Ladies and gentlemen, thank you all for standing by. Welcome to H1 2020 Results Conference Call of Airtel Africa. Today's speakers are Raghunath Mandava, Chief Executive Officer, Jaideep Paul, Chief Financial Officer. All lines are now closed except for the speaker line. If you'd like to ask a question to the speakers, please press star and the number 1 on your keypad to connect with the operator. Before we continue, I will present an important disclaimer. This presentation has been prepared by Airtel Africa plc and is for information purposes only. This presentation contains forward-looking statements, which by their very nature, involve inherent risks and uncertainties, and risk exists that such forward-looking statements will not be achieved. You are strongly advised to review the disclaimer page of the investor presentation available at https://airtel.africa/investors. This conference call will be recorded and transcript will be posted on the website.
The first speaker will be Mr. Raghunath Mandava. Please go ahead, sir.
Thank you very much. Welcome to the first half of 2020 conference call, and thank you all for joining. The flow for today is as follows. I will give a brief overview of the H1 results. Jaideep Paul, our CFO, will present the financial performance. Then I will close today's presentation by giving you an update on our strategy and execution. Post that, we will open up for Q&A. We also have Pier Falcione, Head of Investor Relations based here, and Segun Ogunsanya, our Managing Director for the Nigeria business. You would have seen, there is a brief summary in slide number three, leading telecom operator. Just for a recap, we are present in 14 countries. We are organized as Nigeria, East Africa, and rest of Africa. We are the number 1 or 2 in 12 out of the 14 markets.
We have crossed 100 million customers in the last quarter. 30% of our customers plus are on data, and 15% are on Mobile Money. If we go into slide number five, you would have seen our results today morning, published today morning. These are strong results and are a clear evidence of our strategy, effectively delivering profitable growth. In H1 2020, our revenues grew by 11.4%, with EBITDA growing even faster. Thereby, we delivered a margin expansion of 90 basis points in constant currency terms. Revenue growth was broad-based across all our services of voice, data, and Mobile Money. Finally, we continue to improve our balance sheet position with the leverage ratio down to 2.3X. Slide number six, strong sets of results across businesses. The overall growth of Airtel Africa is broad-based with growth across voice, data, and Mobile Money.
At less than 44% unique customer penetration, there is ample opportunity for growth in customer terms, and this is reflected in our customer growth by over 10%, leading to a voice revenue growth of 3.2%. Our investments in 4G and belief that the demand for data is huge in Africa was reflected in our data customer growth by more than 17%. Thanks to the huge network rollout of 4G and our More for More bundles, that data ARPU grew by 18.5%. Data revenue grew by over 37%, and data consumption per customer increased from a year back to about 1.65 GB in the first half, indicating a huge appetite for data consumption in the absence of other technologies providing data access too in Africa. Mobile Money continued to expand country by country, and the revenue growth is more than 46% year on year.
In both customers and ARPUs, we have recorded growth, thereby indicating increasing usage and transaction values. Data and Mobile Money now contribute 26% and 9%. That's 35% of our overall revenues, and they grew by over 40%. Simultaneously, we are developing the voice segment, which has also recorded a positive growth. Our belief in the huge growth potential in Africa across all segments is further vindicated by the revenue growth of 11.4% and EBITDA growing faster. FCF was up by 28%. Slide seven. This is our seventh successive quarter of double-digit growth and EBITDA margin expansion. This strong record reinforces three things. First, the market. The potential for growth in Africa, considering 44% unique customer penetration, poor fixed line infrastructure, and a massive opportunity on financial services. Second, building the right operating model tailored for the African subcontinent, which means building a very profitable and high growth business.
Third is a successful execution is possible even in a challenging market with a great team that we've really built in Africa. Let me now take you through the region-wide performance. Slide number eight, you will see Nigeria. Nigeria is our largest market, which continued delivering a very strong growth. We continued building a leading 4G network in Nigeria, which proved to be an important and profitable milestone for us. 4G sites have more than doubled in the last year and now account for more than 60% of our sites. Overall data consumption grew by over 90%, and data revenue grew over 75%. Our continued focus on cost efficiency, despite the high investment in network, helped us increase our EBITDA margin by 53%. Our overall revenue grew greater than 23% in Nigeria. We are keen to launch the Mobile Money service in Nigeria.
We filed for relevant applications for both payment service bank and super agent licenses. We are confident that the role of mobile operators in financial services in Nigeria will grow. Slide number eight, East Africa. East Africa constitutes six countries, some of which we have very strong businesses, some of which we are the challenger player. We continue to build very strong networks with nearly all sites being 4G, especially in a few countries. We have completed our network modernization in most of these countries. Soon, we will be launching 4G services in Tanzania, that we will be able to provide 4G services to all our customers across the 14 markets. A strong network combined with excellent distribution network allowed us to generate revenue growth of more than 11%. Here, the excellent example is the Mobile Money expansion and growth.
