Airtel Africa Plc

Thank you. Hello, everyone, and thank you all for joining us today.

Let me give you some brief highlights before [indiscernible] Jaideep Paul who is our CFO. I'm very pleased that despite macroeconomic challenges, we have continued to deliver strategically, operationally and financially over the last 6 months.

This is supported by a sustainability framework, which is core to our company's focus. Strategically, the key highlight is that we continue to invest for future growth.

We have increased our CapEx. And for that, we invested in spectrum across a number of our key markets.

In Nigeria, our largest market, we have launched a commercial rollout of the mobile money service called Smartcash, which will drive financial inclusion across the country and supplement future growth. Operationally, we continue to expand our customer base, grow our ARPU and increased 4G network coverage.

Both mobile money and data continue to be our growth engine, although voice continues to grow in double-digit as well. Financially, I will let Jaideep talk through the details, but at a very advance level, we continue to deliver double-digit revenue growth in reported currency and further EBITDA margin expansion.

We continue to strengthen our balance sheet by an early redemption of HoldCo debt, [indiscernible] declared an interline dividend. [indiscernible] over-the-year, reflecting very solid trends.

As importantly today, we have published our first sustainability report. Slide 4 please, compares our performance versus our major objectives.

Since the IPO, you can see we're on track, we'll perform better in all respects. Let me move now onto Jaideep to run through our financial performance over the last 6 months.

Jaideep, please?

Thank you, Segun, and good afternoon, good morning to all of you. Let me start with key financial highlights.

Slide #6. In overall terms, we have delivered a good set of results for the first half of the year.

We continued our revenue growth momentum and EBITDA margin expansion. Revenue growth for the half year was 16.9% with Q2 growth accelerating to 18.5% in constant currency.

EBITDA grew by 17.8% in constant currency and EBITDA margin was at 48.9%, an improvement of 38 basis points in constant currency from the prior period. The first half of the year was impacted by higher ForEx and derivative losses of about $160 million, resulting in a $0.07 decline in earnings per share, which came in at $0.068.

Our balance sheet position was continued to strengthen our leverage ratio improved to 1.3x from 1.5x in the prior period. The Board has declared an interim dividend of $0.0218 per share.

Coming to the consolidated regional performance. Revenue in Nigeria grew by almost 20%, supported by both customer base growth of 14.5% and outgrowth of 6.8%, despite NIM-related barring of voice outgoing calls.

EBITDA margin for Nigeria was 50.7%, lower by 422 basis points in constant currency, primarily impacted by rising fuel prices. In East Africa, revenue grew by more than 16% with an EBITDA growth of over 20%.

Margin reached 52.1%, an improvement of 168 basis points in constant currency. In Francophone Africa, revenue grew by 13% and EBITDA grew by 23% in positive currency with an EBITDA margin of 47.9%, increasing by 397 basis points.

However, normalizing for the one-off benefit in Q2, the margin was about 44.7%. Coming to mobile service performance.

Our mobile customer base grew by almost 10%, supported by growth across all regions. Nigeria grew by 14.5%, East Africa by 8%, and Francophone Africa by 6%.

Mobile Services ARPU was $2.9 per customer per month, growing by 5.9% compared to the prior period, primarily attributable to data ARPU growth. Revenue for the first half of the year was $2.3 billion, which grew by 15.6% in constant currency.

EBITDA was $1.1 billion, grew by 11.2% in reported currency and 15.1% in constant currency with an EBITDA margin of 49%, which is in line with our [ drive today ]. Coming to performance of mobile money.

Our mobile money customer base grew by 24%. Transaction value per customer increased by over 9%, resulted in a 32% increase in the transaction value to $40 billion for the first half of the year.

Our Q2 annualized transaction value now stands at $86 billion. Revenue for the half year was $332 billion, a growth of 29.5% in constant currency.

EBITDA was $165 million, growing by almost 25% in constant currency with an EBITDA margin of 49.6%. The drop in mobile money EBITDA margin was primarily due to kicking in of expenditure in Nigeria PSB operations, including the Smartcash launch.

Coming to the next slide. All our key service segments of voice, data, and mobile money contributed to 16.9% revenue growth in constant currency.

Revenue in reported currency grew by 12.9%. The differential growth rate between constant currency and reported currency was due to currency devaluation, mainly in Nigeria Naira, Central African Franc, Kenyan and Ugandan shilling and Malawian Kwacha and partially offset by appreciation in Zambia kwacha.

On the next slide, we show the group EBITDA growing by 14.3% in reported currency to almost $1.26 billion. EBITDA has been adversely impacted by $37 million as a result of currency devaluation discussed previously.

