination of solar battery and of course, I mean, very small levels of a diesel power generator for emergencies. That we've done. The third thing we're doing is to find other ways of reducing our energy requirements. Like I mentioned to you, we launched our sustainability agenda about a year ago. Our first report is being released today.
We also have some energy saving mechanisms we're pursuing to ensure that we reduce our carbon footprint and at the same time reduce our dependence on diesel to power our operations.
I don't know if I can, you know, ask like a follow-on question around, you know, what the expected impact of this will be on, let us say, the next financial year in terms of your energy costs. Assuming all these, you know, plans work out, by how much do you envisage that your, I mean, in terms of savings, by how much do you think you will save on energy costs, you know, from like the next financial year onwards?
Jaideep, you want to take a go at this?
At this stage, I'll not be able to give you a very specific guidance on that because we are still in the conversation with the TowerCo in terms of the cost-sharing formula for the further enhancement or increase in the fuel price. As Segun mentioned, you can safely assume that all the new sites which will be coming up to start with will be coming with the higher battery backup and the solar power energy level. That there we should be able to reduce the cost by at least 10%-20% from the existing normal consumption of diesel. That's the aim for all the future sites.
On the existing site, that's what we are negotiating and because obviously on the existing site to change or install solar power, it requires for the TowerCo additional CapEx, additional cash outflow and so on and so forth. We are trying to come to an agreement on a formula of cost sharing and also the CapEx sharing model so that existing sites can also be converted into an energy efficient model. Probably by next quarter when we meet, we'll be able to give you a better guidance on this. At this moment, we are still in conversation.
Okay. Thank you very much.
Our next question is from Jonathan Kennedy-Good of JP Morgan. Please go ahead. Jonathan, please make sure you are unmuted.
Hi. Sorry about that. Just want to return to the issue of cash repatriation from Nigeria, and thank you for sharing some of the statistics over the last year. Obviously there's a lot of concern in the market around dollar liquidity there and what is happening in the parallel market. I'm just trying to understand, if you wanted to repatriate cash today, is there liquidity to do so? Can you share when exactly last you did repatriate cash?
I would mention how much we've gotten out in the last six months, over $200 million, and over the last one year from Nigeria, close to $400 million. In terms of sources of foreign exchange, we don't access the parallel market. We don't go to such market to buy foreign exchange. We work with international banks, and we use a number of structures to access foreign exchange, legal structures. Pricing may be different from price offered by CBN, but these prices are negotiated bank to bank to customer. We don't access the parallel market for foreign exchange in Nigeria.
Okay. You're not willing to share when last you repatriated cash?
We've given you how much money we repatriated in the last six months. We did repatriate some money like a month ago. Like a month ago we did and we took some money out a month ago.
In September.
September.
Okay. Thank you so much.
Sure.
Ladies and gentlemen, just another reminder. If you would like to ask a question, you're welcome to press star and then one. We will pause a moment to see if we have any further questions on the conference call. At this time, we have no further questions on the conference call. I would now like to hand over to webcast questions.
Yeah. Jaideep, lots of questions. Some of them have been already answered, from you and Segun. Can you please explain what exactly was driving the $30 million derivative loss?
$30 million derivative loss is somewhere linked to also Nigeria repatriation. As Segun mentioned, that we do repatriation and also source dollar for meeting the vendor obligation because you know that most of our CapEx is in dollar. We use very, very structured instruments available through the banks, the forward deliverable, non-deliverable forwards, cross currency swap and so on so forth. All this put together, there is obviously a liability for the derivative instrument which is there in our financials. Now those derivative instrument is mark to market and we have to restate that every month. Some month there can be gain, some month there can be loss.
In this quarter, there is a loss because of the devaluation and we did the mark to market of those, $365 million of outstanding derivative instruments and that is causing this $30 million of loss.
Thank you. Have we reached the bottom for EBITDA margins in Nigeria, or do you see further downside from these levels going forward?
Well, you know, it's a difficult question to answer in the current context, but everything is dependent on the fuel price further, whether it will go up or it is stabilized. Of course, as I mentioned that there's a constant effort engaging with the TowerCo to see how we can reduce the impact of the existing fuel price rise and also mitigate the future impact by way of installing solar power and battery backup. This is the one big ticket item in our P&L. Practically, if you look around our entire cost increase, almost the entire cost increase is coming out because of that. It is difficult to state how the fuel price will move or what is the impact in the short term.
In the medium to long term, we have our sustainability strategy of deploying alternative source of energy to reduce this impact.
