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Transforming
lives
Airtel Africa plc Annual Report
and Accounts 2020
Who we are
We are a leading provider of
telecoms and mobile money
services in 14 countries
in sub-Saharan Africa.
Our services already reach more
than 110 million customers,
bridging digital divides and
increasing financial inclusion.
Contents
Strategic report
Who we are
02 Airtel Africa at a glance
04 Chair’s statement
06 Chief executive officer’s review
09 Our response to COVID-19
11 Our key performance indicators
14 Our market environment
16
Legislation and regulation
18 Our business model
21 Our ‘Winning with’ strategy
32 Our stakeholders
Business reviews
34
– Nigeria
34
– East Africa
36
– Francophone Africa
38
– Mobile services
40
– Airtel Money
42
44
Financial review
52 Corporate social responsibility
56 Managing our risk
63 Long-term viability statement
Governance
66 Our Board of directors
69 Our Executive Committee
70 Chair’s introduction
72 Our leadership
Board evaluation
77
78
Engaging with our stakeholders
80 Audit and Risk Committee report
87 Nominations Committee report
90 Our compliance with the UK Corporate
Governance Code
128
127
94 Directors’ report
98 Directors statement of responsibility
100 Directors’ remuneration report
Financial statements
Independent auditors’ report
116
Consolidated statement
126
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement of cash flows
Notes to consolidated
financial statements
Company statement of financial position
Company statements of
changes in equity
Notes to company only
financial statements
Other information
194
198
Alternative performance measures (APMs)
Reconciliation between GAAP and
alternative performance measures
189
190
129
130
191
202 Forward looking statements
203 Definition of terms
206 General shareholders’ information
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Welcome to our first annual report as a listed
company. In the sections that follow, we aim
to give you a fair, balanced and understandable
account of our business and performance, in a year
of sustained and profitable growth. We also aim to
share our view of the opportunities and challenges
we foresee, and the mitigating actions we’re taking,
as we continue to create value for our customers
and shareholders, by growing profitably and
as a powerful force for financial inclusion.
As we publish this report, the world is being
impacted in tragic and unprecedented ways by the
COVID-19 pandemic. We describe the impacts of this
pandemic, and our response, on pages 9 and 10.
RAGHUNATH MANDAVA CHIEF EXECUTIVE OFFICER
Financial performance
$3,422m
revenue
+13.8% in constant currrency
$1,515m
underlying EBITDA
+16.3% in constant currency
$901m
operating profit
+25.4% in constant currency
$642m
capex
+1.9%
10.3 cents
basic earnings per share
decrease of 9.2 cents
Financial highlights
Alternative performance measure (year ended)
Revenue ($m)
Mar ’20
Mar ’19
Underlying EBITDA
Underlying EBITDA margin
3,422
3,077
Mar ’20
Mar ’19
1,515
1,332
Mar ’20
Mar ’19
44.3%
43.3%
Reported change 11.2%, constant change 13.8%
Reported change 13.8%, constant change 16.3%
Reported change 100bps, constant change 94bps
Free cash flow ($m)
Mar ’20
Mar ’19
EPS before exceptional items
($ cents)
EPS before exceptional items
($ cents) – restated1
453
151
Mar ’20
Mar ’19
7.3
14.0
Mar ’20
Mar ’19
Reported change 200.7%
Reported change (48.2%)
Reported change (6.4%)
GAAP measures (year ended)
Revenue ($m)
Mar ’20
Mar ’19
Reported change 11.2%
Profit after tax ($m)
Mar ’20
Mar ’19
Operating profit ($m)
Profit before tax ($m)
3,422
3,077
Mar ’20
Mar ’19
Reported change 22.8%
Basic EPS ($ cents)
408
426
Mar ’20
Mar ’19
901
734
Mar ’20
Mar ’19
Reported change 71.7%
Basic EPS ($ cents) – restated1
10.3
19.5
Mar ’20
Mar ’19
Reported change (4.4%)
Reported change (47.3%)
Reported change (4.8%)
6.9
7.4
598
348
9.8
10.3
1 In July 2019, after the announcement of Initial Public Offering (IPO), the company issued 676,406,927 new shares
Earnings per share (EPS) has been restated considering all the shares as at 31 March 2020 had been issued on 1 April 2018 for like for like comparison
2 The difference between reported currency and constant currency growth rates is on account of currency movements with reference to the US dollar rate
3 The APMs have been fully defined and reconciled on pages 194-197. All other APM measures, in addition to those set out above, are the following: underlying operating
expenditure, underlying profit/(loss) before tax, effective tax rate, adjusted effective tax rate, underlying profit/(loss) after tax, operating free cash flow, and net debt
and leverage ratio. Growth rates presented in constant currency also represent APMs
4 The percentages included in the tables throughout the Annual Report are based on numbers calculated to the nearest $1,000 and therefore minor rounding differences
may results in the tables
Airtel Africa plc Annual Report and Accounts 2020
01
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Strategic report
Airtel Africa at a glance
We operate in 14 dynamic, underpenetrated
markets with good opportunities
for continued growth.
Nigeria
East Africa
Niger
Pop: 22m
Chad
Pop: 15m
Francophone
Africa
Nigeria
Pop: 196m
Gabon
Pop: 2m
Republic
of the Congo
Pop: 5m
Uganda
Pop: 43m
Rwanda
Pop: 12m
Kenya
Pop: 51m
Democratic
Republic of
the Congo
Pop: 84m
Zambia
Pop: 17m
Tanzania
Pop: 56m
The Seychelles
Pop: 0.1m
Malawi
Pop: 18m
Madagascar
Pop: 26m
An underpenetrated telecoms market,
a young population and rising smartphone
affordability, along with low data
penetration, give us growth opportunities
in both voice and data. The telecoms
market in our footprint is projected to grow
by 10.1% CAGR over the next five years.
At the same time, low penetration of
traditional banking services provides us
with the opportunity to meet the needs of
unbanked customers through our dedicated
mobile money platform, Airtel Money.
Population figures source: World Bank data 2018 and
5 year CAGR source: Delta partner (pre COVID-19)
Revenue contribution by region
Year to
March 2020
$m
Year to
March 2019
$m
Growth in
constant currency
%
Nigeria
East Africa
Francophone
Africa
Total*
1,373
1,201
859
3,422
1,106
1,102
888
3,077
24.4
13.6
(0.5)
13.8
$859m
$1,201m
Total
$3,422m
$1,373m
14
markets in our
diversified portfolio
1st or 2nd
largest operator by customer
market share in 12 markets
14
4G services available
in all markets
$16.9bn
total mobile telecoms market
in our region in 2019
2.8%
projected compound annual
population growth in our
region by 2023
13.8%
revenue growth in constant
currency for Airtel Africa in
2019/20
* Breakdown of revenue as stated in above table will not add
up to total revenue, since it also includes intra-segment
revenues of $11m (2019: $19m)
02
Airtel Africa plc Annual Report and Accounts 2020
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Our voice, data and mobile money
services are driving our growth and
transforming customers’ lives.
Voice
We offer pre- and post-paid
wireless voice services,
international roaming and
fixed-line telephone services.
110.6m
customers
Data
We offer a suite of data
communications services, including
2G, 3G and 4G. We provide 4G
services in all 14 of our markets.
35.4m
data customers
Airtel Money
We offer mobile money services
including payments systems,
microloans, savings and
international money transfers.
18.3m
Airtel Money active
customers
22,909
infrastructure sites
64.7%
sites providing 4G coverage
>1.6m
retail touchpoints
(agents and distributors)
in our network
43k+
kilometers of
connecting fibre
We’re driving Airtel Money growth and financial
inclusion through strategic partnerships.
By expanding our network
footprint in both rural and
semi-urban areas and ensuring
a resilient transmission network,
we’ve enabled millions of people
to access telecoms services.
By taking the lead in the rollout of
4G networks, we’ve helped drive
digitalisation. Our expanding
footprint of retailers and
distributors, supplemented by our
unique operations, have helped
deliver services across our
markets. Our focus on increasing
the number of use cases through
international partnerships and
the expansion of our dedicated
distribution channel have helped
drive the take up of our mobile
money services, boosting
financial inclusion.
Revenue contribution by service
Year to
March 2020
$m
Year to
March 2019
$m
Growth in
constant currency
%
Voice
Data
Airtel Money
Other^
Total*
1,970
1,915
930
311
302
683
234
309
3,422
3,077
5.2%
39.0%
37.2%
(0.2%)
13.8%
$302m
$311m
Total
$3,422m
$1,970m
$930m
* Breakdown of revenue as stated in above table will not add up to
total revenue, since it also includes intra-segment revenues of $91m
(2019: $64m)
^ Other revenue includes messaging, value added services, tower
sharing and enterprise
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Airtel Africa plc Annual Report and Accounts 2020
03
Strategic report
Chair’s statement
Delivering
vital services in
challenging times
A year of sustained growth demonstrates
the success of our strategy to build
Airtel Africa into a market-leading mobile
service provider. The Board is confident
that the business has the right measures
in place to ensure that we can continue
to provide vital services and create
value for all our stakeholders.
SUNIL BHARTI MITTAL CHAIR
04
Airtel Africa plc Annual Report and Accounts 2020
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One of our core values as a
business is ‘Respectful’, which
reminds us that: ‘We live the same
lives as our customers, sharing the
same joys and the same pains’.
As the world faces up to the challenges of
COVID-19, this value has never been more
true, or more important. I know that our
mobile services, which support many vital
functions in areas such as hospitals and
emergency services, are playing their part in
this global fight. For millions of people working
from home or living with isolation or social
distancing, our services are providing a crucial
financial and social link to the outside world.
Protecting colleagues,
serving customers,
creating value
Our CEO Raghu describes the steps we are
taking to protect our colleagues and serve our
customers during this pandemic on page 9.
While this is a time of uncertainty for
everyone, the Board is confident that the
business has the right measures in place
to ensure that we can continue to provide
vital services and create value for all our
stakeholders. What is more, I’m convinced
that by spurring on financial inclusion and
digital transformation, Airtel Africa’s services
will also support the global recovery that we
all hope will come very soon.
Clear opportunities for
growth and sustainable
development
The markets we operate in have powerful
and promising underlying macroeconomic
and demographic trends – but they also face
infrastructural and economic challenges that
hold back sustainable development. Millions
of people are excluded from the financial
system. Millions lack access to the data
services that customers want, and this
prevents them from being part of the
digital transformation.
Realising this huge unmet demand, we knew
that investing in networks and distribution
channels would not just benefit our business
– which it has – but would also help transform
the lives of people across sub-Saharan Africa.
I’d also like to highlight the strengths of our
partnerships. We work hard to build lasting
partnerships based on mutual values.
This year, we have developed innovative
partnerships that are helping us expand the
range and depth of our Airtel Money offerings.
We are working with Mastercard, Western
Union and others on a range of products
and services, including international money
transfers. This helps build our transaction
volumes – but it does far more. It promotes
the wider adoption of mobile money, and of
Airtel Money in particular, connecting millions
of people to financial services and the
global economy.
Making a difference to the
lives of those around us
Alongside the positive impact of our services,
we also aim to make a difference at a country
level, drawing on the experience of Bharti
Airtel Limited and the Bharti Foundation in
delivering targeted programmes that address
local needs in areas such as education, and
through other initiatives that benefit the
societies we serve.
Bharti Enterprises (a related party of Airtel
Africa plc), through its joint venture with
Softbank, is becoming a major force in the
renewable energy space, thereby contributing
towards the cause of the global climate
agenda. This work means a great deal to me
personally, and I know it means just as much
to the many Airtel Africa colleagues who take
a leading role in delivering our environmental
and community support programmes in
Africa, creating educational opportunities and
health provision, increasing internet access
across the continent, and offering assistance
in disaster situations – work described on
page 52. The Airtel Africa team – and indeed
all our stakeholders, including our partners,
our suppliers, and our entire distribution
network – have all played a vital role in our
profitable growth this year, and will be crucial
to our future success. I’d like to end by
thanking them for all of their hard work and
dedication as we continue to grow our
business and transform lives.
SUNIL BHARTI MITTAL
CHAIR
13 MAY 2020
A milestone year of growth
This year has been a milestone for Airtel
Africa. Our listings on the London and
Nigerian stock exchanges have come
alongside a year of sustained double-digit
growth that demonstrates the success
of our strategy to build Airtel Africa into
a market-leading mobile service provider.
Our strategy is designed to take on the
challenges presented by geography and
infrastructure, to mitigate our risks, including
foreign exchange risks, and to enable us
to grow revenue faster than the markets
in our footprint – as we did in 2019/20.
At the same time, we’ve improved our
underlying EBITDA margin by 1% and
reached $1.5bn during the course of the year,
while operating profit grew by 22.8% and
leverage improved to 2.1x in March 2020
from 3.0x in March 2019.
Meeting the Board’s
priorities
The Board has had two key priorities over
the last 12 months. The first was to move
towards a position where our business has
the appropriate structure and quality of
capital, debt and liquidity. The second
was to make sure we have a suitable and
effective governance structure in place for
a premium listed company – and I describe
our governance processes on page 72.
I’m happy to say that we have made
significant progress on both fronts, and
in light of this, we paid an interim dividend
of 3 cents per ordinary share in November
2019 in line with our policy, and the Board
has approved a final dividend of 3 cents per
ordinary share, lower than the approved
policy but a prudent cash measure in these
uncertain times.
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Airtel Africa plc Annual Report and Accounts 2020
05
Strategic report
Chief executive officer’s review
Delivering social
transformation
in diverse markets
I’m delighted to introduce Airtel
Africa’s Annual Report – our first
since we listed on the London and
Nigerian stock exchanges in 2019.
As this report describes, we have much to
be proud of, the impact our products and
services have on the societies where we
work and in terms of our performance.
As I write this, the world is battling with
COVID-19. And my first thoughts are with
our colleagues, customers and people
everywhere.
Telecoms are essential services, and we know
that maintaining our services is critical to
society at large. Data and voice services are
many people’s only means of contact when
in lockdown or confinement. Our services
are also critical to supporting people working
in other essential services.