The EBITDA margin was at 48.9%, an improvement of 38 basis points in constant currency. The improvement in margin was led by both revenue growth and slight improvement in operational efficiencies alongside disciplined cost control, which offset the rise in energy cost and inflationary cost pressure.

Coming to the EPS. Operationally, we are happy with our performance with double-digit growth in revenue and operating profit.

However, FX has impacted foreign currency devaluation has impacted our EPS. Foreign exchange and derivative losses were higher by $160 million as a result of $31 million derivative losses and $147 million impact from the restatement of foreign currency liabilities across our OpCs.

In particular, Nigeria Naira devaluation had an impact of $30 million. CFA devaluation, Central African Franc devaluation impact of $45 million, and the balance came from the valuation of Malawian Kwacha, Ugandan shilling and Kenyan shilling.

After normalizing the net impact of this ForEx and derivative losses, the EPS before exceptional item and excluding the ForEx impact, the EPS would have been $0.098, an increase of almost 21%. Coming to the normalized free cash flow.

During the first half of the year, we have generated $394 million of cash from operations post-tax, out of which $195 million was reinvested for our future growth. Hence, our normalized FCF.

For the first half of the year was $173 million. Coming to our balance sheet.

We continue to strengthen our balance sheet by firstly, reducing our foreign currency debt, especially at a HoldCo level. We have repaid bonds of $1 billion over the last 12 months as a result of strong cash upstream from our OpCos and proceeds received from the minority investment in mobile money and tower sales.

As you can see, our upstreaming potential is very diversified across all regions, not making us overly reliant on a specific region. Secondly, our OpCo market date increased by 34% to over $1.4 billion, in line with our strategy to push down the debt at the OpCo level.

Group leverage has improved to 1.3x compared to 1.5x in the prior period. The total weighted average interest rate was 6.4% vis-a-vis 5.5% in the prior period due to increase in base rate, increase in local currency OpCo date and the repayment of HoldCo bond, which had a lower rate.

Our capital allocation policy remains unchanged. As mentioned earlier, our priority remains to invest in the business and at the same time, aim to further strengthen the balance sheet.

Secondly, to return cash to shareholders through a progressive dividend policy. As mentioned earlier, the Board has declared an interim dividend of $0.0218 per share, in line with the existing dividend policy.

As you can see in this chart, we have invested $310 million in tangible CapEx during the first half of the year. In addition to this, we have also invested $82 million for the purchase of spectrum in Kenya and DRC.

And in October, an additional investment of $89 million was made for spectrum in Zambia and Tanzania. 91% of our CapEx investment is geared towards growth initiatives, which combined with the spectrum purchases, ensures a strong, reliable, and resilient network services for the future.

Our investment decisions - coming to the next slide, our investment decisions are made only if they meet stringent return criteria, which is clearly reflected in the trend of our return on capital employed highlighted in the chart above. ROCE improved 390 basis points during the year and almost 9 percentage points in the last 2 years to reach 23.5%.

I'll now hand over to Segun for strategic and operational update. Thank you.

Thank you, Jaideep. It will be very helpful to provide some context around the very strong financial performance that Jaideep had just presented.

We and the industry, we're not [ limited ] in macro and geopolitical challenges that are very apparent across the world. However, we have adopted various initiatives to mitigate against these challenges.

Macroeconomic pressures have continued to impact consumers across all of our markets. Telecom is considered an essential service.

both affordable, targeted offerings, we have been able to drive increased customer growth and higher usage, ultimately resulting in accelerating revenue growth in Q2. Our ARPU is not driven by price increases.

Inflationary pressures, especially rise in energy cost has been particularly challenging. We have an embedded culture within our various OpCos to continue to seek out efficiencies with the result being an expansion in EBITDA margin despite these factors.

Currency volatility across the region is not something new. There is something we can control, but our strong constant currency performance, as sensor double-digit reported revenue and EBITDA growth.

And finally, FX liquidity remains a challenge in some of our markets, but we have succeeded in semi-significant cash from OpCos to derisk our balance sheet. Slide #20 shows our group strategy remains unchanged.

This strategy is clearly working. However, we're not resting on average but instead, we continue to see ways to enhance our service offerings to transform their lives, which is a fundamental pillar of our growth strategy.

We continue to deliver double-digit revenue growth across all 3 service offerings, voice, data, and mobile money. In an environment impacted by very inflation, we continue to offer affordable services with our growth algorithm, [ incongruent ] customers, and usage in what are very underpenetrated markets.