The revenue growth, along with cost efficiency, supported underlying EBITDA growth of 16.2% in constant currency. It led to EBITDA margin improvement of 164 points on reported currency basis. Slide number 10, Rest of Africa. Rest of Africa revenue was down 2.9%. However, I am confident it has started recovering in H1. We recorded a solid customer base growth, voice base growth. Voice dropped by almost 10% due to reduced termination and interconnect charges in some of the countries. Our 4G launches in Rest of Africa happened a little later than in other countries, and we are still yet to see the big uptake in the overall growth. However, even now, we are observing a very good growth in data translating to about 22%. Our investments in 4G and increasing handset penetration result in a higher data consumption.
The revenue drop and one-off penalties in Gabon have impacted our H1 EBITDA margins. I'll now hand over to take you through the detailed financial performance to JD Paul.
Thank you, Raghu, and good morning, everyone. During the half year, we delivered an encouraging set of results as Raghu has explained already. Let me start with some highlights. Our constant currency revenue grew by 11.4% and 12.6% yearly in Q2. EBITDA increased 13.7%, leading to 100 basis point EBITDA margin expansion, which now stands at 43.9%. Absolute EBITDA for the half year stands at $719 million. Our balance sheet position also has improved. Lower net debt and EBITDA led to net debt to EBITDA ratio at 2.3 times, in line with our capital structure policy. We generated strong free cash flow up 28% to $237 million. EPS before exceptional item was $0.041. On a normal basis, by assuming a similar weighted average number of shares, EPS nearly doubled over previous year first half. Moreover, the board has approved an interim dividend of $0.03 per share.
Going to slide number 13. As you can see, we have broad-based revenue growth across data and Mobile Money. Reported revenue were up 8.4%, while constant currency growth was 11.4%. More than offset unfavorable foreign exchange devaluation in certain countries. Revenue growth was broad-based across voice data Mobile Money. Going to slide number 14. Segment performance. Looking at the performance across all three segments, Airtel Nigeria delivered a strong growth both in voice and data, supported by double customer growth and 1.5% increase in ARPU. In East Africa, we delivered a good performance across voice, data, and Airtel Money. Kenya, Tanzania, Malawi, Zambia, all delivered double-digit growth. Performance in Rest of Africa improved in second quarter as compared to the first quarter, largely driven by data, Mobile Money, while it continues to be under pressure due to macroeconomic weakness and changes in interconnect rate.
In Rest of Africa, we delivered good performance. We see Chad, Seychelles. While in countries like Gabon, Niger, and Republic of Congo, we delivered good growth in data, even though not enough to offset the voice revenue drop. Slide 15. Mobile Money business delivered another quarter and half year of strong performance. Revenue grew by 46.5% in constant currency, driven by customer growth in transaction value. Growth of customer base was largely driven by the expansion of distribution network as the business invested in more franchisee-driven exclusive kiosk and Mobile Money branches. Underlying EBITDA increased by 91%, amounting to $70 million, driven by revenue growth and supported by optimal distribution costs, resulting in better flow-through in EBITDA. As a result, underlying EBITDA margin improved to 48%, up from 36%. ARPU in Mobile Money also increased by 22.4%, mainly driven by add-on services like merchant payments, et cetera.
Going to slide number 16. We delivered consistent EBITDA growth. EBITDA increased 10.9% in currency and 13.7% in constant currency. Reported EBITDA for first half was $719 million. $17 million of adverse Forex impact was driven mainly by currency devaluation in Zambia, Kwacha, and Central African Franc. EBITDA margin, next, slide 17. EBITDA margin expanded by 90 basis points on constant currency. 75 basis points improvement is on account of 11.4% constant currency revenue growth, while balance 15 basis points improvement is due to operating leverage. We have a transparent and balanced capital allocation policy. This is underpinned by our sustainable capital structure policy, which targets a net debt to EBITDA ratio between 2 and 2.5 times. In the medium term, I see this ratio to be closer to 2 times as we progress. Our current H1 2020 leverage at 2.3 times.
We aim to continue to invest in business in an efficient way. Every capital expenditure project goes through a rigorous analytical review to ensure we achieve our targeted return on investment. We are also privileged to get substantial procurement saving due to consolidated buying along with our parent company, Bharti Airtel Group. During the half, we incurred $246 million of capital expenditure, and we maintain our full year guidance for our CapEx to be in the range of $650 million-$700 million. Finally, we aim cash to shareholders through clear dividend policy, which aims at distributing a minimum of 80% of our consolidated free cash flow, subject to our leverage ratio to be below 2.5 and any other regulatory or monetary restrictions. Having said that, as I mentioned earlier, the board has approved an interim dividend of $0.03 per share. Slide 19.
A very strong free cash flow generation we have seen in H1. Free cash flow increased 28% to $237 million, as higher EBITDA growth and lower year-on-year capital outflow more than offset higher capital expenditure as we continued to invest in our network and distribution infrastructure. The benefit on our working capital position was largely driven by higher creditor balances, mostly as a result of phasing of payments. Therefore, I expect the benefits generated from our working capital position to in the second half. Tax payments were higher in the half, largely as a result of higher operating profits and were broadly offset by lower interest payments as a result of lower net debt. Slide 20. Our balance sheet is getting stronger.