At the end of this statement, we have included
a special section on the impact of COVID-19
on our business, and the measures and
mitigations we have put in place to protect
our colleagues and maintain our vital services.
While improving telecoms
penetration through affordability and
improved coverage, we have a clear
vision of reducing the digital divide
and enhancing financial inclusion
in the countries we serve.
RAGHUNATH MANDAVA CHIEF EXECUTIVE OFFICER
06
Airtel Africa plc Annual Report and Accounts 2020
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We describe the risks to our
business on page 56
Strategic overview
The 14 markets we operate in are all in the
sub-Saharan belt of Africa, and while they
vary substantially, all are in the developing
category and have many features in common.
Our markets are characterised by huge
geographies with sparse populations and
an average population density of 62 per
square km. They typically have fast-growing
populations with an overall average of 2.8%
growth per year, and a high proportion of
youth, with 32% of the population aged
10-24 years old.
Most of these countries are experiencing
rapid urbanisation, with high migrant
populations seeking a better life. Some
countries are commodity- and oil- dependent,
and some rely on agriculture, tourism and
minerals. They are all beautiful places with
an abundance of wildlife.
The average per capita income is $3,814ppp
(Purchasing power parity). In most countries
incomes are between $1,000 and $6,000,
with exceptions like the Seychelles and
Gabon which are far more affluent.
The unique customer mobile telecoms
penetration is around 45% on average.
This, coupled with a very low availability
of fixed wire connections, means that
mobile networks are the mainstay of
telecommunications. Most customers’
internet device is their mobile phone
(mobile internet user penetration is 24%).
Smartphone penetration is about 39%.
In some countries, banking penetration is
around 40%, but in most it is far lower –
and the large distances between branches
and ATM machines mean many people
face great challenges in accessing banking
services. Mobile money is a critical tool for
the people in these countries.
Telecoms companies have a very important
role in the economic and social growth of
these countries. Telecoms is an essential
service everywhere, and it is even more
critical in geographies with vast distances
and limited infrastructure. These physical
and infrastructural difficulties mean that
we need to find innovative business
models and use superior, robust technology.
Airtel Africa’s endeavour has been to work
on a model which can provide affordable
telecoms services in a profitable and
sustainable manner.
While improving telecoms penetration
through affordability and improved coverage,
we have a clear vision of reducing the digital
divide and enhancing financial inclusion in
the countries we serve.
The markets we operate in have been
characterised by high economic growth,
but also risks in terms of foreign exchange
volatility, financial availability, affordability and
possible regulatory inrervention. Our strategy
is designed to overcome these risks by
delivering faster revenue growth with
improved profitability. Details of how we
mitigate these and other principal risks are
set out on pages 56-62.
During the last year we have been able to
grow our revenues by 11.2% to $3,422m
(constant currency growth of 13.8%), with
underlying EBITDA growing at 16.3% and
underlying EBITDA margin improved by
94 basis points in constant currency. Our
operating profit grew by 22.8% to $901m
(constant currency growth of 25.4%) and
leverage improved to 2.1x in March 2020
from 3.0x in March 2019. We paid an interim
dividend of 3 cents per ordinary share in
November 2019 in line with our policy,
and the Board has approved a final dividend
of 3 cents per ordinary share.
While we detail our ‘Win with’ strategy on
pages 21-31, I would like to say a few words
on its key strategic elements.
Our strategy is delivering profitable
growth – and it is helping us bridge
the digital divide and grow financial
inclusion in the countries we serve.
Win with network
Over the last few years we have built a
modernised single RAN network which
enables us to move from 2G to 3G to 4G
through software upgrades, which means we
can create incremental data capacity at low
marginal capex and opex. With 81.5% of our
sites now equipped with single RAN and our
robust and large backbone fibre network
across our OpCos we have significant
capacity, and we can provide huge data
at affordable costs.
Win with customers
We have built a unique mix of multi-brand
retail and exclusive franchise-run shops –
which has grown by over 16% this year –
where we can acquire customers in
adherence to stringent Know Your Customer
requirements. This has resulted in a double-
digit customer growth of 11.9%, which
has not only helped in increasing mobile
penetration, but also helped grow our voice
revenues by 5.2% in constant currency.
Win with data
In line with our vision of bridging the data
divide in the countries where we operate,
one of the first steps we took was to invest
ahead of the curve in an expansive and a
robust 4G network. This was backed by
strong on-ground activities in collaboration
with handset vendors, and has resulted in
our data customers growing at 18% and an
increase in smartphone penetration to 32.6%.
In addition, simple and clear pricing along with
innovative products such as Airtel TV, Pocket
Wifi and Home broadband have enabled a
growth of data usage per customer by 56.1%
to 2.1GB by Q4, resulting in data ARPU growth
of 20% in 2019/20 in constant currency.
Win with mobile money
In line with our vision of enhancing financial
inclusion, we have built a unique model
of kiosks and Airtel Money branches,
supplementing our vast agent network
and thereby making available to customers
assured wallet and cash. We have increased
the number of ‘use cases’ by enabling
customers to use Airtel Money for
transactions, including disbursements of
salaries, grants and merchant payments.
We have a growing number of partnerships
that enable cross-border money transfers.
We have also launched a virtual card that can
help make payments anywhere in the world,
and, in particular, digital payments across
borders. All these helped us achieve a mobile
money customer growth of 28.7% and
a revenue growth of 37.2% in constant
currency.
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Airtel Africa plc Annual Report and Accounts 2020
07
Strategic report
Chief executive officer’s review continued
Win with cost
The countries we operate in are characterised
by huge geographies, insufficient
infrastructure and difficult terrain, which all
place upward pressure on costs. At the same
time, per capita GDPs are typically low, so it is
very important to make mobile services
affordable. Running an efficient and profitable
telecoms operation in this environment
requires an operating model totally unlike
those found elsewhere. Our focus has been
on redesigning each of our business
operating models to enable this. Our focus on
driving throughputs on fixed cost networks
helps bring down cost per unit as volumes go
up. This has helped us flow through almost
50% of our incremental revenues into
underlying EBITDA.
Data sources: Population and GDP growth from IMF,
per capita income derived, mobile internet user
penetration and smartphone penetration from GSMA
sub-Saharan Africa 2019 report. Unique customer
mobile penetration from market analysts
Our investment proposition
Substantial growth,
substantial potential
Average population growth in
our footprint is projected to be
2.8% in the next 5-10 years, and
the region currently has low
unique SIM penetration.
Our market environment is
described on pages 14-15
Strong foundations for
growing our business
We have a well-invested asset
base, strong brand value and
recognition, and effective
distribution channels (both
direct and indirect).
Our strategy for growth is
described on pages 21-31
Win with people
Our teams have demonstrated a strong
growth mindset, which has enabled them to
think differently and foster innovation across
all levels. A focus on learning and mastering
functional expertise has helped build a strong
knowledge base of both leadership and
cross-functional competencies. Our expanded
leadership team, which includes three
regional heads, as well as our strong
functional chiefs, working collaboratively with
independent and empowered OpCo
managements led by Managing Directors and
their teams, have provided us with executional
agility which drives faster growth and keeps
us closer to our markets. Our reward systems
are based on simple and consistent metrics
which drive the right behaviors.
Transforming lives
Our progress on these strategic pillars helps
us bridge the digital divide and grow financial
inclusion in a sustainable manner, which is
helping transform lives in the countries
we serve.
My review would not be complete if I did not
thank our employees and all our partners who
have put in a lot of hard work, especially as we
go through these uncertain times during this
pandemic. Telecoms and financial services
are essential services and our teams are
out there in the markets to ensure service
availability to our customers – and my thanks
go to all of them.
RAGHUNATH MANDAVA
CHIEF EXECUTIVE OFFICER
13 MAY 2020
Ready to meet the
demand for data
Our investment in single RAN
technology and 4G capability
across all our operations,
combined with extensive fibre
coverage, means we have
market-leading data capacity.
Our mobile data business is
described on pages 40-41
Airtel Money: driving financial
inclusion, transforming lives
Our Airtel Money business
continues to grow fast. In
2019/20, our Airtel Money
customer base grew by 28.7%,
resulting in revenue growth of
37.2% in constant currency.
Our Airtel money business is
described on pages 42-43
Strong growth story and
operational performance
We continue to deliver strong
topline growth. Our customer
base increased by 11.9% in
2019/20, and we grew revenue
by 13.8% in constant currency.
Our underlying EBITDA margin for
2019/20 was 44.3%, an increase
of 94 basis points on 2018/19.
See our financial review on
pages 44-51
Effective management team,
with support from globally-
recognised shareholders
Strong country-level management
teams with deep knowledge of
their markets are well supported
by subject matter experts at
Group level. We also leverage the
support of our globally recognised
shareholders, including Bharti
Airtel, one of the world’s largest
telecoms operators.
All growth percentages are in constant currency unless specified
08
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Our response to COVID-19
We’re closely monitoring the
fast-moving situation, acting quickly to
minimise risks to our business.
In the countries where we operate,
the spread of the COVID-19 has
lagged the rest of the world.
The situation is rapidly evolving,
and in the last few weeks several
governments in Africa have taken
decisive actions to reduce the risk
of contagion, including banning
all commercial flights, closing
educational facilities and in
some case all non-essential
establishments, limiting social
gatherings and encouraging
social distancing and working
from home.
During these unprecedented times,
governments have recognised the telecoms
industry as a critical and essential service.
We are working closely with them to keep
people connected and the wheels of the
economy turning. Our performance during
the month of April has been resilient despite
customers behaviour being impacted by
lower disposable income and restrictions
on movements. The business continued to
deliver constant currency revenue growth,
although at a lower rate. Increase in data
and mobile money revenue growth more
than offset revenue decline in voice.
We are constantly monitoring how the
situation is evolving to identify key risks
and take immediate action to put in place
adequate mitigation plans to minimise any
potential disruptions from the pandemic
to our business.
Governance
We have a dedicated executive COVID-19
committee mandated to regularly identify
risks, agree on action plans and monitor their
execution. As an outcome of the committee’s
role, the CEO and CFO have regularly updated
the Board on the risks and actions identified.
This ensures a direct channel between
local management and executive and
non-executive directors to ensure actions
are agreed and executed quickly.
Safety
Our priority is the health and wellbeing of
our employees, outsourced partners and
customers, and we are making every effort
to ensure that our OpCos have taken all
necessary steps to ensure their safety.
All offices have an agreed policy in place
for remote working, working in shifts and
social distancing practices, depending on
the critical needs of individual functions.
All full-time employees have medical
insurance, with additional provisions
being made in case there is a need to
help with medical costs over and above
insurance cover.
The outsourced staff in our call centres have
all been given the option and equipment to
either work from home or, if necessary, from
the office following strict social distancing
practices. Safety protective equipment and
hand sanitisers have also been made available
to all our outsourced partner staff in shops.
The safety of our customers is paramount
to us. We have executed various social
educational digital campaigns explaining
best practices during the COVID-19 outbreak,
and the importance of being safe. We have
also made a number of sites across our
businesses accessible free of charge
to give students continuous access to
quality education.
In addition, we have implemented a number
of initiatives to support our customers,
including zero transaction fees on money
transfers, free text messages, extra bonuses
on data bundles through Airtel Money
subscriptions, and increased availability
of home broadband products to support
working from home.
Our network
In these challenging times, our network
remains the main source for many people for
social interactions, work and entertainment.
We have already seen an increase in data
traffic, and our priority is to keep our 110
million customers connected to the network.
We implemented key business continuity
plans to ensure that both active and passive
maintenance services can be safely carried
out even when the movement of people is
restricted. We have also identified key spare
part components and made them available
at different strategic locations across our
markets. All of our Network operations
centres can be operated remotely if needed.
Distribution
Continuous and increasing lockdown
measures may have some impact on our
ability to both expand our distribution system
and keep adequate levels of stock. So, we
have increased stock levels of SIM cards and
recharge vouchers by 30% to 50% to ensure
availability in our shops over the next few
months. We are also encouraging customers
to use more digital methods of recharge,
including through SMS, bank portals, our app,
Airtel Money and E-Recharge to minimise
the impact of any possible disruption to our
distribution network. For example, Airtel
customers in Nigeria can now recharge
their phones using SMS through their
credit cards or bank account details.
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Strategic report
Our response to COVID-19 continued
Capital expenditure
The current pandemic may affect the timely
deliveries of capital goods. Our capex
deliveries are planned ahead of time, and
as a policy we carry a deployable stock of
network active equipment in our warehouses.
Currently we have around $280m of capital
work in progress and $250m of capital
commitments which are expected to be
fulfilled, so we have enough deployable
materials in our warehouse to ensure timely
rollouts across our markets.
Our strategy of diversifying our sourcing
across four major providers is also protecting
us from a company- or country-specific supply
chain risk.
Mobile money
As a result of the actions taken by
governments to reduce the risk of contagion,
the mobile money business has been affected
by social distancing measures and non-
essential service closures, reducing the ability
of customers to deposit and withdraw cash.
Several governments have also asked mobile
money operators to waive fees on certain
transactions, including person-to-person and
merchant payments. We have engaged with
governments and regulators to allow certain
mobile money outlets to be classified as
essential services so that customers can fully
access mobile money services. Mobile money
represents 9% of the Group’s gross revenues.
Liquidity
We enter this period of high volatility with a
strong financial position. Free cash flow more
than doubled in the last 12 months to $453m,
and with a 44.3% underlying EBITDA margin
we benefit from strong profitability. Our net
debt to underlying EBITDA ratio continued
to improve to 2.1x at the end of this financial
year. Our cash balances in conjunction with
up to $814m of committed undrawn facilities
ensure we can meet our financial obligations.
We have $2.3bn in long-term debt with the
first repayment of €750m due in May 2021.
The next major debt repayment of $505m
is due in March 2023.
We have agreed to extend the maturity of
$254m of debt facilities loans due to mature
in December 2020 and January 2021 by an
average of 18 months to two years, further
improving our liquidity.
