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Home Opinions Blurb

Analysis: Airtel is winning the data war

Blurb Team @Nairametrics by Blurb Team @Nairametrics
October 30, 2019
in Blurb, Spotlight
Why Airtel's IPO is not for you.

Snippet of Airtel's popular advert that helped propel data usage.

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Since 2001 when Nigeria launched the Global System for Mobile (GSM), Airtel, Nigeria’s second-largest mobile company, has undergone several transitions. It has metamorphosed so much that some recalcitrant subscribers still refer to it as Zain, one of the many names it has assumed over the years. Throughout this transition, its main rival, MTN, has remained yellow, growing and stunning Nigerians with profits unheard off in the annals of publicly quoted companies in Nigeria. But Airtel isn’t left behind; it also has a great story to tell. 

Blistering results: Recent half–year earnings from the company revealed that it posted revenue growth of 8.4% across its African operations. Revenue was $1.6 billion compared to $1.5 billion. Pre-tax profits also rose by 158% to $316 million. Even EBITDA, a closely followed metric for Telcos, also rose by 11% to $719 million. Much of Airtel’s earnings and performance come from its Nigerian operations. In the same period, the company reported a revenue of $640 million, a 23% rise compared to the year before.  You need not look too far to see where all this money is coming from. 

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Data Boost: In 6 months, Airtel raked in $199 million from data sales in Nigeria, a whopping 76% higher than the $133 million it reported the same period in 2018. Airtel has poured in billions of naira in its data business over the years and has stepped this up with solid advertising. The company appears to have resigned to losing the voice market share to MTN but it showed early that it wanted to own the data space by leading the way earlier on. Today, this move is paying off. MTN grew its data revenue by 37% when it reported its half-year results back in June 2019. 

Data foresight: Even Airtel admits this much. According to the company, “Data revenue growth was driven by the accelerated rollout of our 4G network, with 62% of the sites being 4G, an increase in data customer base by 20.8% and ARPU growth of 43.0%.” 

Through aggressive and appealing advertising, it reported that “during the period, 4G data usage increased by almost 20 times.” Airtel’s Data revenue now accounts for 31% of Airtel Nigeria revenue, compared to 22% in the prior year. “The solid expansion of the 4G network is a pillar of strong growth in Nigeria,” the company asserts. 

According to its CEO, Raghunath Mandava, “Our investments ahead of the industry in LTE network along with our simple and intuitive customer journeys have helped grow data consumption by 81% and data revenue growth by 37.8%.” It’s also replicating this model across other African countries. Mandava again, “Over the last 6 months we launched 4G services in Democratic Republic of Congo and Niger, and 4G sites now account for 58% of total sites. Now we are ready to launch in Tanzania, thereby making 4G services available across all our 14 countries.” 

Finally, If Airtel is to sustain revenue and profitability growth, then it must double down on quality data services for its 15 million-plus subscribers in Nigeria. Nigerians are data guzzlers, but they are wary of fast depleting data and are quick to hop onto the next service provider. Incidentally, consumers have little choice as nearly all providers are in on the fast depleting data gig.  

Airtel also proposed a half–year dividend of $0.03 per share or N10.8 resulting in a dividend yield of 3.5% (based on the current share price of N308). The stock is also far from its post–listing high of N350. If you are looking to buy, then look further than Airtel, as the stock trades on very thin volume. You are better off taking a bet on Airtel winning the data war, for now.  

 

 


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Tags: 2019 H1 ResultsAirtel AfricaBottom LineData Revenues
Blurb Team @Nairametrics

Blurb Team @Nairametrics

The "Blurb Team" is the official conveyer of the opinions of the Nairametrics Research & Analysis Board on matters of financial reports, macroeconomic data, and economic policies.

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Comments 6

  1. Godson says:
    October 30, 2019 at 12:07 pm

    So airtel is proud of cheating us their customers.. Over 3 years if not more airtel has played us from data/call charges hence they are celebrating while we suffer..
    How can one recharge 4 gig data for a month and without doing much, the next day you receive a message saying, your data has finished or you don’t have enough data..
    What nonsense

    Reply
    • Kk says:
      October 30, 2019 at 2:35 pm

      Thanks for confirming my worries about airtel data disappearances after little or no usage. I will switch to another network immediately.

      Reply
      • Jay says:
        October 30, 2019 at 4:39 pm

        Shatap

        Reply
  2. enddy says:
    October 30, 2019 at 7:33 pm

    rubbish, I made a data of 1k 1.5g subscription on Friday without using it to any length and all I could get this morning is your data bundle has expired.

    Reply
  3. J_kay says:
    October 30, 2019 at 11:14 pm

    All Nigerian networks are like that allways lying and strealing

    Reply
  4. Savage says:
    October 31, 2019 at 3:33 pm

    Brother that one nah lie haba 4gb two days when you no dey work for cafe abi betnaija shop chai dey reason before you go talk abeg

    Reply

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