In a half year that saw the coming of the fourth mobile provider and the collapse of a data only provider, Airtel Zambia Plc posted unaudited results that showed their performance was under competitive forces constraint during the period under review.
On September 24th 2018 through SENS Announcement, its board issued a statement that its half year highlights included a customer base that was up by 9.2% Year-on-Year and now stands at 5.36 million. In a country that has just over 16 million people and a mobile usage penetration of 76%, this indicates that Airtel are among the top two providers.
On the revenue side, the company recorded a fall in revenue in comparison to the previous period of 7.91%. Revenues at half year came in at ZMW 976 million. Saving grace for the bottom-line came with a lower profit after tax that was calculated at half year. Caution is necessary on tax because companies have specific ways in which they declare their taxes and the unaudited abridged interim results do not indicate what the composition is and cannot be used as an indicator of how the final tax bill at year end will look like.
Although the company indicates in the SENS announcement that “As a result, Profit after Tax (PAT) was up 39.89%YoY to ZMW 130.8 million due to operational efficiencies”, Financial Insight argues that the tax component also contributed a great deal in a lower revenue environment. Furthermore, the company is candid in its admission that competitive forces and reduced tariffs are beginning to weigh in on the company. Airtel will do well to also seek solace in the fact that they started the price war and must wait until the next equilibrium is reached.
A look at their abridged half year cash flow statement indicates significant movement in their investing activities on the one hand whilst of the other hand their operating net cash has grown by a factor of 2X. Their declared operational efficiencies are definitely responsible for this.
However, Airtel remains the one network that has the most robust 4G networks in Zambia. This in itself gives them competitive advantage. Furthermore, they are showing signals of adopting additional businesses around their ecosystem that are poised to impact their bottom-line at end of year.