As you can see, over the last four years, we have consistently deleveraged, and we closed the half with a net debt to EBITDA ratio of 2.3, well within our targeted capital structure policy, largely driven by both EBITDA growth and lower net debt as a result of receipt of the IPO proceeds. In line with our medium-term strategy to increasingly match our currency exposure with asset and liabilities, we have reduced our foreign currency debt by 41% and increased our local currency debt exposure by 22%. In the medium term, we will continue to focus on deleveraging our debt position through both EBITDA expansion and asset monetization opportunities, as well as continue to diversify our currency exposure. Slide 21. Total finance charge decreased by $70 million, largely driven by lower interest cost as a result of repayment of bonds.
Our weighted average cost of debt in the current half was 4.85%, about 22 basis points higher than last year, mostly because of higher cost of debt at the OpCo level. Slide 22. Earnings per share before exceptional item was 4.1. Higher operating profit and lower finance charges contributed to EPS increase. Tax charges had a negative impact on EPS, largely on account of higher operating profit and one-off benefit in previous year. The adjusted effective tax rate for the current period was 37.1% as compared to 4% in the same period of last year. The adjusted effective tax rate is lower compared to last financial year, primarily on account of deferred tax asset recognition in the Rest of Africa. The adjusted effective tax rate is higher than the weighted average statutory tax rate of 33%, largely due to the profit mix between various countries.
Shares issued last financial year and at the time of IPO, we issued a total of 2.245 million of shares, which diluted the price. On a restated basis, assuming the shares of IPO was existent in last year and normalizing the weighted average number of shares, our EPS before exceptional would have nearly doubled. Finally, in conclusion, I can say consistent double-digit revenue growth. We delivered consistent double-digit revenue growth with all services, namely voice, data, Mobile Money, contributing to the growth. EBITDA grew even faster, and we expanded our EBITDA margin by 90 basis points in constant currency term. Cash delivery was also strong with flow up 28% at $237 million. We continued to deleverage and reached a leverage ratio of 2.3, in line with our capital structure policy, as a result of both EBITDA growth and lower net debt.
Moreover, after normalizing the number of shares issued in both periods, our EPS before exceptional nearly doubled. We are on track to deliver another year of low double-digit constant currency growth margin expansion. Finally, the board approved an interim dividend of $0.03 per share, which is in line with our dividend policy announced at the time of IPO. That is distribution of at least 80% of free cash flow, provided leverage conditions are met. Back to you, Raghu.
Thank you, Jaideep. I will now get into the Africa strategic direction and what we are doing on our strategy. Slide 25. Before I give an update, I would like to remind various discussions that I have mentioned, that telco in Africa is actually two businesses, mobile and payments. The mobile market, characterized by low unique customer penetration combined with a growing and young population. It provides the potential for the growth of mobile subscribers and voice revenue. Quite unlike most of the well-penetrated markets around the world. The poor fixed line penetration and infrastructure and low revenues and opportunities of various entertainment and information opens up a huge opportunity for data. That is why we will see a lot of data consumption growth and revenue movement.
The low penetration of banking services, along with a huge geographical continent, poor infrastructure, low population density, provide a huge opportunity for financial services and a massive growth potential for mobile. Slide 26, our key pillars for strategy. They are all based on the potential that we will see in Africa. The key pillars of our strategy are winning with quality customers, winning with our network, winning with data revenues, winning with Airtel Money, the multiple areas of upside that we see, and of course, continuously focus on cost optimization. These six priorities are supported by a strong people agenda and also an approach towards in Africa of partnering the nation in both reducing the digital divide in the countries we operate in and also helping increase financial inclusion. Let me take through one by one in each of these, what are we broadly doing. Slide 27.
In the first half, we continued the accelerated customer acquisition through our exclusive and dedicated distribution channels for customer acquisition. We are working, and we have progressed quite well in simplifying the customer experience through a simplified digital onboarding process, leading to faster activations and resulting in better customer or higher customer satisfaction, thanks to all our call centers and self-care. We have, across markets, run a combination of reduced basic pricing of PAYGo rates and also an increased bundle penetration with our More for More bundles. In all our bundles, our special focus has been on a long validity of moving further from daily to weekly bundles. All these have helped grow our customers by 10.4% to 104 million, as you have seen. Leading 4G player.
If you see this chart, our strategy to continue to build a robust Single RAN network through modernization of all our urban networks in all markets, and have full coverage in some countries. This, along with rolling out 4G and stronger spectrum position through adding new spectrum and through a software upgrade of the multiple carriers that we have helped us in generating huge incremental data capacities, largely on 4G. The rollout of almost 5,000 kilometers of fiber has further helped us to build greater redundancy and capacity on our transmission networks, along with bringing down our average cost per GB in this market. We have now launched in the first half 4G in DRC, Congo-Brazzaville and Niger. We are ready to commercially launch 4G in Tanzania.