We have identified other ways to conserve
cash, reduce costs and mitigate risks from
COVID-19. We have conducted a review of
our operating expenses, and discretionary
spend has to a large extent stopped. There
is a travel ban across the business which has
resulted in significant savings. We have also
deferred the salary review for management
and employees until there is more clarity
on the COVID-19 impact. This will be now
reviewed by the Remuneration Committee
in June and, if required, again in September.
We intend to continue to invest in our network
and spend our planned $650m to $700m of
capex in the next financial year, in line with our
guidance. A detailed analysis of this planned
capex indicates that, in a worst-case scenario,
we would be able to reduce it significantly
without compromising network quality by
prioritising expenditure.
After considering the uncertainty caused
by the COVID-19 pandemic the Board has
recommended a reduced final dividend
of 3 cents per share. This means the
recommended total dividend will be 6 cents
per share, or $226m amounting to 50% of
free cash flow.
See page 117 for our going concern
assessment
Foreign exchange
The global economic slowdown combined
with lower oil and commodity prices has
resulted in currencies devaluing across our
markets, including the Nigerian naira, Kenyan
shilling, Ugandan shilling and Zambian
kwacha. By far our largest exposure is in
Nigeria, which represents 40% of our revenue
and 49% of underlying EBITDA. We estimate
that 1% of Nigerian naira devaluation will have
a negative $13m impact on revenues, $8m on
underlying EBITDA and $6m on finance costs.
See pages 63-64 for our long-term viability
statement
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Our key performance indicators
We use our KPIs to manage and measure
the delivery of our ‘Win with’ strategy.
They give our Board and management a
clear sense of where we’re making progress,
and where we need to improve.
Measuring the success
of our strategy
Our KPIs give us a vital insight into the delivery
of our strategy. Our financial KPIs monitor
our revenue growth ambitions and our goal
to ‘Win with cost’. And our operational KPIs
reflect our focus on growing our customer
base, strengthening our network, and
succeeding even more in two key areas
of opportunity: data and mobile money.
KPIs are set of metrics, ideally quantifiable
in nature, which help our organisation to
measure and monitor its progress towards
articulated organisational goals. KPIs also
form an essential component of our Group’s
governance and performance management
process. KPIs facilitate the communication
and articulation of the Group’s chosen
strategy across all levels of the organisation.
Ensuring our KPIs are
meaningful and responsive
We keep our KPIs under review to make sure
they stay relevant to our strategy and our
business. Given our strategic focus, our
primary operational KPIs are average revenue
per user (ARPU), customers, net additions,
churn, usage, Airtel Money transactions and
transaction value. We’re also focused on
aspects of our business not currently covered
by a KPI. For example, while we have a clear
strategic direction on our environmental and
social performance, and on developing a
skilled workforce as an employer of choice,
these areas are not currently covered by a KPI
for the purpose of our first Annual Report.
See definition and reconciliation of alternative
performance measures pages 194-197
Linking KPIs to
remuneration
Our key targets for remuneration are in line
with the key drivers of our strategy and
are made up of financial KPI’s (revenue,
underlying EBITDA and operatonal free
cash flow) and non-financial measures
(including the development of talent). In
addition, as part of our long-term incentive
scheme we benchmark our total shareholder
return performance against a broad-based
representative peer group. We keep these
KPIs under review to ensure they stay relevant
to the strategy of the business.
See Remuneration Committee report page 100.
Financial KPIs
Revenue (growth in constant currency)
Underlying EBITDA
Underlying EBITDA margin
$3,422m +13.8%
2018/19 $3,077m +11.9%
$1,515m
2018/19 $1,332m
44.3%
2018/19 43.3%
Capital expenditure
Net debt and leverage
Basic earnings per share (restated)
$642m
2018/19 $630m
$3,247m (2.1x)
2018/19 $4,005m (3.0x)
9.8 cents
2018/19 10.3 cents
In July 2019, after the announcement of Initial Public Offering (IPO), the company issued 676,406,927 new shares. EPS has been restated considering all the shares
as at 31 March 2020 had been issued on 1 April 2018 for like-for-like comparison.
Growth percentages in KPIs are in constant currency unless specified
See our financial review for the performance of financial KPIs on page 44
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Strategic report
Our key performance indicators continued
Operational KPIs
Total sites
and broadband
stations
>1,800
increase in
sites
Customer base
and customer
net additions
+11.9%
growth in
customer base
Total sites number
Broadband stations number
Customer base m
Customer net adds m
47,082
12.5
11.8
32,501
20,093
19,731
21,059
22,909
11.9%
9.6
10.7%
89
99
111
2017/18
2018/19
2019/20
2017/18
2018/19
2019/20
Performance In 2019/20, we reached 22,909 sites
and 47,082 broadband stations. During the year,
as part of our strategic drive to Win with network,
we rolled out more than 1,800 sites, upgraded
more than 5,500 sites to 4G, added more than
3,900 sites to our 3G network, and added more
than 8,000km of fibre. Data capacity increased
by 64% and reached 7,572 terabyte per day.
Performance Our customer base grew by 11.9%
to 110.6 million in 2019/20. This growth reflects
our strategy of acquiring quality customers and our
investment in infrastructure and our distribution
network. Churn, at 5.0% in 2019/20, remains the
same as 2018/19. Our customer base grew in all
three segments: up by 12.5% in Nigeria, 13.5%
in East Africa and 7.1% in Francophone Africa.
Voice traffic
and usage per
customer
+20.6%
growth in
voice traffic
Voice revenue
and voice ARPU
+5.2%
voice revenue
growth
Voice traffic mins bn
Usage per customer mins
183
207
201
250
165
160
Voice revenue $m
Voice ARPU $
2.0
1.7
5.1%
1.6
5.2%
1,932
1,915
1,970
2017/18
2018/19
2019/20
2017/18
2018/19
2019/20
Performance Voice traffic grew to 250 billion
minutes in 2019/20, an increase of 20.6% on
2018/19. Usage per customer grew by 9.5% to
201 minutes per month. These increases reflect
our emphasis on our Win with customers strategy
and are driven by growth in our customer base
and penetration of our voice bundle offers.
Performance Voice revenue increased by 5.2% in
2019/20, driven by the increase in our customer
base. Voice ARPU decreased by 4.5% in constant
currency, largely reflecting the weakness in our
Francophone segment and decreases in
interconnect usage charges across key markets
in East Africa and Francophone Africa.
Numbers for 2017/18 refer to 14 countries for
like-for-like comparison. Growth percentages in
KPIs are in constant currency unless specified
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Data customers,
4G data customers
and penetration
+105%
growth in 4G
data customers
Data usage, 4G data
usage and data
usage per customer
+81%
growth in
data usage
Data revenue
and data ARPU
+39%
growth in
data revenue
Data customers m
4G data customers m
Penetration %
28%
30%
22
25
25
30
2
2017/18
5
2018/19
Data usage mbs bn
4G data usage mbs bn
Data usage per customer mbs
1,863
1,192
427
954
35
710
235
237
335
392
283
Data revenue $m
Data ARPU $
2.2
2.1
39%
32%
549
683
2.4
930
32%
25
10
2019/20
2017/18
57
2018/19
2019/20
2017/18
2018/19
2019/20
Performance We reached 35.4 million data
customers in 2019/20, an increase of 18.0%, and
data customers now make up 32% of our total
customer base. Our 4G customer base grew by
105%, and now makes up 29% of the total data
customer base. This growth was fuelled by our
Win with network, Win with customers and Win
with data strategic pillars, including the rollout
of 4G network. The percentage of 3G and 4G
enabled smartphones increased to 32.6% from
30% in the previous year.
Performance Data usage increased by 81% in
2019/20 to 710 billion MBs, while data usage per
customer grew 56.3% to 1,863 MB each month.
4G data usage rose fivefold over the year to 40%
of total data usage. This growth was supported by
the rapid expansion of our 4G network (Win with
network) and our simple and affordable data
products, including ‘more for more’ bundles.
Q4 2020, data usage per customer reached
2,145 MB per month.
Performance Data revenue grew by 39% in
constant currency in 2019/20. This growth
was largely driven by an 18.0% increase in data
customers, the rollout of our 4G network and an
81% growth in data usage. Data ARPU was $2.4
for 2019/20, up by 20% in constant currency.
Airtel Money
customer base
and penetration
+28.7%
growth in
customer base
Airtel Money
transaction value
and transaction
value per customer
+31%
growth in
transaction
value
Airtel Money
revenue and
ARPU
+14.2%
growth in ARPU
Airtel Money customer base m
Penetration %
Airtel Money transaction value $bn
Transaction value per customer $
Airtel Money revenue $m
Airtel Money ARPU $
13%
14%
17%
171
14
11
18
20
160
25
167
32
1.5
37%
58%
234
1.6
311
1.3
152
2017/18
2018/19
2019/20
2017/18
2018/19
2019/20
2017/18
2018/19
2019/20
Performance Our Airtel Money customer base
grew by 28.7% to 18.3 million in 2019/20,
representing 16.5% of our total customer base.
This growth was largely driven by our expansion of
our distribution network, as we continued to invest
in kiosks and exclusive Airtel Money branches.
Performance Our transaction value grew 31.0%
to $32bn in constant currency in 2019/20.
Transaction value per customer was $167 per
customer per month, up by 9.0% in constant
currency. This growth in transaction value was
driven by customer base growth, the expansion
of our distribution network, and popular offerings.
Performance Airtel Money revenue grew by 37.2%
in 2019/20 in constant currency, driven by the
growth in customers and transaction values. Airtel
Money ARPU was $1.6, up by 14.2% in constant
currency reflecting the growth in transaction value
per customer.
For more on our ‘Win with’ strategy, see page 21
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Airtel Africa plc Annual Report and Accounts 2020
13
Strategic report
Our market environment
A young and growing population. An expanding urban
middle class, and large rural areas with limited coverage.
Some of the least penetrated markets in the world, with
just 45% of the population owning one or more SIMs.
Together, these factors are
creating ever-increasing demand
for data, mobile voice, and mobile
money services in sub-Saharan
Africa. The result is a highly
attractive sector – in which a
strong vision and outstanding
execution are key to success.
Key to strategic pillars
Win with network
Win with customers
Win with data
Win with mobile money
Win with cost
Win with people
A continent of rapid growth
Africa is one of the world’s fastest-growing
regions by GDP, population, urbanisation and
income levels. While the impact of COVID-19
is not yet known, before the pandemic the
IMF World Economic Outlook Database
forecast African nominal GDP to grow at
a compound annual growth rate (CAGR)
of 6.9% from 2018 to 2023. The African
population reached 1.2 billion in 2018,
and is forecast by the United Nations
to reach 2.5 billion by 2050.
Young, growing populations
While each of our markets has its own unique
profile, the dynamics in our overall footprint
reflect those of Africa as a whole: 32% of the
population in our markets is between the
ages of 10 and 24 years. The population in
our footprint is forecast to grow at a CAGR
of 2.8% between 2019 and 2024.
The middle class is also growing, alongside
a longstanding trend of urbanisation and,
in many markets, rising household incomes.
We aim to offer a mix of products, content
and pricing structures that reach and retain
this emerging customer base.
Link to strategy
Limited infrastructure, low
mobile connectivity
Many parts of Africa lack landline
infrastructure, and fixed broadband levels
are a fraction of those in developed markets.
That means mobile networks are the primary
source of voice and data services in
many places.
Across Africa, mobile connectivity is low
relative to other markets – but it is growing
fast. Mobile connectivity in our overall
markets is forecast to increase by 10.1%
each year between 2018 and 2023, reaching
574 million connections by 2023, compared
to $354m in 2018. Our own focus on
expanding and improving our networks
is helping drive this trend – and win and
retain customers.
Link to strategy
The data opportunity
Smartphone penetration in our markets is
also low relative to global levels. But demand
for data is high, and in the relative absence
of fixed broadband, mobile data demand
is growing fast.
Increasing availability of 4G is encouraging
the rapid uptake of 4G smartphones. We aim
to fuel smartphone uptake by leading on
4G networks and product offerings.
We’re also offering more content. The Airtel
TV app is available in Android as well as iOS
and is a one-stop platform for Live TV, music
videos, news, sports and much more,
all offered without subscription fees.
Link to strategy
The mobile money opportunity
In many of our markets there is limited access
to traditional financial institutions, and little
banking infrastructure: as of 2017, there were
only 7.4 bank branches for every 100,000
adults in sub-Saharan Africa. In the region
as a whole, less than half of the population
has a bank account, the lowest proportion
of any emerging market region.
This creates a clear opportunity for mobile
money services. Mobile money has been
embraced to varying degrees across
our markets, as regulators explore the
opportunity it creates for financial inclusion
and growth.
Across our markets, mobile money is forecast
to deliver CAGR of 31.2% in terms of
registered accounts and 25.5% in terms
of revenue between 2018 and 2023.
Our Airtel Money strategy includes a focus
on winning new customers through services
including inter-operability, payments,
microloans and international money transfers.
Link to strategy
We describe the impact of COVID-19 on our
business on pages 9-10
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A growing market in which
pricing is important
The sub-Saharan African mobile landscape
is dominated by a few large competitors,
with some smaller regional companies
in some markets. As well as Airtel Africa,
the key players include MTN, Vodacom,
Orange and Tigo.
We compete for customers through our range
of services, our advertising and brand image,
the quality and reliability of our service, our
wide coverage, strong data networks – and
price. We offer pricing plans that are simple
and transparent, based on the principle of
‘more for more’. We use a tailored pricing
strategy that varies depending on our position
in each market.
This agile pricing approach works alongside
our focus on improving our network to win
new customers, and on increasing our data
and digital offerings to drive revenues from
our customer base.
Link to strategy
Diverse markets which demand
risk discipline
Fluctuating currencies and high rates of
inflation can impact some of the economies
in sub-Saharan Africa. We manage foreign
exchange risk as one of our 14 principal risks,
described in detail on page 61.
Working with governments
and regulators
The telecoms sector is highly regulated,
and all operators must work within the
frameworks created by governments and
regulatory authorities. These cover telecoms
regulations, banking regulations and licences.