Slide 22 provides a snapshot of device opportunity. We're supposed to market with some of the strongest population [ world trades ] in the world as well as some of the most future populations, this, combined with very low levels of good benefition across our markets, provide significant scope for growth.

We also see significant usage upside as it remains way below [ Globale TS ]. Very key to confer this opportunity is to continue to stand the coverage of the network as far as our distribution reach and provide affordable offerings.

The positive structural demand dynamics for voice on the pace, our very strong vice revenue growth, which resulted in 2% growth for the group. All of our regions reported double-digit constant currency revenue growth.

In Nigeria, base revenues and ARPU was impacted by the NI registration requirements. However, we have seen voice revenue growth accelerated to 13% in the second quarter.

Invoices are under benefited service. Data is even more so as only take 6% of our customers or data customers, less than half of which is 4G.

Only 16% of our total customer base is on 4G, we continue to invest into our network to increase the breadth and depth of our 4G network, which has resulted in a 14 percentage point increase in 4G penetration of data customers over the last 2 years. However, with financial set below 50%, we see each scope of further upside, particularly almost 90% of our size can of 4G services to customers.

The consumption of data services across our data customer base also remains very low in the global context, reflecting the scale of the opportunity. Rising 4G penetration on coverage, combined with transparent and affordable offerings, we provide a foundation for considerable growth in the future.

[ Different air ] on data revenues, Slide 25, our strategy is working as we delivered double-digit revenue growth across all 3 regions, driven by both ARPU and customer growth. Slide 26.

Just an overview of our mobile money business. The key to mobile money remains the provision of our core services in an assured manner that builds trust, crude ease of use, and confidence with our focus on float availability.

So customers know they can assess their cash with ease as and when they need it. Alongside this call, we continue to develop our ecosystem of financial services for emerging and more [ solicited ] services.

We have been able to increase mobile money penetration in near one of our markets. In 4 countries, we are beneficiaries way over 50%.

And there are several more where we believe we can significantly grow penetration. Slide 27, [ we still ] continued evolution of our mobile money ecosystem.

We're assisting the digital wallet casing and cash-out services as the major source of mobile money that the new, and there is a very hedged potential for this from increasing our penetration with new customers, but there is also a continued diversification of the business towards additional payment solutions and also more sophisticated financial services. This slide, Slide #28.

Reflect on the successes achieved to date in our mobile money business and our strategies to drive future revenue growth. The foundation behind the strong growth in border transaction value and ARPU is confidence in the plan.

Furthermore, the expansion of our distribution network continues to bring new customers onto the platform, particularly in more rural areas. The increased services on [ NOVA ] across the platform, supported by our strong partnership ecosystem will add to transaction frequency and further support continued growth.

The results have been very encouraging with double-digit growth across good - the East Africa and Franco for regions. Slide #31.

I like the opportunity from a new full PSD, our mobile money business in Nigeria, where we are very strongly positioned. Nigeria is a market with over 200 million people, an agility of $400 billion, which on bank population [indiscernible] 55% of [ partners ].

Our very strong presence across the market alongside our investment into distribution network position us well to maximize the opportunity to available to us. As the survey in Nigeria pointed out, the majority of responders indicated, the main reason why they do not with bank account was because of cost in the service offer and the lack of availability of the service.

Solving these 2 issues are the bedrock of our strategy as we invest in our distribution network over 31,000 exclusive agents so far and in technology and systems to ensure that customers as well as the agents are confident in the security of their data as well as the safety of the cash. Slide 30.

[ Page for ] sustainability strategy, which was launched ago. It was based on our 4 key pillars and demonstrates our contribution of 6 of the UN sustainable development goals, which we believe we can have the biggest impacts.

We are delighted to announce that our fourth sustainability report 2022 has been published today. This is a very, very important milestone for Airtel Africa.

As our first time [ below ] sustainability report, it shows the first step taking to achieve the ambitious growth, which offset a year ago. The report covers in January last year and proves an update on our progress towards delivering on goals and targets.

It describes our alignment with ESG-supporting framework and standards. In this slide, we summarize the key highlights that are fully detailed in the report, and I look forward to continuing to report on our progress on sustainability, which remains a core part of our strategy.

And lastly from me, on Slide 32, a few words on summary and outlook. As I've seen from our results, our focus has contributed to strong operation and financial performance, and we continue to demonstrate positive developments on nearly every key metric.

Our near-term focus, we remain on investing in our network and [indiscernible] funding the distribution to be closer to our customers, while at the same time, building new services for future growth, such as the rollout of our Nigerian mobile money business. We remain mindful of the currency and [ reparational ] risk, which is likely outside of our control.

