Airtel Africa Aims To Be Continents Biggest Telco: CEO

Would you call Airtel Africa’s debt position comfortable?

When we did our IPO in 2019, the leverage was 3X, and now it’s 1.3X—that’s a very comfortable position for a mobile network operator to be in. We’ve got a twin policy: one, reducing foreign currency debt at the hold co (holding company) since we don’t have revenues getting generated, and two: moving debt to local op cos (operating companies) where we have the flexibility of writing off interest expense against revenues. So we won’t be taking on any long-term foreign currency debt. We’ve prepaid $450 million of the $1 billion bond outstanding, leaving only $550 million, which we will try to prepay earlier than the March 2024 deadline.

What kind of upside are you expecting in Africa?

There are three clear indices, which show a very long runway to growth. Firstly, the level of SIM card penetration in Africa is still south of 50%. Secondly, the fastest growing population in the world and thirdly, the consumption of minutes is between 199-270, compared to 600 in India. We’re sitting on three legs of growth—voice, data and Airtel Money—that are continuing to grow, and of them, data and money are growing in double digits. We’re not just growing in Africa. We’re growing profitably.

How do you plan to close the gap with MTN?

We’re already No. 1 in a few countries, like Zambia and Niger, on par in Uganda. We’re No. 2 in many countries, such as Nigeria. We don’t want to remain No. 2 forever. We’re ready to be No 1. My aspiration is to be No. 1 in as many markets. If you look at our journey in the last 10 years, we’re very stable ownership, and we’ve developed a very clear strategy that is working on six pillars—network, distribution, data, money, cost reduction and people. MTN got in much before us; they’ve been stable for a long time. We came in late, we took over several badly performing businesses, and we’re proud of what we’ve achieved, especially in the last five years.

Aren’t inflation and currency devaluation headwinds?

Yes, we underestimated the impact of inflation. It not only impacted customer wallets but also damaged our opex (operating expenses) structure. We’re making changes to mitigate the impact on costs of operation because most of our sites are powered by diesel, and the cost of business in some countries has gone up 3X. The impact of oil is huge on the bottom line. We’re re-negotiating with our tower partners to pass on only a part of the cost increase in return for the commitment of new rollouts. Also, we’re moving away from fossil fuels. Also, we’re removing non-revenue impacting operating expenses such as postponing recruitments in non-critical areas.