Know Your Customer regulations apply
in many of our markets – these require
customers to register their identity to access
mobile services. Providing easy access to
a fast and compliant registration process
is a key part of our Win with
customers approach.
Telecoms businesses also have a vital role to
play in helping the countries of sub-Saharan
Africa achieve their goals of digitalisation,
financial inclusion and sustainable
development. So as well as focusing on strict
compliance, we aim to work collaboratively
with governments to make sure we integrate
our services into their key initiatives.
Link to strategy
Key market
profiles
Key to markets
Top six markets
Our other eight markets
Data sources:
Population and GDP from IMF
Mobile customers and mobile money
customers from respective telecoms
regulatory authorities published data
Unique mobile penetration report from
market analysts
3
5
2
4
1
6
1. DRC
Population
GDP
2019
98m
2018
95m
2. Kenya
Population
$49bn
$47bn
GDP
2019
49m
2018
48m
$99bn
$88bn
Mobile customers
37m
36m
Mobile customers
55m
50m
Unique mobile
penetration
Mobile money users
39%
7m
37%
6m
Unique mobile
penetration
Mobile money users
62%
29m
61%
32m
3. Nigeria
Population
GDP
2019
2018
201m
196m
4. Tanzania
Population
$447bn $398bn
GDP
2019
56m
2018
55m
$62bn
$57bn
Mobile customers
184m
172m
Mobile customers
48m
44m
Unique mobile
penetration
45%
44%
Unique mobile
penetration
Mobile money users
49%
26m
48%
23m
5. Uganda
Population
GDP
2019
40m
2018
39m
6. Zambia
Population
$31bn
$28bn
GDP
2019
18m
2018
18m
$24bn
$27bn
Mobile customers*
26m
23m
Mobile customers
17m
15m
Unique mobile
penetration
Mobile money users*
42%
16m
42%
14m
* Uganda data from September 2018-September 2019
Unique mobile
penetration
54%
53%
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Strategic report
Legislation and regulation
Legal and regulatory
frameworks
Our strategy is to work with
governments and regulators to
create a fair and stable business
environment while taking into
account the rapid technological
advancements. We aim to abide
by all laws and regulatory
frameworks. Additionally, we are
supporting governments and
regulatory agencies in their
continuous effort of enhancing
digital and financial inclusion.
Legal and regulatory frameworks
While legal and regulatory frameworks are unique to each country, they can be
broadly classified in three categories: telecoms services, mobile financial services
and broadcasting services. National competition law and laws developed by
economic blocks also apply in some of our markets.
Government policy in each country determines the exact local regulatory
framework, but these categories typically include:
Telecoms
services
• Telecoms law and
regulations
• Data protection and
cybersecurity laws
• Licences
Mobile financial
services
• National payment
systems laws and
regulations
• Anti-money
laundering laws and
regulations
• Licences
Broadcasting
services
• National broadcasting
laws and regulations
We published a full list of the regulations that apply in each market, and of our licences and
other relevant permissions, in our Airtel Africa Prospectus, June 2019, which is available on
our website. We’ve set out below some examples of the legal and regulatory frameworks
in some of our key markets. These are subject to change.
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Francophone Africa
DRC
Telecoms services: the Information and
communications technology sector (ICT) is
managed by the Autorité de Régulation de la
Poste et des Télécommunications du Congo
(ARPTC). ARPTC is responsible for issuing
licences for the operation and provision of
communications services and facilities. The
law prescribes a minimum local shareholding
of 30%. A further 5% of the shareholding
must be reserved for employees of the
operators.
Mobile financial services: these
are regulated by the Central Bank of
Democratic Republic of the Congo.
The Central Bank also enforces anti-money
laundering legislation.
See description of our compliance to legal
requirements on page 62
SNAPSHOT: REGULATIONS IN OUR LARGEST MARKETS
In Uganda our Public Service Provider (PSP)
Licence expired on 16 October 2018 but has
been extended indefinitely, pending
conclusion of negotiations for the NTO
Licence. Our Public Infrastructure (PI) Licence
is valid until 2023.
Mobile financial services: the National
Payments Bill is currently under discussion in
Parliament. Pending the passing of this law,
the Bank of Uganda issues letters of
no objection to banks partnering with telecom
providers to offer mobile financial services.
The Bank of Uganda also enforces anti-
money laundering legislation.
Tanzania
Telecoms services: these have been
liberalised since 2003. The regulator
is the Tanzania Communications Regulatory
Authority, which issues licences for the
operation and provision of communications
services and facilities. Since 2016, Telecom
licensees are required to list at least 25% of
their shares on the local stock exchange.
Mobile financial services: these are
regulated by the Bank of Tanzania, which
issues various licences to mobile financial
service providers. The Bank of Tanzania also
enforces anti-money laundering legislation.
Zambia
Telecoms services: these have been
liberalised since 1991. The regulator is the
Zambia Information and Communications
Technology Authority (ZICTA), which issues
licences for the operation and provision of
communications services and facilities. Airtel
Zambia is a listed entity. Listed entities are
required to have a minimum of 25% of listed
shares on the Lusaka Stock Exchange held by
the public.
Mobile financial services: these are
regulated by the Bank of Zambia, which issues
various licences to mobile financial service
providers. Bank of Zambia also enforces
anti-money laundering legislation.
Nigeria
Telecoms services: these have been
liberalised since 2000. The regulator is the
Nigeria Communications Commission, which
issues licences for the operation and provision
of communication services and facilities.
Mobile financial services: these are
regulated by the Central Bank of Nigeria,
which issues licences for Payment
Service Banks and enforces Anti-money
laundering laws. Airtel has applied for and
awaits the issue of a Payment Service Bank
Licence from the Central Bank of Nigeria.
Broadcasting services: these are regulated
by the National Broadcasting Commission,
which issues licences. Airtel Nigeria obtained
a provisional broadcasting licence on 20
December 2019.
East Africa
Kenya
Telecoms services: these have been
liberalised since 1998. The regulator is
the Communications Authority of Kenya, which
issues licences for the operation and provision
of communications services and facilities.
Mobile financial services: these are regulated
by the Central Bank of Kenya, which issues
various licences such as the National Payment
Systems Licence and the International Money
Transfer Licence. The Central Bank also
enforces anti-money laundering legislation.
Uganda
Telecoms services: these have been
liberalised since 1997. The regulator
is the Uganda Communications Commission
(UCC), which issues licences for the operation
and provision of communications services
and facilities. The UCC has recently revised its
licensing framework and is consulting with
operators.
New telecoms licensing framework:
On 10 December 2019, the UCC formally
communicated the new Licensing Framework
and called upon operators to apply for desired
licences. On 20 January 2020, we submitted
to the UCC an Expression of Interest for the
National Telecom Operator (NTO) Licence,
subject to further discussions on licence fees
and licence terms and conditions.
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Strategic report
Strategic report
Our business model
Our dynamic business model
delivers value to stakeholders
while transforming lives through
digitalisation and financial inclusion.
VISION
Our vision is to enrich the lives of our customers.
Our obsession is to win customers for life
through an exceptional experience.
Our services are integral to the growth
and development of economies. We work
to integrate our mobile and mobile money
services to help transform lives.
HOW WE CREATE VALUE
An efficient network
and business structure…
• Spectrum assets in every
• 22,909 network towers
country, with multiple
layers of data capacity
and 47,082 mobile
broadband base stations
• A modernised network
offering 2G, 3G and 4G,
largely on efficient single
RAN technology
• 43,000+ km of fibre across
our markets
• 3,300+ employees
Other key inputs and enablers
• Compliance with regulatory
framework in all markets
• A sound capital allocation
strategy and financial
management that targets
revenue growth ahead
of the market and
underlying EBITDA
margin improvement
• A strong management
structure with operating
companies in each market
that can leverage
Group expertise
• Active policies to protect
the natural environment
and conserve resources
• Sound and transparent
• Mobile network
governance
partnerships that outsource
the management and
operation of our network
infrastructure
• A network of around 2,700
partners, including mobile
brands, IT companies and
telecoms infrastructure
providers
VALUES
Alive
We act with passion and a can-do attitude.
Innovation and an entrepreneurial spirit drive us.
Inclusive
We champion diversity. We anticipate, adapt and
deliver solutions that enrich the lives of the
communities we serve.
Respectful
We share the joy and pain of our customers. We act
with humility and are always open and honest.
… delivering
outstanding
services and
products…
• Voice
• Data
• Airtel Money
• Other services,
including fixed
line telephony,
home broadband
and data centres
… through a unique
distribution network
that is close to
our customers…
• More than 29,000 exclusive retail
touchpoints (including minishops,
kiosks and Airtel Money
branches)
• Around 226,500 SIM selling
outlets, including freelance
sales agents
• A wide network of more than
1.6 million retail touchpoints
• Strategic collaborations with
regional and international
partners to offer financial
and money transfer services
Other key inputs and enablers:
• Efficient Know Your
Customer processes
• Easier onboarding processes,
self-service through our app,
and our My Airtel Money app,
currently available in four markets
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HOW WE CREATE VALUE
99.2%
of our customers
use pre-paid services
1.6+ million
people earning through working
with Airtel*
*
Includes partnerships
and wider distribution network
99%
of customer requests
processed digitally
WHAT MAKES US DIFFERENT?
There are many aspects of our strategy and business model that are unique to us. If we had
to choose three important ways in which we stand apart from the competition, they would be:
Our vision for data in Africa
We could see that African customers wanted
and needed data to connect, work and thrive.
We invested in 4G to meet this demand ahead of
the competition, using single RAN technology to offer
more capacity to customers at a low incremental
cost to ourselves. We now have an extensive, resilient
and reliable 4G network in most of our markets.
Simple, trusted pricing
and service
Our straightforward pricing models,
simple ‘more for more’ offers and
intuitive customer journeys are
helping us to win and keep
customers all over Africa.
A unique
distribution network
By building exclusive channels
and developing effective
onboarding processes, we've
been able to grow our customer
base faster than the market.
… to reach…
110.6m
customers
including
35.4m
data customers
and
18.3m
Airtel Money
customers
… offering simple
customer journeys
and competitive
pricing…
• Simple, convenient
and intuitive
customer journeys
• Straightforward
pricing plans based
on the principle of
‘more for more’
• A tailored pricing
strategy that varies
depending on market
position
Other key inputs
and enablers
• Marketing and brand-
building to increase
consumer awareness and
build customer loyalty
… creating value for our stakeholders
Our people
• Direct employment
in a growing business
offering competitive pay
and skill enhancement
Our communities
• Programmes to support
health, education, the
environment and disaster
relief
Our shareholders
• Constant currency revenue
growth of 13.8% in 2019/20
• Underlying EBITDA
margin of 44.3%
• Total dividends
of 6 cents (interim and the
final declared)
Our customers
• Convenient and competitive
services that enable people
to connect, live and work
• Financial inclusion
and opportunity through
connections to local and
global economies
Our economies
• Accelerated sustainable
development through
increased penetration
of mobile service and
enhancing financial inclusion
and ‘banking the unbanked’
• Direct contributions
through licences and
operating agreements,
and overall tax contributions
of $458m in 2019/20
• 1.6 million people earning
through working with Airtel
as entrepreneurs and in our
distribution networks
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Strategic report
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Strategic report
Our strategy
Our ‘Win with’
strategy is driving
our profitable
growth – and helping
to transform lives
Our strategy is delivering sustainable,
profitable growth for our business. At the
same time our products and services are
helping transform lives across sub-Saharan
Africa by fostering financial inclusion,
driving digitalisation, supporting education
and empowering our 110 million customers.
See more
on page 24
See more
on page 26
See more
on page 28
See more
on page 30
Our strategic pillars
Win with
network
Win with
customers
Win with
data
Win with
mobile money
Win with
cost
Win with
people
See our Group strategy on page 21
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Strategic report
Our strategy continued
To achieve our vision of enriching the lives
of our customers, we have a clear business
objective: to grow market share profitably
and create superior enterprise value.
STRATEGIC PILLARS
1 Win with
network
Our strategic intent
We aim to create a leading, modernised
network that can provide the data capacity
to meet rapidly growing demand, and
enhance connectivity and digitalisation
in our markets.
That means improving basic network
uptime and quality as well as expanding
our network footprint and our 3G and
4G capabilities.
We will achieve this through:
• Building and modernising our
network through optimal end-to-end
design, including spectrum additions,
carrier aggregation, the use of single
RAN technology and fibre rollout
• Ensuring we have the right speed
and latency to provide best-in-class
customer experience on video and
social media platforms
• Delivering voice quality index while
improving network uptime
How we measure progress
We measure network through a number
of KPIs, described on page 11, including:
Total sites and broadband stations: in
2019/20 we reached 22,909 sites and
47,082 broadband stations. During the
year, we rolled out more than 1,800 sites,
upgraded more than 5,500 sites to 4G,
added more than 3,900 sites to our 3G
network, and added more than 8,000km
of additional fibre. Data capacity increased
by 64% and reached 7,572 terabyte per
day.
We consider 9 principal risks in relation to this
strategic intent, as described on page 56
2 Win with
customers
3 Win with
data
Our strategic intent
We aim to build on our distribution network
to increase our quality customer base.
We will increase penetration through:
• Strengthening our distribution
network to ensure depth and width,
and to win more quality customers
• Enhancing the customer’s
experience through simplified
processes, including the Know Your
Customer (KYC) process
We will drive loyalty and consumption
through our smart product approach and
tailored pricing:
Our strategic intent
We aim to maximise the value of
data-based services and increase data
penetration in all our markets.
That means encouraging smartphone
ownership and increasing data usage
at scale.
Our approach includes:
• Continuous investment in our
4G network
• Focusing on 4G ‘handset bundling’
(recruiting customers who buy new
handsets)
• Developing our wireless home
• Simple, transparent products with
broadband business
few tariffs
• ‘More for more’ bundles that offer
lower unit prices, longer validity, and
more content in exchange for a higher
recharge cost
• Build customer airtime balances
through promotions
• Segmented offers based on balance,
usage and type of device
How we measure progress
We measure customers through
a number of KPIs, described on page 11,
including:
Customer base and net adds: our
customer base grew by 11.9% to
110.6 million in 2019/20.