But these results continue to demonstrate the effectiveness of our strategy, sound execution and the resilience of our business despite on such macroeconomic environment. For the remainder of the financial year, we anticipate sourcing growth in the business alongside EBITDA major resilience.

And with that, a lot of time all of my attention to you. I will now open the floor for questions.

Thank you.

Just a couple for me, please, if I can. The first one, if you could just help us understand a bit more about the total energy cost that you have?

And how much that's actually going up and things like the extent to which you hedge, how many -- how much energy are you using gigawatt hours, what's happening -- so some more detail really in terms of the energy consumption and costs and hedging will be helpful. And then just a second question on mobile money.

I'm seeing some signs of maybe wave retrenching a little bit. You mentioned being perhaps not quite so disruptive as they were.

So if you could provide a bit of commentary in terms of how you're seeing some of the competition in these markets. That would be very helpful.

[ Can you repeat ] your question on mobile money, please? [ Can I hear ] your question on the questions on mobile money?

It wasn't very clear.

The question was unclear. Okay, sorry.

Shall I try again?

Yes, please.

Okay. So on mobile money, if you could talk a bit about the levels of competition from some of the disruptive entrants that will be helpful.

I read some articles about new entrant called Wave that was maybe retrenching and cutting back a bit in some of their new markets. So some commentary on the competition on mobile money would be helpful.

Let me talk about the countries where we have some fintech players that are competing with us. Specifically, if you look at Uganda where you have Wave, we see a major competitor to us in Uganda.

But if you look at the ecosystem, the customer base that we have, we've [indiscernible] done. We have a different set of advantages, which position us way beyond the typical fintech of operators.

One, we have the capturing customer base in our GSM network. 2, we have a lot of analytics.

And 3, we have very deep distribution infrastructure. In most of our countries, the primary influence into financial system is through the Asian infrastructure, and we develop a very widely Asian infrastructure to capture a lot of our customers and to onboard our customers into the financial system.

To the very large extent, we do have a very different profile and a very different set of competitive advantages in this market for those [ on bank ]. Beyond those banks, we're also going to sell an advanced financial services, we're offering loan for those.

We offer investment to those insurance products to the customer base. So the sales are quite different for us, and I'm very confident that we stand a very good chance of winning in the various markets where we are competing against the fintech companies.

We're very strong in distribution. We're very strong in offering the advanced products like savings, loans, and investments.

Combine this together with a unique set of competitive advantages of [ adding ]. [ Jaideep ], if you want to...

The first question, if I understand, the first point is on the derivative loss or the way we do our hedging and therefore, the cost associated for that. So we entered into several derivative instruments across our of course for different reasons, including hedging against our exposure on sourcing foreign currency.

And the example of derivatives that we use for deliverable forwards, non-deliverable forwards, cross-currency swaps, options, et cetera. These derivative instruments are mark-to-market at every period.

And while in the past, we had some gains. This time around, we suffered losses.

And the impact of that restatement is about $30 million on the overall outstanding derivative instrument of net of $365 million. Now coming to the other part of the question on the fuel.

So on the margin compression, actually, primarily, if you see Nigeria margin compression has come out because of the fuel price increase, and that was the main driver. We have had an increase in the fuel price from about 300 Naira per liter in quarter 4 last financial year, which was January, February, March vis-a-vis 750 Naira in quarter 2 this year, which is July, August, September, which is more than 120% increase in the price of fuel.

And this is the major driver of the compression of the margin. Not only in Nigeria, by the way, a few other countries in East Africa do experience this increase in the fuel cost.

But unlike Nigeria, most of the East African countries, the grid power availability is much better than Nigeria, which has resulted in much lower impact in the overall operating cost. Just to give you a flavor of the impact, a 10% increase in the fuel price in Nigeria from the current level may lead to network operating cost increased by 7%, so which is about -- roughly about $10 million a quarter.

That's the impact of 10% increase. Our total energy costs as a part of our overall OpEx is 27%.

And overall, if I take only network operating expenditure, network OpEx, then the percentage of fuel cost is about 52%. Hope that answers your question.

If I could just replay that back to you. So 27% of total OpEx revenues minus EBITDA is energy and 52% of network OpEx.

Apologies. Your voice is very distant.

It's very far away.

Sorry. Yes, if I can replay those numbers back to you because the audio is not great, maybe on my side.

But can I just replay back so 27% of OpEx, so revenues minus EBITDA is energy? Is that right?

27% of the total OpEx is our fuel cost.

Yes. And what -- and how much has it gone up in percentage terms, dollar terms, constant currency, anything is fine?

