By Allan Olingo

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Airtel Africa’s profit after tax for the quarter ended March almost tripled to $154.52 million, from $57.5 million in the last quarter of 2016-17. This is the second positive margin in the telcos’ eight years of operations on the continent.

“Africa revenues grew by 10.7 per cent year-on-year led by strong growth in data and Airtel money transaction value. Mobile data traffic has grown by 88 per cent to 70 billion megabytes in the quarter as compared with 37 billion MBs in the corresponding quarter last year.

“Data customers increased by 48 per cent to 24.9 million from16.9 million in the corresponding quarter last year,” said Airtel Africa chief executive Raghunath Mandava.

The telco was in the news last year amid rumours that it was contemplating exiting the African business altogether.

In 2017, Bharti Airtel’s chairman Sunil Mittal admitted that the telcos operations in Africa had not been as successful as anticipated, which had seen it exit several markets in West Africa, either through sell offs or mergers.

“Our operations in the 15 African countries haven’t been a successful experiment and we now need a change of strategy,” said Mr Mittal.

Merger

Last month, Airtel Kenya’s unit was said to be considering a merger with Telkom Kenya. However, in December, Airtel said it was committed to the long term viability of its operations in Kenya and Tanzania, to ensure that in 2018 all its15 operations in Africa started contributing positive margins.

“There are a couple of countries where we were not a leader or a close number two and we said we will try and make structural corrections. Ghana was one, Rwanda is another. When anything happens, we will let you know,” Mr Mandava said on the merger discussions.

The firm attributed the profit increase to lower interest on its finance costs.

“We had a tax assessment settlement in Nigeria, which resulted in interest not charged on the VAT,” said Airtel chief finance officer for Africa Jaideep Paul.

Airtel Africa also saw a rise in the active Airtel Money customer base to 11.5 million, boosting the total transaction value on its money platform by 45 per cent to $5.6 billion.

During the quarter, Bharti Airtel acquired Tigo Rwanda, a transaction that is said to have been completed at the end of January this year.

Its Africa average revenue per user, a key performance metric, fell by 1.8 per cent to $3 year-on-year. As at the end of March this year, Airtel Africa had a data customer base of 24.9 million, accounting for 27.9 per cent of the total customer base compared with 22 per cent in the previous year.

Airtel global chief financial officer Nilanjan Roy said that the steady improvement across the top and bottom-line on the African operations was driven by the twin engines of data and mobile money, underpinned by strict cost controls.

“We have seen a net revenue growth of 13.4 per cent year-on-year, while the operations expenditure has declined 5.4 per cent in the past year. The business has entered into a sustainable positive cashflow era, which gives us confidence that the investment rationale seven years ago is still valid today,” said Mr Roy.

“Our strategy in Africa is centred on strengthening our distribution model and enhancing the consumer experience via network modernisation.”