While we have been increasing our 2G sites by over 10%, or actually 2,000 extra sites, we have increased the number of 4G sites by almost 60%, now to 60% of the total sites. Now we have almost 12,800 out of our 22,000 sites are 4G. This has helped us bring a very strong data network and also be a preferred brand for the high-end smartphone users. Slide 29. Maximizing the value of database services. The aggressive rollout of data with a focus on 4G network and the value propositions for high-value customers through our More for More bundles have helped us increase our data usage by over 80% and our data revenues by 37%. If you see one of the tables that I've put between quarter four and quarter two, you will see that the contribution of data customer mix has increased from 4G a little more.
The 4G customer ARPU are substantially higher than our 2G and 3G customer ARPU on data. We witnessed this growth of data customers along with data ARPU. This is due to the increased weightage of 3G and 4G, who have generated much higher ARPUs. As the penetration of smartphones of 3G and 4G is increasing, we observe the potential for data ARPU and data consumption to grow further along with customer expansion. As I mentioned before, our average monthly data consumption has risen to 1.65 GB per month, and with 4G customers as being a few multiples above that. Let me talk about Mobile Money. Out of our 14 countries, we are largely present in about nine countries. If you see our mix, I had spoken to you about that we have a 15% penetration of Mobile Money.
If you remove a few countries where we are not strongly present, we are not present like Niger, Chad, Nigeria, Kenya, and even Seychelles, where we are hardly there on Mobile Money. In the top nine countries, our penetration of the group is actually at 32.8%. We have countries like Gabon and Uganda, which are well above the 50% penetration. We have countries which are moderately penetrated between 20% and 35%, and we have low-penetrated countries. The growth of Mobile Money has been based on two pillars. One, the increasing number of assured float locations. This increase helps us to bring the Mobile Money services closer to the customers and make them more accessible for basic financial services. The second area is the area of partnerships in order to increase use cases, which I will discuss in the next slide.
You will notice from this slide that our Mobile Money customers grew by 20% to a current penetration of 15%. The range of our customers, various countries and penetration demonstrates that Airtel understands this journey of how to increase our penetration from low-penetrated markets to high-penetrated market, and has a clear game plan and a glide path for growing this. With the opening up and launching in other countries like Nigeria, Chad, Kenya, we do expect a further growth in Mobile Money services in Airtel Africa. With the expected Nigeria payment service bank license, we should see even further growth. Let me move to slide 31 on the strategic partnerships which we have recently tied up. This brings into the second pillar of Mobile Money growth to enhance use cases. We have entered strategic partnerships with Mastercard, Finablr, and Ecobank in recent weeks.
This helps us to build and strengthen in areas of, one, enhancing greater access to greater number of merchants through both offline and more importantly, and online through QR code outlets and digital transactions through virtual cards. A big potential to directly send inbound money transfer directly to Airtel Money Wallets. Outbound money transfer, working with these partners. We can do this, the inbound and outbound transfers of money transfer. We can play in this huge market, both within Africa as well as with over 100 countries from across the world through UAE Exchange, Travelex, and other brands. We also see a huge potential to serve Ecobank customers through our huge Mobile Money network. So in the last two charts, you've seen our potential of how we have a clear strategy of growing both our customer base and also our increase in the use cases that we have.
Slide number 32. What is our strategy for growth? Before we close, let me make a small summary of this. Through our simple strategy and strong on-ground execution and the huge data network, we intend to grow mobile revenues ahead of the industry. We intend to grow through our wide distribution and increase use cases to make Airtel Money the currency of choice. By using our current infrastructure, we are able to monetize additional revenue streams such as home broadband and enterprise. Our operating model helps us to continue benefiting from the operating leverage and the effect of scale supported by the network we are building. Thank you. With this, I end this presentation, and we are now open for the Q&A. As I mentioned before, I have JD Paul, the CFO.
I have Segun Ogunsanya, the Managing Director of Nigeria, and Pier, who is our Head of Investor Relations here to take the questions.
Once again, if you have questions, please press star and the number 1 on your telephone keypad. Our first question comes from the line of Cesar Tiron. The line is now open. Please ask your question.
Yes. Hi. Thanks for the call and for taking my questions. This is Cesar from Bank of America. I have three questions, please. The first one on Nigeria. Can you please comment on the market? It seems that you continue to gain a significant amount of revenue market share. Is that a combination of pricing? Also, do you think your network is still better than those of your competitors? Second question, still on Nigeria. Have you made any progress on obtaining a Mobile Money license there? What is the setback on the timing? The third question would be on the interim dividend. Can you please explain how did you come to the conclusion that it was better to pay the dividend as opposed to reduce further leverage? Thank you so much.
We are fortunate, we have Segun, who is our Managing Director and head of the region of Nigeria. I'm sure he will add a much better flavor on the Nigeria business. Over to you Segun.
Thank you, Raghu. We continue to expand our business in Nigeria through two key levers. Network expansion. We've invested significantly behind 4G. That is driving quality customers who spend a lot more money. Secondly, we've worked on our distribution infrastructure, creating more opportunities for budding customers. If I'm to summarize, two key levers are driving the growth. One, expansion of network, two, our efficient distribution infrastructure. Your second question on Mobile Money. We working with the regulator, Central Bank of Nigeria, to make sure that the issuance of the Mobile Money license is done very quickly. We're very confident over the next couple of months, the Mobile Money space will be open to all the telcos in the country. We're very confident that the Central Bank of Nigeria would open this space to many more competitors. They've given approval in principle to two telcos already.