Yes. So as I mentioned that in Nigeria, the fuel price has gone up by 120% between this year Jan, Feb, March versus July, August, September.

So price was 300 Naira a liter, has moved up to 750 Naira a liter in this quarter. So that's the impact of the fuel price increase in Nigeria as well as in the overall [ Latika ] level.

Okay. I was looking for a group number, but if you don't have it, it's fine.

Just a couple of questions from my side. Firstly, trying to get more color on your Nigeria subscriber base.

There has been a slowdown in terms of net adds. This has been slow down sequentially.

I can't compare it with last year, given there was a KYC going on. Just wanted to understand, is there a seasonality or there is a competitive intensity that is growing in the market, that's the reason there has been a slowdown in the net adds?

Secondly, I wanted to understand the impact of bad SIM, which I believe is mostly on the voice revenue side. Now voice revenue is still increasing 11.9%.

If I include the other $26 million impact, does that mean that voice revenue growth was actually more than 25% in this quarter if you include the bad SIM impact as well?

Let me take the question about the net addition first, if you recollect, by the end of March, we got instructions from the government in Nigeria to disconnect the number of customers. As of September of this year, we connected about 5.7 million of those customers.

About 3 million is connected but with connected 5.7%. So we currently have over 5 million that are still bad.

It is very unlikely that this customer will come back. Hence, we are not very actively [ posting them ].

But what we've done is to enhance our distribution infrastructure to gain a lot more customers. If you look at our customer growth in India we're more or less back to normal trend.

So what after the net add was those customers that we couldn't get back because [ they did not name ]. But to replace them, we've gained a lot more customers.

So the net addition you see in Q2 is not represented by usual net addition. We're into Q3 now, we're beginning to sell an upsurge in gross starts that would be reflected in our Q3 numbers.

If you look at over customer growth for the group, we've grown customer business by almost 10%, 9.5%. And that is a reflection of our focus on expanding the customer base that has been the key driver of the growth in our revenues.

Got it. And any color in terms of when we can see any KPIs on mobile money in Nigeria?

On mobile money in Nigeria, we're very deliberate in how we'd like to address the market. Initial focus has been on creating trust in the brand.

And we focus on 2 key requirements. One is on the IT system.

Our second is on distribution system. We're very confident that we have the right IT system in place, very resilient that would give customers a lot of assurance that their money is safe.

We've now increased our [ discipline ] infrastructure. We bought almost 31,000 Nigerians, we are already to serve our customers.

So the initial cost throughput, one, creates a very stable platform; second, creates a very efficient field or focused distribution infrastructure. We've done both.

Now we're focusing attention on customer addition. And this is what going to be a been for us in Q3.

I have 2 questions again on Nigeria. Firstly, could you share the amount of cash you have been able to upstream from Nigeria in second quarter?

And if you have done any further cash upstreaming in the month of October? And if you could share the rates as well, how different they have been compared to the historical levels you have upstreamed that?

And second question is on the data revenues in Nigeria. If you could share what percentage of data revenues in Nigeria are coming from customers where the SIM NIM registrations haven't been completed or they have not been verified?

[ Let me turn the ] first question first . We operate in 40 countries.

And in the last 12 months, [ Airtel ] upstream over $1 billion, $1.1 billion was in the last 12 months. Out of this $1.1 billion, about [ $73 ] million came from Nigeria, for [ $34 ] million from East Africa, and Francophone [ $34 ] million.

So we actually have been very diversified source of streaming. So Nigeria alone is going to cause a lot of thing.

In the last 6 months as well, we [ been ]$500 million. Out of $500 million, about $100 million came from Nigeria, with the balance coming from [ Tetina ].

So you can see how diversified we are in terms of providing the balances at [ OpCo ] level. Of course, we do have challenges in Nigeria, but been able to use a number of instruments to upstream [ the months were ] mentioned, $10 million in the last 6 months and close to $400 million in the last 12 months.

We're not also too concerned about [ mirabilis ] in Nigeria. Nigeria is the largest [indiscernible].

We got a very strong appetite for growth in Nigeria. There are a lot of CapEx requirement in Nigeria, some are [indiscernible] nominated.

We are the major expenses we're going to make in the next couple of months in Nigeria in terms of demand for spectrum. In terms of the auction that has been announced by the government few days ago, the new option for 3.5 Giga spectrum.

So despite the amounts of [indiscernible] in Nigeria, we see require sufficient balances to continue the expansion of our business in Nigeria, mainly payment for spectrum and also investing behind the distribution and infrastructure in India. So we're not too worried.