Also, if I can add few comments. Nigeria is a growth story for us. If you look at the growth in the last quarter, we've increased revenue in constant currency by 21%, and half year is about 19.0, almost 20%. We balance both the growth opportunities and the cost pressure. We continue to find ways to mitigate the impact of the cost pressure. The important thing for us, Nigeria is a growth story, and we continue to invest in Nigeria to capture the opportunities in the country.
Also on the FX, with FX losses, could you clarify if this is more of an accounting P&L impact or have any cash impact as well?
At this moment, this is accounting impact of restatement of all the liabilities, forex or our currency denominated liabilities, which includes, finance lease obligations. Roughly 80% of our finance lease obligation is dollar-based, so we need to restate that. As I mentioned, there are derivative instruments. There are other vendor liability which is in foreign currency. Those need to be restated as we encounter the devaluation in different country. All put together, this devaluation impact is a restatement of all our liability, and that impact has come through the P&L, profit and loss account. But yes, when this gets mature, then obviously we have to source dollar at the devalued currency and then pay dollar. Because as you know that our income or 95% of our income or revenue is in local currency of respective 14 operations.
Thank you. Perhaps this one is for you, Segun. Could you share an update on 4G population coverage in Nigeria in particular and in the other regions? Overall, you know, high inflation environment influence our long-term pricing strategy and revenue growth?
Let me take the second, I mean, question first. As I've said earlier, our growth story is based on volumes driven by base expansion followed by usage growth. Those are the two clear metrics we use for driving growth. We want to add a lot more customers. We want to introduce a lot more of our voice products, a lot more of our data products, a lot more of our mobile money products. That's the mantra that we have. Of course, selectively, we look at opportunities for pricing, but pricing has never been a key enabler of our growth story. If you look at the fundamentals of our footprint, where we are operating in terms of customer penetration, still very low, south of 50%.
If you look at usage levels, whether we're talking about voice, we're talking about data, we're talking about money, still very low. Given these very low levels of penetration, very low levels of usage, our strategy is to have affordable price point that can be to drive usage and ultimately use that to grow our top line. In terms of 4G penetration, close to 80% of our sites on the average are covered by 4G. In some countries, Nigeria is almost 100%. Uganda is almost 100%. In the Francophone countries, where we started expanding our 4G footprint, I mean, we have about 60% of our sites covered by 4G. If you look at an average, it depends on where we are in our phase. In most of these African countries, we've gone very, very far.
In Nigeria, almost all of our sites. In Francophone, we're between 60% and 70% coverage in terms of 4G.
Thank you, Segun. Two more questions on Nigeria. One, if there is any update on the biometric SIM registration in Nigeria? Do you anticipate any risk to the business arising from the upcoming elections? Finally, on the 5G license, do you know if it's payable in naira, local currency or dollars?
On the 5G license, spectrum is always payable in local currency in Nigeria, and I don't expect this to be different. I think the payment is gonna be at official exchange rate on date of payment, but I expect that to continue. In terms of, I mean, elections, we've gone through multiple cycles of election in Nigeria, and I think Nigeria is a mature democracy. I don't think the election should present any risk or any danger to business or to anyone in the country. I'm very optimistic that elections would come and go and businesses would survive the elections. Did I miss anything?
Some questions. There's one more question.
Update on biometric SIM card.
On biometric, yes. I mean, we continue to use NIN, I mean, to register new customers. That has not changed.
We're fully compliant like every other telco. Nothing new, I mean, on the NIN. You must have NIN before you can acquire a SIM card in Nigeria. Once you have your NIN, we do issue SIM card and register the SIM card in your name.
Really the last question, our CapEx spend, can you share some color on related growth CapEx? How much is growth CapEx? Obviously, you know, which regions do we spend our CapEx on or currently?
Just quickly. More than 90% of our CapEx, tangible CapEx is growth CapEx. Almost 100% of our intangible, which is more or less, mostly like spectrum purchase, is growth CapEx. Because the spectrum is bought for the further expansion of the network and further expansion of our capacity coverage, etc. All these are put up as a growth CapEx. From a total allocation or perspective, if you look at it, Nigeria takes about $134 million, East Africa $90 million, and Francophone Africa about $60 million. That's the first half CapEx spend. However, from when you talk about intangible CapEx, we spend about $82 million. $42 million is in Francophone Africa and $40 million is in East Africa.
That's the broad split up of the tangible CapEx and the intangible, which is the spectrum, allocation between various region.
Thank you. Thank you all for joining the call and asking the questions. Operator, I think we can close the call now.
Thank you, everyone.
Thank you.
Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.