Given this path, over the next couple of months, I'm confident that we would be able to secure our license.
On interim dividend, I'm ready. Sorry.
Following the strong sets of results we delivered today, the Board has approved an interim dividend of $0.03 per share. Today's dividend is in line with our dividend policy to distribute a minimum 80% of our free cash flow, subject to leverage ratio being below 2.5, and subject to any other monetary or regulatory restriction. This has been evaluated thoroughly by the Board, and Board has recommended this dividend. Adding one more point. If you go to slide number 19, we have given the definition and how the free cash flow has been calculated. You can see that in this half, we have generated $237 million of free cash flow. The interim dividend is basis our dividend policy, which has been described earlier, and that's what Board has recommended.
Thank you so much. If I just can follow up just on that Mobile Money license in Nigeria, do you think this is going to be sorted in the next couple of months, you said?
I am confident that in the next couple of months, this will be sorted out. Worst case scenario, early next year. We're engaging our stakeholders to make sure that the path of issuing licenses to telcos continue. Two approvals in and then once again, I'm sure that we would secure our own. We put in our application. We fulfill all the conditions that are requested of us, and we're just waiting for the regulator to review and give us approval in principle. I am confident that worst case scenario, early next year, this should be done.
Thank you so much for your clear. Thank you.
Thank you. Our next question comes from the line of John-Paul Davis from JP Morgan. The line is now open. Please ask your question.
Thank you, and thanks for the presentation. A couple of questions from my side and then one housekeeping one. Just in terms on the questions, I really wanted to kick the tires a little bit on the emphasis of matter that you've disclosed. There's two questions there. The first one is, you flag in the text that it does present material uncertainty. You do say why you're comfortable with it. I'm surprised at or interested in why the board still continue to declare a dividend, while there is this material uncertainty. Interested in the context around that. The separate question related to this topic. In a scenario where you did pay back the $505 million, can you give us a sense of what the new finance rate or new cost of interest would be on that?
These new debt facilities you do touch on in the text. Just a housekeeping question, if you could just help us understand in the cash flow statement what the derivative sale of $122 million relates to, in the first half of the year under the financing section. Thank you.
Firstly, this news which came up yesterday, it is a legal matter. Our colleagues at Bharti are best suited to respond on the details around these claims. That is the first thing. Let me start by saying that this unprecedented situation of an out-of-ordinary court order at a parent level does give rise to assessing whether risk arises for Airtel Africa. However, at the same time, our financial liquidity cash situation, along with many options of refinancing which we have today, all suggest that Airtel Africa shall not have to go through any issue whatsoever. As you know, that group has $2.7 billion of bonds guaranteed by Bharti Airtel Limited. In March 2019, the Honorable Supreme Court of India has delivered this adverse court judgment on the group's intermediate parent in relation to the long-outstanding industry-wide issue.
This adverse judgment from Airtel Africa perspective can or may have an impact if Airtel India rating gets impacted negatively, it falls below the investment grade. This could result in US$505 million of group's notes due to mature in 2023, requiring to be prepaid on a voluntary basis from an Airtel Africa perspective, so as to avoid debt incurrence governance on those notes coming into force. As you know, the cash in hand currently, which is about $1.45 billion, fully covers these and more. Additionally, we have sufficient funding arrangement in hand, which covers all the issues which may arise for repayment of this bond. I just want to inform you that this is the residual non-tendered stock of 2023 bond, which was earlier offered for a buyback, and this is left out amount, which was not tendered back.
We have evaluated our Airtel Africa perspective, the entire operation on a going concern basis, and critically evaluated the situation. There is nothing at this stage which calls for any kind of anxiety or any kind of, I would say, a reason not to believe that we are absolutely fine with reference to going concern. Any other on this?
No, just one quick follow-up on that. That was very clear. Thank you. Just one quick follow-up. Just around the potential interest rate differential between that $505 million and new facilities that you may draw down on. Just trying to get a sense of what you would borrow at without the support of Bharti. Thank you.
Hi, J.P. Sorry, it's Pierre here. I think it's very premature to give this type of guidances. First of all, because we obviously need to evaluate better this matter. Second of all, is because we have a range of options to which we can access these facilities. This could include the local facilities at OpCo, more central facilities, or even deciding to refinance those bonds with new bonds directly issued. Depending on what option we may or may not decide, that will impact that interest cost. It's very premature to give this type of guidance.
Okay. That's fair enough. Then just a quick follow-up on that housekeeping question I had, the sale of derivatives, $122 million. Just wondering a little bit of color there, please.
Okay. This was a mark-to-market hedge instrument, which has been canceled, which has been booked after selling those hedge instrument.
Okay. Do you have any other substantial hedge assets that you're looking to dispose of in the next 12 to 18 months?
No. At this stage, we don't have any further, any significant hedge instrument.