And we're fairly confident that the structures we put in place will ensure the health of our business in Nigeria and net of each of our, of course, in the [ important ] countries where we operate in.

And the second question on data revenues?

If you look at the data revenues in Nigeria, we have got return avenues in Nigeria by about 2.7% in the first 6 months of the year. And in the last quarter, we actually grew by 9%, an acceleration for the first quarter, with more or less [ in gone ] through the beta customers [ who gone through ] the NIM.

Although despite the [indiscernible], you actually allows you receive phone calls and to actually engage in data session only buy them from making a [ green ] costs. So the impact on data revenue was not huge because this customer is good to access Internet on network immunity in part from making up going cost.

Exactly. That's why I'm wondering if these numbers get disconnected eventually, whether that will impact your data revenue trends in any case.

I think we've almost calculate of the impact. If you check most of those customers, they probably have a second SIM on our network, a second SIM somewhere.

Nigeria is a [indiscernible] country. So after 6 months, I believe that most of the customers were going to come to us with the [ NI Banco ] and the impact of the initial [indiscernible] out.

And my final question is on the pricing trend in Nigeria. Have you been able to push through any price increases in Nigeria?

I also saw some articles talking about government not approving some price hikes. So if you could talk about that, give some details what happened and what is likely to happen in the next a few quarters?

[ As a strategy ], we don't use any price to grow revenue. We grew revenue by growing volumes by expanding our customer base under [ turning ], we've done very well in the last quarter and the last half year.

Of course, where we are that very high levels of inflation, we missed selective require a price increase. But despite that, we do comply with all the good directions.

In Nigeria, we took a price increase, I believe, through as end of September. Sometime in October, the government axes to revise the price increase.

We have revised the price increase. We continue to engage regulators so that we can appropriately give price at in our offerings.

But as a policy or as a strategy, we don't really depend so much on pricing to grow our business. We focus more on base functions and on the final usage.

That is what we're going to continue to do as we engage the government for appropriate pricing when required.

Just to clarify, the instruction from the government, you do not see that as a risk to your growth outlook in the next quarter and so.

Like I said, I mean, we're very clear on our pillars of growth. One clear pillar that has worked for us in the past, but we're going to continue to drive on is on business expansion, customer growth, customer fees.

We continue to -- of course, pricing would add -- is it that without the pricing, we're not going to, I don't think so. Without the pricing, we still continue to grow, but we will engage government as an industry to reflect the inflation in the pricing formula for our [ crudes ]in Nigeria.

Just to add one more point on what Segun said. The quarter 2 growth of Nigeria, what you see here is without any price increase.

So the price increase impact was nothing actually practically nothing in quarter 2, and that tells us the growth story of Nigeria. And if you see the other KPIs, the customer base growth and the usage growth that is leading to the Nigeria growth.

Great. Okay.

So you are not worried about the government, let's say, fronting on the price increases headlines. So even if you don't get any price increases you are happy.

No, we are definitely looking forward for the price increase more to neutralize the impact of the inflation, fuel price increase, and so on and so forth. It will help us to restore back more than growth broadly the EBITDA margin if there is a price increase which happens.

And that's what we are looking for because the pressure is more on the OpEx side because of the fuel price increase and the inflationary pressure. So we'll be definitely looking forward to engage with the regulator and see if we can get a price increase.

But as far as growth, the organic basic growth is concerned, we are not very worried about the price increase or not price increase.

To totally summarize, is it nice to have? Is it [ most ] to have?

I don't think so, but we continue agreement with the government to find a few spots that works for us, works for government, and also the customers as well. But without pricing, we will continue to expand our business, grow our franchise in Nigeria and in each of the 4 countries where we operate.

And congratulations on your numbers. I have got 2 questions to ask.

The first is around the energy cost. And I remember the last time we were on this call with you, you said that management plans to work around the energy increase by working with tower companies to move the energy sources from [ disk ] to battery and solar power.

I would like it if you can give us an update on that front because it doesn't look like these surprises are going to moderate anytime soon. That's the first one.

The second one is around 5G license in Nigeria. I understand that there will be another auction in December of this year.

That is costing around $273.6 million. Should we expect you to be at that auction?

And how willing are you to ensure that you win at the option and have 5G on to compete favorably in Nigeria?

I'll take the second question first. On the 5-year action, it's going to be December [ thing if I recall it ], we're certainly going to beat, and we would put in an offer for the place that we believe that is relevant to the opportunity presented by 5G.

So definitely, we are going to be bidding in December for the [ spec ] to be auctioned by the general regulator. On your first question on fuel.