We consider 9 principal risks in relation
to this strategic intent, as described
on page 56
• Developing our enterprise business
How we measure progress
We measure data through a number
of KPIs, described on page 11, including:
Data customers, 4G data customers
and penetration: we reached 35.4
million data customers in 2019/20, an
increase of 18%. Our 4G customer base
grew by 105%, reaching 29% of the total.
Data usage, 4G data usage and data
usage per customer: data usage
increased by 81% in 2019/20 to 710
billion MBs, while data usage per
customer grew 56.3% to 1,863 MB/
customer/month. Q4 2020, data usage
per customer reached 2,145 MB per
month.
We consider 10 principal risks in relation
to this strategic intent, as described
on page 56
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STRATEGIC PILLARS
Our ‘Winning with’ strategy
describes the six strategic
pillars in which we are
actively working to achieve
this objective. Cutting across
all these pillars is our commitment
to transforming lives, driving
sustainable development and
acting as a responsible business.
We have a unique opportunity to play
a key part in the social and economic
transformation of the people in our markets
through enhanced digitalisation and financial
inclusion. Working with the governments
and institutions of the countries in which we
operate is a central element of our strategy.
We aim to help them realise their goals for
sustainable development by working to
integrate mobile and mobile money
approaches to their economies. At the same
time, we know that strict and continued
compliance with local laws and regulations
and listing requirements are a vital element
in our current and future success.
At all times, we aim to act as a responsible
business. That means doing business
transparently and with a sound governance
structure. It also means being a good
neighbour and an active contributor to
society, by creating jobs, paying taxes and
respecting the environment. We also support
our communities by working with local
stakeholders in our core sustainability
programmes: improving digital education,
improving health and supporting
communities through disaster relief.
These are described on pages 52-55.
4 Win with
mobile money
5 Win with
cost
6 Win with
people
Our strategic intent
We aim to drive the uptake of Airtel Money
services in all our markets, harnessing the
ability of a profitable mobile money business
to enhance financial inclusion in some of the
most ‘unbanked’ populations in the world.
Our strategic intent
We aim to achieve an efficient operational
model, leading to an effective cost
structure and improved margins. This
enables us to build large incremental
capacity at low marginal cost.
Our strategic intent
We aim to be an employer of choice with
a dynamic working environment that
drives productivity and fosters the health,
knowledge, skills, experience, drive and
inventiveness of our colleagues.
We will achieve this by:
Our approach includes:
We will achieve this by:
• Further strengthening our
• Our cost efficiency initiatives, which
distribution platform of kiosks, mini
shops and dedicated Airtel Money
branches, so customers can access cash
seek to optimise site operational
and maintenance expenses, and
bandwidth cost
• Introducing additional mobile money
services, including merchant and
commercial payments, benefit transfers,
loans and savings
• A detailed analysis of expenses with
the aim of improving operating margins
in individual markets
• Optimal design for vendor service
• Building international money transfer
delivery
services through partnerships
• Building a diverse pipeline of talent
(both internal and external) to meet
current and future business needs
• Improving the functional skills of our
colleagues through training and the
use of cognitive skills assessments
• Redesigning and automating our human
resources processes to improve the
overall colleague experience
How we measure progress
We measure mobile money progress
through a number of KPIs, described
on page 11, including:
Airtel Money customer base and
penetration: our Airtel Money customer
base grew by 28.7% to 18.3 million in
2019/20.
Airtel Money transaction value and
transaction value per customer:
our transaction value grew 31% to
$32bn in 2019/20. Transaction value
per customer grew by 9.0% in constant
currency.
Airtel Money revenue and ARPU:
Airtel Money revenue grew by 37.2% in
2019/20. Airtel Money ARPU was $1.6,
up by 14.2% in constant currency.
We consider 9 principal risks in relation to
this strategic intent, as described on page 56
How we measure progress
We measure cost optimisation through
a KPI, described on page 11:
How we measure progress
We measure our people through a number
of KPIs, including:
Underlying EBITDA for 2019/20 was
$1,515m, up by 16.3% versus 2018/19
in constant currency. Underlying EBITDA
margin improved by 1% to 44.3%.
We consider 9 principal risks in relation
to this strategic intent, as described
on page 56
Diversity – both in terms of gender (28%
women) and nationality (35 nationalities
represented).
Learning and development – colleagues
completed an average of 2.7 courses in
2019/20.
Automation of HR processes – as of
March 2020, 67% of our HR processes
had been automated, and this will continue
to be a key focus to improve the colleague
experience at Airtel Africa.
We consider 5 principal risks in relation
to this strategic intent, as described
on page 56
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Strategic report
Our strategy in action
Winning
with
network
in Malawi
Win with
network
Group KPIs – performance
across all our markets
22,909
sites as of
31 March, 2020
64.7%
of sites have 4G
43,000+km
of fibre
See more Group KPIs
on pages 11-13
100%
of our sites are 4G
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In 2019, Malawi joined the growing list
of African countries where Airtel is the
top 4G provider – and is now one of the
few African countries where 100% of
our sites are 4G. In modernising our
network with reliable, high capacity
4G infrastructure, we’re delivering on
our business strategy to increase data
consumption, as well as attracting new
customers and helping the Malawi
government achieve its goal of
extending information technologies
to the entire population.
Most of the over 18 million people in
Malawi live in rural areas (83%), and
businesses of all types are increasingly
expanding outside the cities. With 65%
of the country’s population under the
age of 25 and the use of smartphones
on the rise, there’s a fast-growing
demand for data and fast, reliable
connectivity everywhere.
Ever since I started using Airtel,
I prefer it for voice and data over
other service providers. Not only
does Airtel have the widest
coverage in Malawi, but the cost of
making calls and data is way more
affordable than its competitors.
I prefer using Airtel, even when
making calls to numbers belonging
to other mobile network operators.
EZEKIEL MANGANI ICT INFRASTRUCTURE & SECURITY MANAGER,
BLANTYRE, MALAWI
4G for all
To meet this increasing demand, we set ourselves the
goal of bringing quality and affordable 4G connectivity
to all Malawians, regardless of where they live or work.
To do this, we needed to extend our 4G network beyond
the main cities. We had to anticipate customer desires
and needs and build a data network for the future.
And we had to raise awareness around 4G – what is it?
How can people upgrade? And why should they?
We’ve been working since 2018 to expand our 4G
infrastructure across the country. This has involved building
two fibre routes across borders in Africa, establishing reliable
connectivity between Malawi’s main cities and increasing the
fibre networks within the cities. The final step was to expand
our 4G service to all of our existing sites – we reached 100%
of our sites in September 2019, a 123% increase between
March 2019 and March 2020.
This latest expansion was largely in rural areas, bringing our
world-class 4G service to all of our customers. Due to our
enhanced capacity and more 4G customers, 4G data usage in
rural areas grew by sixfold in 2019/20, with urban usage rising
by 173% and overall 4G data usage in Malawi growing by
216% over the same period. Rural 4G data usage was 21%
of our 4G data total in 2019/20.
Encouraging upgrades
To deepen our 4G penetration, we had to make it quick,
easy and attractive for customers to securely upgrade
their phones.
So, once we had our 4G infrastructure in place, we began
to promote 4G through our distribution network and through
traditional and online advertising. We emphasised the speed
and reliability of the network, also promoting affordable
4G phones through mobile outlets.
Improvements all round
As a result of all of this hard work, we’ve seen overall
data usage jump by 63% in 2019/20, and overall data
revenue increase by 41.5% in 2019/20.
This shift to 4G also good for our customers and their
businesses. Malawians now have a fast and reliable means
of accessing the internet wherever they are – whether
for personal entertainment, learning or doing business.
Our enhanced 4G network is helping our business customers
of all types – NGOs, entrepreneurs, government bodies,
small businesses, enterprises – to work more efficiently and
expand into new areas to take advantage of the 4G network.
A 4G future
We’re building on these successes and continuing
to move customers all over Malawi to 4G.
We’re working behind the scenes to increase our 4G capacity
and speed, while continuing to attract customers to 4G with
competitive offers.
For more details of our strategy, see pages 21-31
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Strategic report
Our strategy in action continued
Win with
customers
Group KPIs – performance
across all our markets
110.6m
customer base
+11.9%
$2.7
average revenue
per customer
+3.3%
$3,422m
revenue
+13.8%
See more Group KPIs
on pages 11-13
Winning
with
customers
in Nigeria
41.8m
customers in Nigeria,
an increase of 12.5% in
2019/20
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Our customers are at the heart of what
we do – and increasing our customer base
is a central part of our business strategy.
Whether they’re in fast-growing urban
centres or in remote rural areas, it’s
important that we get close to our new
customers – and, crucially, register them
in ways that meet national Know Your
Customer (KYC) requirements. So we’ve
invested in an innovative mix of our own
outlets, franchised agents and non-
franchised agents to reach more people
than ever before – leading the way in
meeting KYC regulations with efficient,
tech-driven registration.
Registering the hard-to-reach
Our business in Nigeria shows the success of our
distribution model in action. In 2019/20, we acquired
4.6 million new customers in Nigeria – growing our
business in the country by almost 24.4%.
Reaching and registering rural customers through our unique
distribution model played a key part in this rapid growth. We
wanted people across Nigeria to be able to register an Airtel
SIM quickly, efficiently, and in full compliance with Nigerian
KYC regulations. So we tailored our strategy to meet Nigeria’s
diverse geography, and built and serviced a network of outlets
and agents equipped with our own KYC kits allowing people
to quickly subscribe and register in line with compliance
requirements.
Customer base
)
s
n
o
i
l
l
i
m
(
44
42
40
38
36
34
32
30
Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Economic growth
The growth in Airtel customers in Nigeria is underpinning
our double-digit revenue growth and a rapid increase
in data consumption.
Our distribution model is helping our business grow and,
in turn, creating jobs and financial empowerment for
thousands of agents. In 2019/20, we saw customers in Nigeria
increased to 41.8 million, up by 12.5% from 37.1 million in
2018/19.
It’s also creating real benefits for the local economy, especially
in rural areas.
Airtel has helped me stay
connected with my family, even
in the remote village of Agalawa.
We have good data service, which
is a thing of joy and ease, knowing
what goes on in the rest of the world.
We’re no longer cut off.
ABDULAHI HALIRU FARMER, KANO STATE, NORTHERN NIGERIA
For more details of our strategy, see pages 21-31
For our Nigeria business review, see pages 34-35
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Strategic report
Our strategy in action continued
+23.8%
growth in data ARPU
within DRC in Q4 2020
Win with data
Group KPIs – performance
across all our markets
35.4m
data customer base
+18%
$2.4
data average revenue
per customer
+20%
$930m
data revenue
+39%
See more Group KPIs
on pages 11-13
Winning
with data in
Democratic
Republic of
the Congo
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There is a huge opportunity to meet the
demand for data in sub-Saharan Africa.
While 47% of mobile users worldwide
are currently using data services,
in sub-Saharan Africa that figure
is just 24% – but with the region’s
young demographics, that proportion
is growing fast.
Winning with data is a core intent of our
strategy. It presents a clear opportunity for
profitable growth, while contributing to the
digitalisation and economic transformation
of the countries where we operate.
With our leading 4G network we’re well
positioned to help customers get the data
services they need, and we’re seeing fast
data growth. Across Airtel Africa, we grew
our data customer base by 18% in
2019/20, while data ARPU (average
revenue per user) grew by 20%.
The fibre optic infrastructure we
implemented this year is simply
a game changer for Democratic
Republic of the Congo. It will
allow us to make a fundamental
contribution to the development
of the country.
THIERRY DIASONAMA MANAGING AND NETWORK DIRECTOR, AIRTEL,
DEMOCRATIC REPUBLIC OF THE CONGO
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Strong networks harnessing
smartphone growth
Winning with data has two key elements: increasing the
number of people using our data services, and increasing
the overall amount of data being used.
Both depend on a resilient 4G network that both drives and
absorbs accelerating demand as more and more people
switch to 4G smartphones.
Our data initiatives in Democratic Republic of the Congo
(DRC), where we’ve invested proactively in a leading 4G and
fibre network, show how both these elements work together
to foster growth. In DRC, our data ARPU grew 23.8% in
2019/20, while overall data revenue grew by 26.2%.
Winning new smartphone customers
As elsewhere in Africa, smartphone penetration is
growing in DRC – smartphone handsets were used
by 26.3% of customers in March 2020, up from 22.7%
in March 2019.
The growth is fastest among a young content-hungry
demographic, typically aged 15-25, as well as SME owners
using data to boost their businesses. We aim to win these
smartphone users over from the start. With our Airtel 4G
Pocket WiFi service, smartphone users can create their
own WiFi hotspots.
In DRC, our data customer base grew by 14.5% in 2019/20.
Driving data usage and revenue
We want our customers to make the most of the benefits
data brings, so we're focused on offering attractive
service packages that drive data growth.
We have a wide range of affordable data bundles, based on
the ‘more for more’ principle in which users who use more data
get more value. We’re offering rationalised pay-as-you-go
tariffs. And we’re actively upgrading customers from 3G to 4G.
The result has been a substantial growth in data usage per
customer in DRC – a 126% increase in 2019/20.
Contributing to development
where infrastructure is scarce
The growth of data in DRC has many potential benefits
beyond our business.
By developing our 4G network and working with partners,
including the government, to install over 2,700km of fibre
cable between western and southern DRC, we’re substantially
increasing connectivity in a country where traditional
infrastructure is scarce. We’re opening up opportunities
for businesses and individuals to access global information.
And we’re investing in community projects that harness our
data capabilities and expertise, as described on pages 52-55.