Thank you.
Thank you.
Thank you. Our next question comes from the line of Faisal Azmi from Goldman Sachs. Please go ahead.
Hi, this is actually Philippe on behalf of Faisal. Thank you for the presentation. I actually just have a couple of questions. Firstly, we noticed a spike in the EBITDA margin of Mobile Money over the last couple of years. We just wanted to understand if this is sustainable. What kind of initiatives are you pursuing there to achieve these levels? Secondly, when we look at the free cash flow generation over the last year, I mean, the growth in EBITDA almost offset the increase in CapEx, but this actual improvement was driven by the change in working capital. Trying to understand more the trends there, also how to view it in the future. Thank you very much.
Okay. Let's look at the Mobile Money business. How does it actually operate, and why is it a very good business if we can get our act right? It consists of a customer going to an agent and cashing in, and again, cashing out at a later time after doing a P2P otherwise. It's used for a large amount for customers for basic requirements of security. The margins you make is the customer charge out, and the payments you make to the agent on cash in and cash out. This is a very robust model. Every incremental activity that happens whenever you see a P2P transaction or a payment to an electricity department, a utility, or anything, adds more revenue without adding cost. When you see use cases going up, you will start seeing a margin improvement.
The margin improvement reflection is one led by increased use cases by the same customers, which are a lot more profitable without a cost. The second is, there is a certain cost that we used to incur in order to move the float and balancing that we did for the agents. This required us to redo our entire operating model of distribution of reaching down to agents. When we corrected that, we saw some sharp benefits in our margins. I think it's a robust distribution model and increased use cases that have really helped us take this margin. I will leave the second question to Okay. On free cash flow, if you please refer to slide number 19. We have given the definition, how we calculate the free cash flow.
It's EBITDA minus CapEx, and this is not cash CapEx, this is the CapEx which has been capitalized in the books, therefore, generating operating free cash flow. We take cash interest and cash tax and changes in working capital, therefore, arrive at free cash flow. This is the methodology which is adopted and which will be consistent as we go forward. In terms of whether this cash flow generation, how it will be considered in future, of course, we have two things to mention here. One, our EBITDA growth, consistent EBITDA margin expansion, and the CapEx, as I mentioned in my earlier presentation, overall CapEx for the full year, we are looking at about $650 million-$700 million. With these two, EBITDA margin expansion and stable CapEx, we expect to continue expanding our free cash flow generation.
Okay. Thank you. Sorry, just to follow up. On the change in working capital, this improved creditor balances, do you have any view in the future, or? Thank you.
Yeah. The benefit of our working capital position was largely driven by the higher creditor balance, mostly as a result of phasing of payment. Therefore, I expect the benefits generated from our working capital to moderate in the second half. As you understand that based on the different timing of payments, this can move up or downward. It will not have a very significant change overall in the free cash flow generation. Tax payments in first half is higher because of higher operating profit. We have to keep in mind that in the first half, most of our corporate tax are paid during the first half, therefore, higher cash outflow in terms of cash tax. Broadly, that's the way it is phased out.
From an overall perspective, we expect that this expansion of free cash flow should continue with the EBITDA expansion and the stable Capex.
Okay. Thank you very much.
Thank you. Our next question comes from the line of Dilya Ibragimova from Citi. Your line is now open.
Thank you. Hello. Thanks very much for the presentation, congratulations on the good set of results. One of my questions on working capital has been addressed. The second question I had was on the operational trends in West of Africa. If you could provide a few comments on when do you expect for things to turn into positive? Clearly, the improvement is there in the second quarter, but if you have any view on the change in the trends to the positive in terms of top-line growth. Thank you.
We've had some difficult times in West and Central Africa, basically both on the economic situation and also some delays that we've had compared to the rest of Africa, rest of the business where we have launched our 4G. Let me give you two, three things. As you rightly said, there is an improvement in quarter two in our performance. We have invested very heavily in 4G in the recent quarters. First half, we have launched in Niger, Chad, and DRC, and Congo Brazzaville. We see that data growth acceleration will continue to happen in the next few months and quarters. This, along with Mobile Money growth, should surely offset the revenue hit in voice revenue. We see this improvement continuing. It's a matter of conjecture as to by when it will start becoming positive, but we are continuously seeing a positive improvement in our growth pattern.
Thank you.
Should we proceed to our next question, sir?
Yes, please.
Thank you. Your next question comes from the line of Pavitra from Apollo. The line is now open. Please ask your question.
Yeah. Hi. Thanks a lot for the call. I have two questions, mostly on the debt. Firstly, I'm not sure if I understand correctly. You had this new Airtel Africa facility of around $2 billion, but subsequently, that was fully canceled. Now you're looking at new facilities in order to potentially repay the whole of the $2.7 billion of bonds outstanding. Can you just talk about why do you want to refinance those bonds? Is it purely to take away the parent guarantee? Also, since those bonds, they have a staggered maturity, right, from 2020, 2021, 2023, 2024. How would you be able to buy them back at this point in time? Would it be like a make whole, or have you thought about the bond prices at which you will buy them back? That's the first part of the question.
