Airtel Tanzania will pay out more than $12 million to the government for its high speed internet (4G) licence, the company said in its latest financial update.
The telecommunications firm intends to more than double the number of its 4G network sites following issuance of the permit.
Bharti Airtel, its Indian-based parent company, says in its financial results for the nine months to December last year that the Tanzanian unit has also been allocated additional frequency spectrum at an annual fee of $600,000.
“Airtel Tanzania has been authorised by the Tanzania Communications Regulatory Authority to use 10MHz in the 700MHz band for eight months. The licence of 700MHz band will be issued post completion of a total of $12 million payment to the regulatory authorities in June 2020,” Bharti Africa said in the update.
Airtel rolled out its 4G network in the country last November under an eight-month provisional licence subject to completion of the payment, after which it plans to expand to 25 other towns.
The firm’s regional units — Uganda, Zambia, Tanzania, Kenya, Malawi — posted a 7.5 per cent revenue growth in the nine-months to December 2019.
“All countries delivered a solid performance and contributed to revenue growth, with the exception of Rwanda,” said Airtel.
Capital expenditure in the region rose to $93 million from $72 million in the previous period, the bulk of which was spent on network modernisation.
Bharti Africa chief executive officer Raghunath Mandava said revenue growth increased as a result of improved performance in the rest of Africa, supported by good results in Nigeria and East Africa.
“This is now the eighth consecutive quarter that we have delivered double-digit revenue growth. This set of strong results further demonstrates our ongoing ability to deliver against the opportunities offered by the markets in which we operate,” Mr Mandava said.
Voice revenue went up 4.5 per cent from $154 million to $161 million, largely driven by customer growth of 11.4 per cent and an increased usage per customer of 14.1 per cent.
Data revenue, the emerging mining field for African telcos, increased by 17.4 per cent to $12.9 million from $10.8 million.
Bharti Airtel Africa attributed the growth to an increase in the data customer base, up 19.4 per cent, and an increase in data usage per customer, up 55.1 per cent.
“The growth was supported by the roll-out of the 4G network. Smartphone penetration was up 2.6 per cent,” the telco said, adding that in the nine-month period data sales accounted for 25.2 per cent of total revenue in East Africa. “The improvement in data revenue growth was mainly driven by Kenya, Malawi and Zambia as a result of increased 4G data usage, up almost four times.”
Airtel also saw its regional units’ mobile money revenue increase by 44.1 per cent, driven by customer base growth of 19.9 per cent and transaction value per customer growth of 23.1 per cent.
“We continued to expand the mobile money distribution network increasing the number of agents, kiosks and Airtel Money branches. In the three months to December, the year on year expansion slowed compared with the same period in the prior year which benefited from extensive distribution roll out in Zambia and Tanzania,” Airtel said.
HIGH OPERATING EXPENSES
The firm’s East African units’ earnings-before-tax margin dropped in the last three months of 2019 due to an increase in operating expenses from investment in network expansion and higher marketing spend. “The exceptional item in the nine-month period to December 2019 benefited from $14 million one-off gain largely as a result of reassessment of life of customers leading to a deferment of customer acquisition costs,” the company said.
Airtel also saw the capital expenditure amounting to $115 million, slightly lower than the prior period of $133 million, as a large part of the network modernisation in East Africa was completed in the previous year. As a result of lower capex and higher underlying earnings before tax, Airtel’s East African units’ operating free cash flow amounted to $239 million, up 26.2 per cent.
In the nine months, Airtel increased its towers in the region by 492 to 8,838 as at the end of 2018. It increased its foothold on leased towers during this period by 442, with the other 50 towers owned by Airtel Africa.
Bharti Airtel’s revenue increased by 9.9 per cent to $2.52 billion for the nine-month period ended December last year, while its earnings before tax rose by 13.2 per cent to $1.11 billion. Free cash flow almost doubled to $391 million.