For more details of our strategy, see pages 21-31
For our Francophone Africa business review, see pages 38-39
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Strategic report
Our strategy in action continued
Winning with
Airtel Money
in Zambia
Win with
mobile money
Group KPIs – performance
across all our markets
18.3m
Airtel Money
customer base
+28.7%
$32bn
Airtel Money
transaction value
+31.0%
$311m
Airtel Money revenue
+37.2%
See more Group KPIs
on pages 11-13
30
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Growing our mobile money service,
Airtel Money, is a core strategic focus
across all our markets. We know
there’s a huge opportunity to meet
the needs of tens of millions of
customers in Africa who have
little or no access to banking and
financial services – and this demand
is driving growth.
In 2019/20, across the Group Airtel
Money customer numbers grew by
28.7%, with revenues up by 37.2%.
28.7%
growth in Airtel Money
customer base
in 2019/20
37.2%
revenue increase
It’s been so gratifying to see our mobile
money services empowering people and
businesses and improving lives in many
rural, underserved areas. While we’ve
made great strides in our journey to
create financial inclusion throughout
Zambia, we still have a long way to go.
JAMES CHONA AIRTEL MONEY DIRECTOR, ZAMBIA
Transforming the market
Our rapid growth in Zambia shows our Airtel Money
strategy in action.
Back in 2016/17, competitors dominated the Zambian mobile
money market. The Airtel Money contribution to our Zambia
business that year was less than 1% of our overall revenue,
with only 2.4% of our overall customers using our mobile
money services.
Today, our business has been transformed. In 2019/20, 42.4%
of our Zambian customers used Airtel Money – and Airtel
Money contributed 21.8% of our overall revenue in Zambia.
Airtel Money performance in Zambia
42.4%
116%
3 year
CAGR
235%
29.5%
584%
10.5%
154%
2.4%
2016/17
2017/18
2018/19
2019/20
Revenue
Customer penetration
Growth
Transforming our execution
We’re driving this growth by executing the four pillars
of our Airtel Money strategy:
• Increase agents – over this year, adding thousands of Airtel
Money agents across Zambia to provide our Airtel Money
customers with the funds they need.
• Leveraging our mobile customer base – converting
thousands of existing Zambian mobile customers to Airtel
Money, at the same time as winning new customers
through our expanded distribution network and efficient
customer processes.
• Currency of choice – building an ecosystem in which
customers can use Airtel Money to pay utility bills or buy
goods and services from participating merchants across
the country.
• Additional services – offering Zambian customers access
to our partners’ services, including international money
transfers and microloans.
Transforming lives
We can see the success of our Airtel Money strategy
in our financial results from Zambia. And we can also
see its impact on the people and communities we serve.
From living mainly in a cash economy, often hundreds of miles
from the nearest bank, Airtel Money customers now have
access to mobile money. And, through our money transfer
services, they’re more connected to the global economy
than ever before with safe funds.
At the same time, we’re seeing the financial empowerment
of thousands of entrepreneurs now associated with us.
We’re proud of the difference this financial inclusion and
empowerment is making – to people’s lives, and to the
Zambian economy.
For more details of our strategy, see pages 21-31
For our Airtel Money business review, see pages 42-43
Airtel Africa plc Annual Report and Accounts 2020
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31
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Strategic report
Our stakeholders
Stakeholders are at the heart
of our strategic decision-making.
Engaging effectively with our
stakeholders is fundamental for
our businesses, and the people
in and around them, to thrive.
To become the preferred provider of telecoms and mobile money
services in Africa, we must win – and keep – the trust of our many
stakeholders. We work hard to understand exactly who they are,
what they expect and need from us, and how we can create
mutual and long-lasting value.
STAKEHOLDERS
Regulators and
governments
We work closely with key decision-
makers in our markets to align
ourselves with policies and
regulations and ensure that our
services support the ambitions of the
countries in which we do business.
How we engaged in the year
We have formal meetings and ad hoc
conversations with regulatory authorities,
under our four-level approach for
proactive engagement which spans from
interactions with the local regulatory
affairs director at each office to speaking
directly to our Group CEO. We liaise with
banks and telecoms operators as needed
to discuss product approvals, licensing
requirements and shaping the regulatory
landscape towards best practice. Working
well with local unions is critical to meeting
our employees’ needs.
Interests and concerns
Across Africa, governments want to strike
a balance between the interests of
investors, consumers and the state when
it comes to financial and digital inclusion.
We’re seeing a push in many of our
markets for telecoms licensees to have
a local shareholding. We’re seeing
increasing recognition and regulation of
mobile financial services. Compliance
around anti-money laundering, data
protection, quality of service and supply
chain requirements remains critically
important.
We describe our work with governments
and regulators on pages 16-17.
Customers
Approximately 110 million people
across Africa use our data, voice and
mobile money services to connect,
live and work.
Communities
We’re deeply rooted in and dedicated
to our communities across Africa
where we live, work and provide
our services.
How we engaged in the year
We aim to be a positive force and make
a real and lasting difference in the
communities where we operate by
bridging the digital divide and increase
financial inclusion. Individuals and
organisations (NGOs and governments)
in our communities regularly reach out to
us – by calling, writing or visiting in person
– to request our help with local initiatives
and challenges. Each of our businesses
has a CSR manager who reviews and vets
all requests and, after gaining approval
from their local MD and the head office
compliance team, takes action on
priority issues.
Interests and concerns
Through research with community
stakeholders and employees, we assessed
how we could best support our
communities and now focus on three main
areas – education, health and disaster
relief – through the use of our technology.
These are the focus of our employee-led
community programmes, as well as our
partnerships with external organisations.
We describe our work supporting
communities in the Corporate social
responsibility section on pages 52-55.
How we engaged in the year
We work hard to understand and engage
with our customers, and continue to
innovate and develop our range of
products and services to meet their needs.
We engaged with customers through
our 24/7 on-shore call centres, in person
in our 1,500+ Airtel stores, and over email
and social media.
Interests and concerns
With such a wide range of customers,
we aim to meet a variety of needs. For
example, our young, upwardly mobile
customers seek extensive and affordable
voice and data connectivity. Our mature
business customers depend on Airtel
Money for their daily economic activity and
on our wide network for connecting to the
world. Our Enterprise customers leverage
our network to operate geographically
spread businesses and connect their
employees.
We know that overall, our customers want
to have a seamless customer experience
and be self-sufficient: to be able to easily
find the information they need without
having to ask for help. It’s also important
to offer them a variety of channels for
reaching us – people are increasingly
turning to social media for service.
110m
customers across Africa use our data,
voice and mobile money services
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STAKEHOLDERS
Since the IPO in 2019 we have
a diverse shareholder base.
Through regular financial reporting
and events, we ensure an ongoing
conversation with shareholders.
Our people
Our more than 3,300 full-time
permanent employees in 17 countries
represent 35 nationalities and are the
heartbeat of our business.
How we engaged in the year
We hold quarterly online town halls
(in both English and French) with all
colleagues, where our CEO updates
everyone on our performance,
organisational changes and plans
before taking questions from individuals.
Each country-level business has a monthly
town hall, as well as one-to-ones with
management, regular union forums
and local e-newsletters. We also have
a WhatsApp chat line where people
can ask our CEO anonymous questions
at any time.
Interests and concerns
Our people are keen to develop
themselves, and are very receptive to
training that will help them to progress
their careers. To share best practice,
we send employees on short-term
assignments in other countries to learn
from teams who have made notable
achievements.
Partners and suppliers
We work with almost 2,700 suppliers
– mobile brands, IT companies and
telecoms infrastructure providers –
across Africa, with the top 100
accounting for just over 86% of
our sales.
How we engaged in the year
We are very proactive in dealing with
our partners and suppliers, aiming to
make sure we resolve any operational
issues or concerns quickly.
We meet our vendors through multiple
forums. The majority of interactions
happen through meetings between senior
representatives in Nairobi, at least once
a quarter. These include governance
meetings, commercial meetings and,
where necessary, grievance meetings.
Our OpCo teams discuss operational
matters with vendors at country level.
We also engage with partners and
suppliers at mobile industry conferences,
such as Barcelona MWC and AfricaCom.
Interests and concerns
Our suppliers are typically very interested
in operating with us due to our growth
story and our track record of designing
win-win solutions with them. They provide
information on the latest developments
and support us with the adoption of new
technologies. We also discuss sales and
project plans, bids and proposals,
and payments.
2,700
suppliers
3,300
full-time permanent employees
section 172 statement
The information on these two pages,
alongside the discussion on pages 78-79
of the governance report, serves as our
section 172(1) statement under
the 2006 Companies Act.
The directors are also responsible under
section 172 of the Companies Act 2006
for promoting the success of the
company with regard to the needs of
wider society and stakeholders, including
customers, consistent with our core
business objectives.
Investors and
shareholders
Since the IPO in 2019 we have a diverse
shareholder base. Through regular
financial reporting and events,
we ensure an ongoing conversation
with shareholders.
How we engaged in the year
We follow each of our results
announcements with presentations,
conference calls and meetings with our
shareholders. We held meetings with
major institutional investors, shareholders
and financial analysts throughout the year
in various geographic locations to discuss
the business performance and strategy.
The Board is regularly updated on the
investor and shareholder feedback coming
from these meetings to ensure we create
sustainable long-term value for
shareholders in a manner which
contributes positively to a wider society.
We have consulted with our top 20
shareholders and three proxy agencies to
provide an early opportunity to comment
on the main elements of the directors’
remuneration policy.
Interests and concerns
In addition to the obvious concerns around
solid financials, such as delivering
sustainable profitable growth, free cash
flow and dividends, our shareholders
expect to see high standards of
governance at Airtel Africa.
We describe our relationship with our
majority shareholders on pages 95-96.
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Airtel Africa plc Annual Report and Accounts 2020
33
Strategic report
Business review: Nigeria
Creating strong growth and exciting
opportunities through better coverage
and a dynamic distribution network.
$1,373m
revenue
+24.4%*
$565m
operating profit
+52.6%*
$744m
$2.9
underlying EBITDA
+35.6%*
ARPU
+9.4%*
Revenue ($m)
24.4%*
1,373
25.2%*
1,106
2018/19
2019/20
* Growth % in constant currency
Revenue split
Others
6%
Data
32%
Underlying EBITDA ($m)
54.2%^
49.7%^
550
All of this has contributed to our double-digit
revenue growth, a wider customer base and
a rapid rise in data consumption.
We’ve also continued our commitment to
working with the communities around us
and the environment – see pages 52-55 for
some of our CSR activities in these areas.
Nigeria also has low banking penetration –
around 50% in 2019, according to the Central
Bank of Nigeria. We currently provide services
through a partnership with a local bank, but
following regulatory changes in 2018 we
applied for a licence to offer payment services
independently. When approval for this licence
is obtained, it will allow us to access one of the
largest and least penetrated mobile money
markets in Africa.
Other market participants
• MTN
• Glo
• 9 Mobile
Our market
Nigeria is the largest single
country market for Airtel Africa –
and presents some of our greatest
opportunities. With a large and
growing population, low banking
penetration and rapidly rising
demand for data, it offers
enormous potential for us to both
grow our business and increase
our positive social impact.
Customers in Nigeria expect excellent
coverage and a quality experience, and
increasingly demand a strong data
experience.
We’ve been working to meet this demand
through modernising our network and rapidly
upgrading our 4G capability. At the same time,
we’ve led the way in strengthening and
expanding our distribution network, meeting
Know Your Customer (KYC) regulations,
establishing fixed outlets for customers to
comply with Nigeria’s KYC requirements, a
key element in building our customer base.
Summarised statement of operations
Voice
62%
Description
Revenue
Voice revenue
Data revenue
Other revenue
Underlying EBITDA
Underlying EBITDA margin
Depreciation & amortisation
Exceptional item
Operating profit1
Capex
744
Operating free cash flow
Operating KPIs
ARPU
Total customer base
Data customer base
Unit of
measurement
$m
$m
$m
$m
$m
%
$m
$m
$m
$m
$m
$
m
m
2019/20
2018/19
1,373
1,106
Reported
currency
change %
Constant
currency
change %
24.1%
14.9%
67.8%
24.4%
15.1%
68.1%
(17.4%)
(17.2%)
35.3%
35.6%
740
259
107
550
850
435
88
744
54.2
49.7
448 bps
449 bps
(184)
(157)
16.9%
17.6%
5
565
325
419
2.9
41.8
16.7
(22)
(123.8%)
(124.0%)
52.6%
80.9%
13.8%
9.4%
371
180
370
2.7
37.1
14.7
52.6%
80.9%
13.2%
9.2%
12.5%
14.0%
1 The operating profit in above table includes CSR (Corporate social responsibility) expense of $1m for the year
ended March 2020
2018/19
2019/20
* Percentage in constant currency
^ Underlying EBITDA margin in reported currency
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Our performance
Reported revenue was up by 24.1%, with
almost the same growth in constant currency.
This was underpinned by 15.1% revenue
growth in voice and 68.1% in data.
Other
Other revenue decreased by 17.2%, affected
by the rollout of new directives issued by the
Nigerian Communication Commission (NCC)
on content-based revenue.
Voice
Voice revenue at $850m, up by 15.1%,
was supported by a 12.5% increase in
the customer base and a 1.2% increase
in average revenue per user (ARPU). We
expanded our customer base as a result
of efficient sales and distribution network
supported by the accelerated rollout of our
network infrastructure and 4G leadership.
Data
Data revenue growth of 68.1% was
supported by a 14% growth in data
customers and a 53.8% increase in data
usage per customer. This growth was driven
by an accelerated 4G rollout (with 68% of
total sites now 4G), a 1.8% increase in
smartphone penetration, and affordable
products in our data bundles – 47.5% of total
data usage is now through the 4G network.
Data revenue accounted for 31.7% of total
revenue, up by 8.2%.
Airtel Money
We continue to engage the relevant
regulatory body on the approval of our
application for a payment services licence.
Underlying EBITDA
In 2019/20, underlying EBITDA margin
increased by 449 bps due to the revenue
growth and operating efficiencies. Exceptional
items include $5m one-off gain, largely as a
result of the reassessment of the customers
‘life cycle’ which led to a deferment of
customer acquisition cost.