Second part of the question, if you can talk about the early repayment conditions that could be triggered on some of the bonds on account of the Supreme Court ruling. I know you talk about the $505 million of notes, which that one can, if there's a rating downgrade, then leverage covenants come into the picture. For the remaining notes, what are the early repayment conditions that could be triggered because of the Supreme Court ruling, if you can talk about that.
Okay. Let me address this $505 million of early repayment, which can trigger only in the event of any downgrading of the parent. Firstly, we have $1.45 billion of cash. Secondly, with reference to the $1 billion facility, which was quite expensive. We have canceled that, and we have enough facility in hand to make sure that in the event the other bond repayment triggers, we have sufficient facility by way of either underwriting a bond or additional facilities, loans, various other options which we have. We are pretty confident that in case that event triggers that we have to repay the whole bond, which is likely at this stage, except that $505 million. We are self-sufficient to sustain that repayment.
With reference to $505, I have explained this in my earlier presentation that we have enough facility cash in hand in case that event triggers. However, I must inform you at this stage, we are not worried or anxious about any such event triggering unless our colleagues in Airtel India, they are completing the entire judgment. Once that complete evaluation is done, then we will understand whether there is any event of triggering early repayment of this $505. Currently, we are absolutely confident and absolutely fine with our current liquidity situation. We should be able to sustain in case that event occurs of repayment of $505.
Okay. That's helpful. Okay, that one $505, that's fine. That's because there's a rating downward trigger. For the remaining bonds, what are those early redemption triggers connected to? Upon what conditions, if you can talk about that. The Supreme Court payment.
Yeah. The other bonds are not relating to anything of our parent company. It is more to do with a covenant which is there for $50 million default. Now, as you understand this group, there is no possibility of that kind of default arising of overall $50 million default across the group. Absolutely nothing to worry on that part. We have evaluated it very critically. Having said so, as I said, we have sufficient headroom of facilities available in hand in the remote case of that triggers for early repayment. We are sufficient, again, I'm repeating this, we have sufficient facilities, financial arrangements done in case that event triggers.
Okay, understood. It's more like a cross-default trigger.
Yes.
Okay, got it. The last question from me is, you mentioned that the $2 billion facility was very expensive and hence you canceled that. I mean, I'd just like to understand as to how is the alternative facility now cheaper than that?
Well, as I said, there are different type of facilities which is in hand. The term sheets are there in hand. Obviously, these are much, much cheaper than that facility. That's a little bit of details then we have to narrate. I can assure you that the new facilities are at a much lower cost or committed cost, I would say, than the earlier facility.
Okay. $1.5 billion of new facilities, right, that you have on hand?
We have in hand almost $1.8 billion of facilities.
Okay. There's $1.8 billion of facilities and $1.5 billion of cash, right?
Yes.
If you can talk about the future debt reduction plans, is it only tied to this $505 million because of that potential trigger? I mean, will that be the only debt reduction, or can we see some more debt reduction given that you have a significant amount of cash on the books? And then what's-
Yes
the minimum amount of cash that has to be maintained on the books?
Okay. overall debt reduction will be triggered by two event. One, as you see our EBITDA expansion, revenue growth, and flow-through in EBITDA. That's the first. If you look at even our current quarter result, there is a clear visible EBITDA expansion which is happening. Secondly, as I mentioned, there are still opportunities of asset monetization. In about five countries, towers are still there for handing over or sell to tower companies. Roughly about 4,500 towers are there. There are some active discussion which is going on in some of the places, which will be revealed if there is any material or any constructive discussion happens. Secondly, we have almost 35,000 kilometer of fiber. Again, that can be looked at monetization of the fiber.
Of course, we have data center and other some of the assets which can be monetized and some cash can be generated from there. We are actively working on those. That's one of the way of reducing the overall debt. EBITDA expansion, asset monetization, and a very tight control on the overall CapEx. These are the three things which will lead to, in future, the de-leveraging or improving the leverage on the net debt position.
Okay. That's really helpful. Sorry, I just want to ask, this $1.5 billion cash, how do you plan to use that? I mean, do you plan to reduce as much debt, like over the next six months or so? In the same way, like the $1.8 billion of facilities, do you plan to use that to refinance some of the bonds? Or is that just like a standby facility sort of a thing?
Well, this is all dependent on certain conditions. Broadly, we have a plan of using this 1.5 to reduce the overall debt position, because anyway, this cash is available. As we go forward, we will decide on utilize this for the debt repayment. As you see that we have enough free cash flow available to sustain our normal operations. We don't have to worry about that at all. This cash, along with other facilities, will be drawn as and when it is needed. This cash will be definitely utilized for reducing the overall debt level.
Okay. Got it. Thank you so much. Thanks a lot.
Thank you once again. Should you wish to ask a question, you may press star and one on your telephone keypad. Our next question comes from the line of Johnathan Kennedy-Good from Vergent Asset Management. The line is now open. Please ask your question.
