Airtel Africa Q3 result: Net profit slumps 23% YoY on higher tax outgo

Bharti Airtel’s Africa unit reported a net profit of $103 million (Rs 735 crore) in the quarter ended December 31, a 23 per cent fall from $133 million in the same period a year before.

The decline in the third quarter (Q3) was mainly on account of higher tax payment, of $95 million against $13 million in the corresponding earlier period. Operating profit for the telecom entity rose 24 per cent to $399 million. 

“Revenue growth accelerated in Q3 to 14.2 per cent, as a result of improved performance in the Rest of Africa, supported by solid results in Nigeria and East Africa. This is now the eighth consecutive quarter that we have delivered double-digit revenue growth and Ebitda (operating earings) margin expansion in constant currency,” said Raghunath Mandava, chief executive officer, Airtel Africa.

Goldman Sachs, the global research firm, expects the operating profit to grow at an annualised 10 per cent from 2018-19 to 2023-24. Airtel Africa said the group’s parent company had raised $3 billion in capital through a mix of of qualified institutional equity placement and convertible bond offerings. This had “reduced the level of uncertainty about the ability of the group’s intermediate parent company to comply” with the recent Supreme Court judgment on statutory dues. “As a result, the directors have concluded that the previously highlighted material uncertainty around the group’s ability to continue as a going concern no longer exists and that the group has adequate committed and non-committed facilities to operate as a going concern.”

Revenue for the quarter at $883 million was 12.8 per cent higher (and 14.2 per cent higher on a constant currency basis). Revenue in voice, data and mobile money rose 3.9 per cent, 39 per cent and 40.4 per cent, respectively, in constant currency. “Revenue increased by 9.9 per cent to $2,522 million for the nine-month period ended December 31,” the company said.

The company said the total tax charge for the period was $170 million, as compared to a tax credit of $111 million in the same period a year earlier, as a result of higher operating profit and withholding tax on dividends — Airtel Nigeria, its largest and most profitable market, declared a first dividend.

“In addition, the prior year period benefited from one-off items which included deferred tax recognition in Nigeria of $170 million and a reversal of tax provision of $55 million,” it said. Back in India, the Supeme Court has decided that telecos owe the government a cumulative Rs 92,642 crore in licence fee and another Rs 55,054 crore in spectrum usage charges. In October, the court held that non-core revenues have to be considered for calculating these statutory dues.

For Bharti Airtel, the liabilities add to Rs 35,586 crore, of which Rs 21,682 crore is licence fee and Rs 13,904 crore is the spectrum usage charge dues. It, Vodafone Idea and Tata Teleservices have jointly applied to the apex court for more time to pay these dues. 
In a post-earnings analyst meeting, Mandava said merger of the company’s Kenyan unit with Telkom Kenya was in process. The agremeent to do so was signed in February 2019, mainly to counter Safaricom, market leader in that country.

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