Capital expenditure
Capital expenditure amounted to $325m,
up from $180m year on year, as the business
continued to expand and invest in further
rollout of network infrastructure.
Operating free cash flow
The $419m operating free cash flow was up
by 13.8%, largely as a result of double-digit
underlying EBITDA growth partially offset
by higher capital expenditure.
We’re a force for greater
good in Nigeria, the
largest country by
population in Africa,
connecting 41 million
people through
enhanced 4G, extended
voice coverage and
newly launched
home broadband.
OLUSEGUN OGUNSANYA MD & CEO, AIRTEL NIGERIA
My connection with Airtel Africa
means I get to influence network
deployment to communities, solve
subscriber issues and provide
a means of livelihood to others.
YAHAYA HAMMA, SALES AREA MANAGER, EMERGING MARKETS, KANO
METROPOLIS, NIGERIA
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Airtel Africa plc Annual Report and Accounts 2020
35
Strategic report
Business review: East Africa
Airtel Money and data driving growth
in segment with strong potential.
$1,201m
revenue
+13.6%*
$266m
operating profit
+32.7%*
$485m
$2.2
underlying EBITDA
+14.6%*
ARPU
+3.4%*
Revenue ($m)
12.8%*
13.6%*
1,102
1,201
2018/19
2019/20
* Growth % in constant currency
Revenue split
Others
10%
Mobile
Money
17%
Data
25%
Revenue % contribution is excluding eliminations
Underlying EBITDA ($m)
40.1%^
40.4%^
442
485
Our market
The six markets in our East Africa
segment are each unique – but
overall they are characterised by
positive GDP growth with a young
and growing population,
presenting a clear opportunity
for us to grow our business and
deepen our social impact. We’re
focused on three core activities:
acquiring quality customers,
accelerating the penetration of
data and 4G, and further growing
our Airtel Money business.
East Africa is our largest segment by
customer base, and we continue to focus
on our drive to win more quality customers
through network improvements and
distribution expansion, coupled with
popular products.
Our network modernisation programme has
delivered 4G coverage expansion to meet the
needs of region’s growing demand for data.
We are the first company to offer nationwide
4G coverage in Uganda, Malawi and Zambia,
where every tower is 4G enabled. We
continue to expand 4G coverage in Kenya,
and during the year we launched 4G services
in Tanzania, on our newly-acquired 1,800
MHz spectrum.
We support the growth of data customers
through a range of commercial initiatives,
including smartphone promotions and 4G SIM
upgrades. In Uganda and Zambia, we have
launched Airtel TV as a platform to distribute
local and international content, and will be
launching in other markets within the
next year.
We have continued to focus and expand
our distribution network with the aim of
getting closer to our customers, building
more exclusive channel outlets, rolling out
more kiosks and recruiting independent
freelancers to support our business.
Summarised statement of operations
Unit of
measurement
$m
$m
$m
$m
$m
$m
%
$m
$m
$m
$m
$m
$
m
m
2019/20
2018/19
1,201
1,102
Reported
currency
change %
Constant
currency
change %
9.0%
1.6%
15.5%
38.6%
3.9%
9.7%
13.6%
6.2%
20.3%
43.7%
7.6%
14.6%
27 bps
37 bps
1.5%
5.7%
596
266
154
126
442
40.1
(226)
(7)
(239.2%)
(244.4%)
209
257
185
2.2
42.9
10.9
26.9%
32.7%
(29.6%)
(29.6%)
64.3%
78.6%
(0.8%)
3.4%
13.5%
22.0%
606
307
213
131
485
40.4
(229)
10
266
181
304
2.2
48.6
13.3
Airtel Money revenue3
Other revenue
Underlying EBITDA
Underlying EBITDA margin
Depreciation & amortisation
Exceptional items
Operating profit
Capital expenditure
Operating free cash flow
Operating KPIs
Average revenue per user
Total customers
Data customers
Voice
50%
Description
Revenue2
Voice revenue
Data revenue
2018/19
2019/20
1 East Africa segment includes Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia
2 The above table includes intra-segment eliminations of $56m for the year ending March 2020 and $40m for the
year ending March 2019
* Percentage in constant currency
^ Underlying EBITDA margin in reported currency
3 Airtel Money revenue post intra-segment eliminations with mobile services is $157m for the year ending March
2020 and $114m for the year ending March 2019
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In every market, we have made Know Your
Customers (KYC) kits more accessible,
ensuring compliance with local laws and
regulations for the sign-up of new customers,
and re-registration of existing customers.
Airtel Money revenue grew by 43.7% in
2019/20, showing that a mobile money
ecosystem continues to grow in the region.
In such a diverse segment, each market has
its own specific opportunities and challenges.
We tailor market-specific plans to address
each country context. As a partner to each
of the countries we operate in, we continue
to contribute directly in terms of job creation,
digitalisation and financial inclusion.
Other market participants
• Kenya – Safaricom and Telkom
• Malawi – TNM
• Rwanda – MTN and KTRN
• Tanzania – Vodacom, Tigo,
Halotel and TTCL
• Uganda – MTN and Africell
• Zambia – MTN and Zamtel
Our performance
East Africa reported revenue grew by 9.0%
and by 13.6% in constant currency. This was
broad based across services, and partially
offset by currency devaluation in Zambia
and Kenya. All countries, with the exception
of Rwanda, delivered double-digit revenue
growth. Performance improved in Q4 2020
largely as a result of an increase in voice
and data customers in Tanzania, Uganda
and Kenya.
Voice
Voice revenue at $606m, grew by 6.2%,
largely driven by a 13.5% increase in
customers and 15.8% increase in usage
per customer slightly off-set by ARPU drop
of 3.3%.
Data
Data revenue grew by 20.3%, driven by
22% growth in data customers and a 4.6%
increase in data ARPU. There was growth
in all countries underpinned by the rollout
of more than 2,400 of 4G sites, a 2.9ppts
increase in smartphone penetration, and
simple and affordable products through
‘more for more’ data bundles. Data revenue
accounted for 25.6% of the total revenue
in East Africa.
Airtel Money
Mobile money revenue grew by 43.7%, largely
driven by growth in Zambia, Tanzania, Uganda
and Malawi. This was driven by a 28.9%
increase in customers and a 21.4% growth
in transaction value per customer, supported
by the expansion of our distribution network
through more agents, kiosks and Airtel Money
branches. Expansion slowed in the second
half compared to the same period in the prior
year, which benefited from an extensive
distribution rollout in Zambia.
Underlying EBITDA
The underlying EBITDA margin was 40.4%,
an improvement of 37bps compared with the
previous financial year. Q4 2020 underlying
EBITDA margin declined by 111bps due to
higher operating expenses resulting from
our investment in network expansion, higher
marketing spends, and increased regulatory
charges in Kenya, Uganda and Rwanda.
Exceptional items include $10m one-off gain,
largely as a result of the reassessment of the
customers ‘life cycle’ which led to a deferment
of customer acquisition cost.
Capital expenditure
We invested $181m in capex, slightly
lower than the previous financial year.
FY 2019 capex was higher due to network
modernisation in East Africa. Due to this
lower capex and higher underlying EBITDA,
operating free cash was up 78.6% at $304m.
Our cross-border money transfer service has
revolutionised the way small traders in Tanzania can
do business with neighbouring countries. With the
support of the Central Bank of Tanzania, this is just
one way we’re bringing greater financial security
to our customers and connecting them to the world.
ISACK NCHUNDA AIRTEL MONEY DIRECTOR, TANZANIA
I see great potential for
us to grow our portfolio
and revenue across
East Africa. Through
our strong and expanding
network and distribution
channels, we’re capturing
the increasing demand
for fast data and
mobile money services.
Our activities and
opportunities are driving
financial inclusion and
economic growth in
communities across
the region.
IAN FERRAO REGIONAL DIRECTOR, EAST AFRICA
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Airtel Africa plc Annual Report and Accounts 2020
37
Strategic report
Business review: Francophone Africa
Shaping the change that will allow
society – and our business – to grow.
$859m
revenue
(0.5%)*
$292m
$91m
operating profit
(31.5%)*
$3.7
underlying EBITDA
(11.8%)*
ARPU
(4.8%)*
Revenue ($m)
-2.1%*
-0.5%*
888
859
2018/19
2019/20
* Growth % in constant currency
Revenue split
Others
10%
Mobile
Money
11%
Data
22%
Voice
61%
Revenue % contribution is excluding eliminations
Underlying EBITDA ($m)
38.2%^
34.0%^
339
292
Our market
The seven countries in our
Francophone Africa segment vary
widely in size, geography, wealth
and market environment. What they
share, however, is strong potential:
for growth in our voice, data, and
Airtel Money offerings – and for our
products to make lasting positive
impact on people’s lives.
Our Francophone Africa segment is made
up of Republic of the Congo, Democratic
Republic of the Congo (DRC), Chad, Niger,
Gabon, Madagascar and the Seychelles.
These are typically countries with young
and growing populations, where demand
for mobile voice and data services is high.
We’re well positioned here, as either the
top or second-placed telecoms provider
in six of our seven markets.
While disruptions and macro-economic
weakness have affected our revenues and our
recent performance, we believe the underlying
dynamics in Francophone Africa remain strong.
We’re continuing to focus on modernising
our networks and investing in 4G and fibre,
to make sure more customers can access
quality data services, all of the time.
In 2019/20, we more than doubled the
number of our 4G sites, launching 4G in
Republic of the Congo, DRC and Niger.
We see investing in digitalisation as part
of a long-term approach to sustainable
development in countries which often face
severe infrastructure challenges. And we can
see the difference our services are making.
For example, we’ve worked with the
government and the World Food Programme
(WFP) in the Republic of the Congo on a project
in which vulnerable beneficiaries receive
donor transfers to their Airtel Money accounts.
And we’re continuing to work with local
communities to improve education and health
– see pages 52-55 for some of our CSR
activities in these critical areas.
Summarised statement of operations1
Description
Revenue2
Voice revenue
Data revenue
Airtel Money revenue3
Other revenue
Underlying EBITDA
Underlying EBITDA margin
Depreciation & amortisation
Exceptional items
Operating profit
Capital expenditure
Operating free cash flow
Operating KPIs
Average revenue per user
Total customers
Data customers
Unit of
measurement
Year ended
March 20
March 19
Reported
currency
change
Constant
currency
change
$m
$m
$m
$m
$m
$m
%
$m
$m
$m
$m
$m
$
m
m
859
525
189
93
86
292
34.0
(189)
(12)
91
133
159
3.7
20.2
5.4
888
597
159
75
81
(3.2%)
(12.1%)
19.0%
25.0%
6.5%
(0.5%)
(9.5%)
22.0%
28.4%
9.2%
(13.9%)
339
(11.8%)
38.2 (423) bps (435) bps
(180)
4.8%
7.9%
(24)
(49.4%)
(49.1%)
135
190
149
4.0
18.9
4.4
(32.9%)
(31.5%)
(30.1%)
(30.1%)
6.6%
12.0%
(7.5%)
(4.8%)
7.1%
21.8%
2018/19
2019/20
2 The above table includes intra-segment eliminations of $34m for the year ending March 2020 and $24m for the
1 This business segment includes Niger, Chad, Gabon, Democratic Republic of the Congo, Republic of the Congo,
Madagascar and the Seychelles. This was previously called Rest of Africa
year ending March 2019
* Percentage in constant currency
^ Underlying EBITDA margin in reported currency
3 Airtel Money revenue post intra-segment eliminations with mobile services is $59m for the year ending March
2020 and $51m for the year ending March 2019
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Other market participants
• Chad: Maroc, Sotel
• DRC – Vodacom, Orange and Africell
• Gabon – Gabon Telecom
• Madagascar – Orange and Telma
• Niger – Zamani, Moov (Maroc Telecom),
Niger Telecom
• Republic of the Congo – MTN
• Seychelles – Cable & Wireless, Intelvision
Our performance
Performance in Francophone Africa was
impacted by macroeconomic weakness in
some countries. Reported revenue was down
3.2%, but it was broadly flat, as growth in
data, mobile money and other revenue did not
fully offset the decline in voice revenue.
Performance was mixed across countries,
with growth in Democratic Republic of the
Congo (DRC), Gabon and the Seychelles,
offset by a decline in other countries in the
region. Revenue increased by 4.1% in Q4
2020 as a result of improved performance
across services.
Voice
Voice revenue decreased by 9.5%, largely
due to a drop in interconnect usage charges
in Niger, Madagascar and Chad, and overall
market weakness in some countries in the
region. Revenue in DRC was also affected
by rationalisation on bonus offers.
Data
Data revenue grew by 22%, largely due
to a 21.8% increase in customers and a
10.4% increase in data ARPU. We saw
revenue growth across all countries, with
the exception of Madagascar. This growth
was supported by our accelerated rollout
of more than 1,600 of 4G sites, with 56.7%
of sites now on the 4G network. It was also
driven by a 3.1% increase in smartphone
penetration and our popular data bundle
offers. In FY 2020, we launched 4G services
in Niger and DRC.
Airtel Money
Mobile money revenue was up 28.4%, with our
largest markets, Gabon and DRC, accounting
for 82% of revenue in the region. This double-
digit revenue growth was supported by a
28.1% increase in customers and the continued
expansion of the distribution network.
Underlying EBITDA
Our underlying EBITDA margin decreased
by 435 bps due to higher operating expenses
resulting from investment in network
expansion and higher marketing spends.
While FY 2019 had $13m in one-off benefits,
FY 2020 was affected by a one-off quality of
services charge in few countries. Excluding
these one-offs, underlying EBITDA margin
decreased by 190bps. Exceptional items of
$12m mainly contributed by accelerated
depreciation resulting from a network
modernisation.
Capital expenditure
Capex was at $133m, a drop compared to the
$190m in the previous financial year which
was higher due to network modernisation in
Francophone Africa. In FY 2020, we continued
to invest in modernising the infrastructure
and rolling out the 4G network, more than
doubling the number of 4G sites in the region.