Hello. Hi. Thank you for the presentation. My first question is on Mobile Money. I believe this makes up around 9% of your overall revenue. Could we get a breakdown on this on a country-by-country basis? Secondly, this would be on the data pricing environment in East Africa. I believe recently Safaricom decided to lower the data prices by around 33%. Are you seeing any impact on this on your business, and are you looking to follow a similar move? Thank you.
Firstly, on Mobile Money, we have revealed or presented even in the presentation, the various penetration in various countries. Beyond that, we would not go down to reporting country-wise performance and revenues on Money at this stage. Coming to your second question on Safaricom, this has happened a couple of days back. In the last few quarters and years, we've been growing quite aggressively in Kenya. I think we have the right pricing for our customers. We have built a strong trust with our customers. This is one of these moves by the competition, and I'm sure we will evaluate and do whatever is relevant to ensure that our customers continue to be happy with us and stay with us.
Understood. Just finally, on regards to the level of debt that you currently have guaranteed by the Airtel Group, at what rate of interest are you currently servicing this debt at?
Average cost is about 4.85.
Thank you. That's all from here.
Thank you. Our next question comes from the line of Tajudeen Ibrahim from Chapel Hill Denham. The line is now open. Please ask your question.
Thank you for the presentation. I have two questions. The first is around the USSD issue in Nigeria between the banks and the telco companies. Can you add a bit of color around that issue and how we should expect it to be resolved, particularly in terms of billing the users and what the CBN or probably the NCC is likely to do? That's one. Two is, can you give us a sense around the overdraft in the book, secured overdraft of around $208 million. Can you give us some sense around which region is the major driver of that bank? I mean the unsecured of $208 million. Can you give us a sense around which region is driving that? Is it the East Africa, rest of Africa or Nigeria? Thank you.
Thank you for the question. USSD channel is a very scarce resource, and is used for voice calls, can also be used for financial services. There's a cost to the service. The issue that we're discussing with all stakeholders, who's going to bear the cost? Should it be the telcos or the customers? I believe we're working with all regulators, the banks, for a fair solution. A solution that would support the financial inclusion agenda of the government, a solution that will work for the banks, a solution that will work for the telcos, and ultimately, that will deliver the best service to the customer. I'm very optimistic that we're going to find a solution that works for all stakeholders. That would ensure telcos continue to invest behind USSD to cater for increasing needs of the financially excluded, and also for increasing voice requirements of the customers.
I'm very optimistic that we'll find a solution that works for every stakeholder, including the Central Bank, the NCC, and our colleagues in the banking sector.
On the overdraft, I actually didn't understand the question. Can you just repeat the question, please?
The overdraft of $208 million, unsecured overdraft. I just want to understand which region, in terms of %, is driving that overdraft. Is it driven by Nigeria or driven by East Africa or driven by Rest of Africa?
Well, it is across all countries put together. This is the overdraft. As you can see that in 14 countries, the total overdraft, if you actually divide it by 14 countries, it will be very minuscule overdraft. These overdrafts are used for short-term funding, almost like the requirement which comes on a day-to-day basis. It goes up and down depending on the requirement. Broadly, it is broad-based across all operating units. Not really a very large amount in any such country. It's widely spread.
Okay. Thank you.
Thank you. Once again, if you have questions, please press star and one on your telephone keypad. Our next question comes from the line of Kelvin Heng from PineBridge. Please go ahead.
Hi, gentlemen. Most of my questions were actually already covered by Pavitra earlier. Just on the issue of the cash balance, just looking at it in another way. I'm just curious if the idea is to keep this on hand to, say, address the maturities of the bonds as they're coming due, or would you perhaps take a, say, a more proactive approach to say tender for some of the higher coupon bonds in the market? Particularly, I'm thinking about on your balance sheet, there's a 2024 US dollar bonds, which is probably your most expensive tranche. I'm just curious if that's something that you would explore.
Hi, this is Pierre. Obviously, as this new situation has arisen, we will look at every option on the table. In terms of bond repayment, it's still the intention to use some, if not all of that cash to continue to repay the bonds, there is a project on the way on how to do that. Obviously, we continue to fully assess the situation.
Just to add to what Pierre said, as I explained earlier, as you see that our operational requirement of additional funding is, if you see from an overall perspective, we are positive free cash flow, positive operating free cash flow, EBITDA expansion happening. From that perspective, we are self-sufficient to take care of our Capex investment or tax or interest servicing. Those are self-sufficient. This cash, as Pierre said, we are evaluating various options. Also, as and when the bonds are falling due, that will be prioritized. We will evaluate all the options which we have to see how to best utilize this cash.
Got it. Thank you very much. Just given the issues that we have seen arising in India with regards to the Supreme Court ruling on the AGR. To the degree that there is significant levy that might be placed on that business, is it at all possible we could see some of that cash at the Airtel Africa level being allocated back to India, earmarked to support that?
No. Absolutely not. I don't think that is anywhere in the horizon. As I said in the beginning, that in case of that remote eventuality, that $505 million, if we have to pay back, we are self-sufficient to pay back that money or pay that bond off. Absolutely, other than that, there is no other impact at Airtel Africa level.
Got it. That's very clear. Thank you.
Thank you.