Nigeria is heavily dependent on diesel to towers. We've done a number of things to mitigate in part of a diesel increase on our business.

The first thing we did was to - [ in Nigeria ] 2 partners we have. So now we can share the cost being part of the increase.

We had an agreement with both of them. On the manner that not of the fuel price increase will be passed on to us.

We walk into that agreement now. The second thing we've done is to engage our partners, for now, to replace as some of the business generators with NID-friendly sources of power.

So with one of the partners. Most of the new sites we're going to be deploying in the country would actually be powered by a combination of solar, battery, and of course, very small levels of diesel power generator for emergency.

So that we've done. The third thing we're doing is to find out our way of reducing our energy requirements.

Like I mentioned to you, we launched our sustainability agenda about a year ago. Our first report is made in yesterday, and we also have some energy-saving [ recognition ] in pursuing to ensure that we reduce a couple of footprint and at the same time, reduce our dependence on diesel to power our operations.

So I don't see if I can ask a follow-on question around what the expected impact of this will be on -- that was the next financial year in terms of your energy costs. So assuming all these plans work out by how much do you envisage that you -- in terms of savings, but how much do you think you will save on energy cost from the next financial year onwards?

Jaideep, do you want to deliver this?

Yes. So at this stage, I'll not be able to give you a very specific guidance on that because we are still in the conversation with the Tower Co in terms of the cost-sharing formula for the enhancement or increase in the fuel price.

But as Segun mentioned, you can safely assume that all the new sites, which will be coming up to start with, will be coming with the higher battery backup and the solar or energy level. So that there, we should be able to reduce the cost by at least 10%, 15% - 10% to 20% from the existing normal consumption of diesel.

That's the aim for all the future sites. On the existing side, that's what we are negotiating and because obviously, on the existing side to change or install solar power, it requires for the Tower Co additional CapEx, additional cash outflow and so on and so forth.

So we are trying to come to an agreement on a formula of cost sharing and also the CapEx sharing model so that existing sites can also be converted into energy-efficient model. But probably by next quarter when we meet, we'll be able to give you a better guidance on this.

At this moment, we are still in conversation.

Sorry about that. I just want to return to the issue of cash repatriation from Nigeria, and thank you for sharing some of the statistics over the last year.

Obviously, there's a lot of concern in the market around dollar liquidity there and what is happening in the parallel market. And I'm just trying to understand, if you wanted to repatriate cash today, is the liquidity to do so?

And can you share when exactly last you did repatriate cash?

I've mentioned how much we've gotten out in the last 6 months, about $200 million and over the last 1 year from close to $400 million. In terms of sources of foreign exchange, we do sell the parallel market.

We don't go to search market to buy for [ foreign exchange ]. We work with international banks and we use a number of structures [ for foreign exchange ], legal structures.

Pricing may be different from price suffer by CBN. But these prices are negotiated bank to bank, bank to customer.

We don't access the parallel market for foreign exchange in Nigeria.

Okay. So you're not willing to share when last you repatriated cash?

We've given you how much money we reported that in the last 6 months. We did remit some money a month ago.

A month, we do we took some money out a month ago.

In the September.

September.

Yes. So [ Jaideep ], lots of questions.

Some of them have been already answered from Segun. Can you please explain what exactly what's driving the $30 million negative loss?

So $30 million derivative loss is somewhere linked to also Nigeria repatriation. So as Segun mentioned, that we do repatriation and also source dollar for meeting the vendor obligation because you know that most of our CapEx is in dollar.

So we use very, very structured instruments available through the banks, the forward deliverable, non-deliverable forwards cross currency swap and so on and so forth. And all this put together, there is obviously a liability for the derivative instrument, which is there in our financials.

Now those derivative instrument is mark-to-market, and we have to restate that every month. So some months, they can be gained, some months, they can be lost.

In this quarter, there is a loss because of the devaluation, and we did the mark-to-market of those $365 million of outstanding derivative instruments, and that is causing this $30 million of loss.

And we reached the bottom for EBITDA margins in Nigeria? Or do you see further downtime from these levels going forward?

Well, it's a difficult question to answer on the current context. But everything is dependent on the fuel price further, whether it will go up or it is stabilized.

And of course, as I mentioned that there's a constant effort engaging with the TowerCo to see how we can reduce the impact of the existing well project price rise and also mitigate the future impact by way of installing solar power and battery backup. This is the one big ticket item in our P&L.

Our practically, if you look around our entire cost increase, almost entire cost increase is coming out because of that. So it is difficult to state how the fuel price will move or what is the impact in the short term.

But in the medium to long term, we have our sustainability strategy of deploying alternative source of energy to reduce this impact.

And also let me add another few comments to [ analyze a growth ] study for us. If you look at the growth in the last quarter, we've increased revenue in constant currency by 21%.

And [ as year] is about 19.6%, almost 20%. So we balance both the growth opportunities and the cost pressure, we continue to find ways to mitigate the part of the cost structure.

But the important thing for us Nigeria's growth story. We continue to invest in and to capture the opportunities in the country.

And always on with the FX losses, you clarified this more of an accounting P&L impact or have any cash impact as well.

At this moment, this is accounting impact of restatement of all the liabilities, ForEx or hard currency denominated liabilities, which includes finance lease obligations, roughly 80% of our finance lease obligation is dollar-based. So we need to restate that.

Then as I mentioned, there are derivative instruments, then there are other vendor liability, which is in foreign currency. Those need to be restated as we encounter the devaluation in different countries.

So all put together, this devaluation impact is a restatement of all our liability in the - and that impact has come through the P&L, profit and loss account. But yes, when this gets mature, then obviously, we have to source dollar at the value currency and then pay dollar because as you know that our income, our 95% of our income or revenue is in local currency of respective porting operations.

And perhaps this one is for you, Segun. Could you share an update on 4G population coverage in Nigeria, in particular, in the other regions?

And overall, how high inflation environment influence our long-term pricing strategy and revenue growth.

Let me take the second question first. As I've said earlier, our growth story is based on volumes.

On volume driven by business function followed by usage growth. Those are the 2 clear metrics we use for driving growth.

We want to add a lot more customers. We wanted to use a lot more of our voice products, a lot more of our data products, a lot more of our mobile money products.

That's the mantra that we have. Of course, selectively, we look at opportunities for pricing.

But prices [ are at being the G&A enabler ] of our growth story. And if you look at our fundamentals of our footprint, where we operate in, in terms of customer penetration, still very low, 50%.

If you look at [ music ] levels, where are we talking about voice, we're talking about the data. We're talking about [ music ] very low.

So given the very low levels of penetration, very low levels of usage. Our strategy is to have affordable price point, economics to drive usage and ultimately use us to grow our top line.

In terms of 4G penetration, close to 80% of our sites on the average covered by 4G in some countries, Nigeria is almost 100%. Uganda is almost 100%.

And in Franco countries where we started expanding our 4G footprint late. We have about 60% of size covered by 4G.

So if you look at an average, it depends on where we are in our face. In most of the African countries, we've gone very, very far.

In Nigeria, almost all of our size, in Franco with between 60% and 70% coverage in terms of 4G.

And 2 more questions on Nigeria. Is there is any update on the biometric SIM registration in Nigeria?

And if you anticipate any risk to the business arising from the upcoming reactions. And finally, on the 5G license, whether it's payable - you know its payable in Naira local currency or dollars.

On the 5G license, spectrum is obviously in local currency in Nigeria. I don't expect it to be different.

I think the payment is going to be official stream rate on debt of payment, but a [ pet ] to continue. In terms of elections, we've gone through multiple cycles of election in Nigeria.

And I think Nigeria is [ my choice ] is democracy. I don't think the election should present any risk or any danger to business or to anyone in the country, I'm very optimistic that elections would come and go, and businesses would be survive the elections.

And did I miss anything?

Update on biometric...

On biometric, yes, we continue to use MINI mean to register new customers, that has no change. We fully compliant like [ OpCo ].

So nothing new on the NIM, you must have an NIM before you can acquire a SIM Card in Nigeria. And there once you have the NIM, we do have [indiscernible].

And Jaideep, you ask questions. Our CapEx spend, can you share some color on its growth CapEx, how much is growth CapEx?

And obviously, which regions do we spend our CapEx on.

So our -- more than 90% of our CapEx -- tangible CapEx is growth CapEx almost 100% of our intangible, which is mostly like spectrum purchase is growth CapEx because the spectrum is bought for the further expansion of the network and further expansion of our capacity, coverage, et cetera. So all these are put up as a growth CapEx.

From a total allocation for perspective, if you look at it, Nigeria takes about $134 million, East Africa, $90 million, and Francophone Africa, about $60 million. So that's the first half CapEx spend.

However, from -- when we talk about intangible CapEx, we spent about $82 million, $42 million is in Francophone Africa and $40 million is in East Africa. So that's the broad split up of the tangible CapEx and the intangible, which is the spectrum allocation between various regions.

Thank you all for joining the call and asking your questions. And operator, I think you can close the call now.

Thank you, everyone.

Thank you.