To make sure we finished our 2,700km fibre
cable project on time, I left my home and
camped out near the installation. This cable is
the first of its kind, connecting the south-east
of DRC to the west coast. As well as providing
enhanced connectivity, it gives our many
customers access to improved livelihoods.
ALAIN MUKADI HEAD OF AIRTEL NETWORK DEPLOYMENT, DEMOCRATIC REPUBLIC OF THE CONGO
Our voice, data
and mobile money
services contribute
to the economic
competitiveness
of our francophone
markets, most of
which are near the
bottom of the UN’s
Human Development
Index. Our networks
touch tens of millions
of lives every day
– connecting
communities, enabling
financial inclusion
and supporting the
societies in which
we operate.
MICHAEL FOLEY REGIONAL DIRECTOR,
FRANCOPHONE AFRICA
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Airtel Africa plc Annual Report and Accounts 2020
39
Strategic report
Business review: Mobile services
Mobile demand continuing
to grow in some of the world’s
least penetrated markets.
110.6m
mobile services
customer base
+11.9%*
35.4m
data
customer base
+18%*
$1.6
voice ARPU
-4.5%**
$2.4
data ARPU
+20%**
$1,970m
voice revenue
+5.2%**
$930m
data revenue
+39%**
$3,210m
mobile services
revenue +12.5%**
$780m
operating profit
+26.7%**
Voice revenue ($m)
Our market
Across Africa, a growing
population of aspirational, price-
conscious consumers demand
high-quality mobile services.
We’ve continued to grow our
customer base and our revenues
in 2019/20 by offering relevant
voice and data products through
an expanding distribution network.
Sub-Saharan Africa is the fastest-growing
mobile telecoms market in the world, driven
by demand for voice and data services. With
our leading 4G network, we’re well positioned
to meet that demand. Our focus on customer
acquisition has seen our customer base grow
by 11.9% to 110.6 million over the last year,
while our expansion of data services to more
than 35 million customers is helping to drive
the digitalisation and financial inclusion that’s
transforming economies and individual lives.
Our mobile voice business line – pre- and
post-paid wireless voice services, international
roaming, fixed-line phone services and
interconnect revenue – is the largest
component of our revenue, contributing 57.6%
to our consolidated revenue in 2019/20. We
expect voice demand to continue growing for
some years in this underpenetrated market.
While reduced tariffs and, in some markets,
reduced interconnect rates contributed to a fall
in our average revenue per user in 2019/20, our
overall voice revenue has continued to grow.
At the same time, we’re seizing the
opportunity presented by Africa’s demand
for data and the increasing availability
and affordability of smartphones. We’ve
consistently invested in our network, giving
us the largest 4G capability in most of our
markets. And we’ve developed simple and
affordable data products, including ‘more
for more’ bundles, to encourage data use.
The result has been strong growth in
customer numbers, data usage and revenue.
We want to keep our momentum on acquiring
new customers, while ensuring customer
satisfaction through the quality of our
network. At the same time, we aim to build
customer ‘stickiness’ through offering other
services, such as Airtel Money.
5.1%**
5.2%**
Mobile services
Unit of
measurement
Year ended
March 20
March 19
Reported
currency
change
Constant
currency
change
1,915
1,970
2018/19
2019/20
Data revenue ($m)
39.0%**
930
32.1%**
683
2018/19
2019/20
* As at March 2020
** Percentage in constant currency
Description
Revenue1
Underlying EBITDA
Underlying EBITDA margin
Depreciation & amortisation
Operating exceptional items
Operating profit2
Capital expenditure
Operating free cash flow
Operating KPIs
Voice
Voice revenue
Voice customers
$m
$m
%
$m
$m
$m
$m
$m
$m
m
Voice average revenue per user $
Data
Data revenue
Data customers
$m
m
Data average revenue per user $
3,210
1,372
42.7
(595)
3
780
626
746
1,970
110.6
1.6
930
35.4
2.4
2,918
1,234
42.3
(556)
10.0%
11.1%
44 bps
7.0%
12.5%
13.5%
38 bps
9.8%
(53)
(106.6%)
(105.7%)
625
613
621
24.7%
2.2%
20.0%
26.7%
2.2%
24.7%
1,915
98.9
1.7
683
30.0
2.1
2.9%
11.9%
5.2%
(6.6%)
(4.5%)
36.1%
18.0%
17.6%
39.0%
20.0%
1 Mobile service revenue after intersegment eliminations amounted to $3,199m for the year ending March 2020
and $2,910m for the year ending March 2019
2 The operating profit in above table includes CSR (Corporate social responsibility) expense of $1m for the year
ended March 2020
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Our performance
Revenue
Reported mobile services revenue was up
by 10.0%, 12.5% in constant currency, with
both voice and data revenue contributing
to this growth.
Voice
Reported voice revenue grew by 2.9%
while constant currency growth was 5.2%.
This growth was largely driven by a 11.9%
increase in customers as a result of the
expansion of distribution and network
infrastructure. Total minutes on the network
grew by 20.6% and voice usage per customer
grew 9.5% supported by the launch of
exclusive voice bundles. ARPU dropped by
4.5% in constant currency terms, largely
driven by a drop in interconnect usage
charges across key markets in East Africa
and Francophone Africa. The Q4 2020 voice
revenue growth of 8.4% in constant currency
was driven by a 17.5% increase in voice usage
per customer.
Data
Data revenue was up 39% in constant
currency, largely due to a growth in data
customers, the accelerated 4G network
rollout and increasing data usage. The
customers base grew by 18% as a result
of accelerated rollout of 4G network across
all markets, as well as a 2.5ppts growth in
smartphone penetration – 32% of our total
customers are data users, up from 30.4%
in FY 2019. Overall data usage grew by 81%
and data usage per customer was up 56.3%
to 1.8GB per customer per month, largely
linked to our 4G network expansion and
popular data bundles. ARPU increased by
20% as a result of higher penetration of
3G and 4G customers.
Data revenue accounted for 27.2% of our
total revenue, up from 22.2% in the previous
financial year. For the quarter ended March
2020, data revenue was 28.2% of our total
revenue.
+81%
data usage
With demand set to
continue, there’s a huge
opportunity in Africa
for businesses able to
reach, and hold on to,
voice customers. By
expanding our customer
base beyond 110 million,
we’ve shown that our
focus on network and
customer satisfaction
is helping us win in a
competitive marketplace.
ASHISH MALHOTRA CHIEF MARKETING OFFICER
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Airtel Africa plc Annual Report and Accounts 2020
41
Strategic report
Business review: Airtel Money
Banking the unbanked,
driving double-digit growth.
18.3m
customer base^
+28.7%
$1.6
ARPU
+14.2%*
$311m
revenue
+37.2%*
$150m
underlying EBITDA
+57.2%*
$143m
operating profit
+60.7%*
Revenue ($m)
37.2%*
311
57.3%*
234
2018/19
2019/20
* Growth % in constant currency
Mobile Money EBITDA ($m)
48.2%**
150
41.7%**
98
2018/19
2019/20
Sub-Saharan Africa has some of
the world’s lowest rates of banking
penetration, with less than half the
population having a bank account.
This means our mobile money
offering, Airtel Money, has huge
potential – both for profitable
growth and for helping to drive
the financial inclusion that
could transform economies
and societies.
What we do
Airtel Money has a unique distribution and
product strategy that enables us to quickly
expand our customer base and drive
revenues. At the same time, we’re bringing
financial services to societies in Africa that
have long been underserved by traditional
banking services, while creating thousands
of employment opportunities. The result is
growth for our business: Airtel Money revenue
grew by 37.2% in 2019/20 to $311m.
A strong and growing
distribution network
Our distribution network uses a dynamic mix of
agents, exclusive franchised agents and Airtel
Money shops to get close to our customers.
Our goal is ‘assured float availability’. This
means customers know that our exclusive
outlets will have the funds to meet their
needs, unlike competing distribution networks
where customers may have to go from agent
to agent to secure cash. Our 17,500 kiosks,
5,100 Airtel Money branches and shops and
more than 335,000 Airtel Money agents
mean that we can reach more customers
than ever before. This strategy is working:
our customer base grew by 28.7% to
18.3 million in 2019/20.
A reliable payments system
that customers trust
We’ve built a payments system known as
‘currency of choice’. This gives huge flexibility
to customers, who can pay their bills anytime,
anywhere, and use Airtel Money over the
counter or online. It also reduces risk and
increases convenience for a wide range
of transactions – for example, paying
government salaries in remote areas.
Access to global markets
through partnerships
We’re also empowering customers through
a range of additional services delivered in
partnerships, including microloans, savings,
and fast, secure international money transfers.
Our strategic partnerships with companies
such as Mastercard, Western Union and
Ecobank give our customers access to
global markets and drive money flows.
Performance
Description
Revenue1
Underlying EBITDA
Underlying EBITDA margin
Depreciation & amortisation
Operating profit
Capital expenditure
Operating free cash flow
Operating KPIs
Airtel Money KPIs
Transaction value
Active customers
Average revenue per user
Unit of
measurement
Year ended
March 20
March 19
Reported
currency
change
Constant
currency
change
$m
$m
%
$m
$m
$m
$m
$m
m
$
311
150
48.2
(7)
143
12
138
234
98
32.9%
53.4%
37.2%
57.2%
41.7
644 bps
609 bps
(7)
91
14
84
5.6%
7.5%
56.8%
60.7%
(13.3%)
(13.3%)
64.3%
68.3%
31,598
25,118
18.3
1.6
14.2
1.5
25.8%
28.7%
10.5%
31.0%
14.2%
^ As at March 2020
* Margin % in constant currency
* Percentage in constant currency
** Underlying EBITDA margin in reported currency
1 Airtel Money service revenue post intra-segment eliminations with mobile services is $220m for the year ending
March 2020 and $170m for the year ending March 2019
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Using Airtel Money
simplifies a lot of
things. I withdraw a
little for myself, then
keep the rest on my
mobile phone. If my
family needs money
I can easily transfer
it to them.
ABDOULAYE BANI COMMUNITY TEACHER, CHAD
Huge potential for growth through
our mobile customer base
Airtel Money has huge potential for growth,
both within and beyond our mobile customer
base. We’re working with partners and
regulators to rapidly expand the range
and availability of our services. Our mobile
customers are key to this. By enhancing
the experience of these mobile customers,
we aim to increase the penetration of Airtel
Money services and reduce customer churn.
Our performance
Revenue
Reported mobile money revenue was $311m,
up 32.9% and 37.2% in constant currency.
This was driven by a 28.7% increase in
customers and a 31.0% growth in transaction
value. We continue to expand our distribution
network through investing in exclusive kiosks
and Airtel Money branches. The continued
focus on expanding distribution network
through partnering with financial service
providers and enhancing product offering
continues to attract more customers and
reduce churn.
Underlying EBITDA
Underlying EBITDA increased by 53.4% to
$150m, driven by revenue growth and a lean
cost structure. As a result, the underlying
EBITDA margin grew to 48.2%, up from
41.7%.
Total transaction value was up 31% in
constant currency, amounting to $34.5bn
(Q4 2020 annualised). This was primarily
driven by the expansion of the distribution
network.
Active customers grew to 18.3 million, up
28.7% on the previous year, with Airtel Money
customers representing 16.5% of our total
customers. Excluding Nigeria mobile money
customers, 26.5% of our total customer base
consisted of Airtel Money customers as of
31 March 2020. ARPU was up 14.2%, driven
by a higher transaction values and increased
contribution from person-to-person money
transfer and merchant payments.
Banking the unbanked
We’re addressing the lack of banking
services in our markets through a range
of services that include:
• Mobile banking: in ten markets, we
work with local and regional banks to
enable customers to make transfers
through Airtel Money wallets
• Merchant payments: customers can
use Airtel Money in a growing range of
scenarios, including paying utility and
school fee bills, and for purchases in
supermarkets, petrol stations and other
retail sites
• Loans: we work with loan providers to
give customers real-time unsecured credit
for emergencies, small business trading,
medical bills and similar needs in Kenya,
Malawi, Tanzania, Uganda and Zambia
• Savings: Airtel Money Save enables
Airtel customers to set up accounts on
their Airtel Money wallets in Kenya and
Tanzania
• International money transfers: we
work with money transfer organisations
(MTOs) and aggregators so that
customers in eight of our markets can
receive remittances and transfers from
around the world, send and receive
transfers within Africa to other Airtel
Money customers and, where
regulations allow, make transfers through
other financial partners. We’re waiting
for regulatory approval to expand this
service to four more markets
New partnerships transforming financial access
In September 2019, we announced our
strategic partnership with Mastercard.
The Mastercard virtual card allows Airtel
Money customers, even those without a
bank account, to make payments to local
and global online merchants that accept
Mastercard. Customers can also make
payments in person through Quick
Response (QR) codes at more than
40,000 Mastercard QR merchants.
The service launched in Tanzania and will
be rolled out to more markets this year.
In January 2020, we signed a strategic
partnership with Western Union which
enables Airtel Money customers to reliably
send and receive international money
transfers directly from their Airtel wallets.
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Airtel Africa plc Annual Report and Accounts 2020
43
Strategic report
Chief financial officer’s introduction to the financial review
Enhancing cash generation, improving
operating leverage and creating long-
term value for shareholders.
Financial performance
$3,422m
revenue
+13.8%
$1,515m
underlying EBITDA
+16.3%
$901m
operating profit
+25.4%
$642m
capex
+1.9%
9.8 cents
basic earnings per share restated
decrease of 0.5 cents
Growth % is in constant currency
Creating long term value
for shareholders
Our free cash flow for the year was $453m,
up by 201%, largely contributed by underlying
EBITDA expansion and lower interest costs
due to reductions in debt. Reflecting this
performance, we paid an interim dividend of
3 cents per ordinary share in November 2019.
The Board recommended a final dividend of
3 cents per share. Basic EPS declined 9.2
cents due to an increase of shares issued,
higher tax and higher impact of devaluation
on foreign currency liabilities. After restating
for same number shares, basic eps declined
5 cents due to higher tax and higher impact
of devaluation on foreign currency liabilities.
We recorded double-digit topline
growth, improved margin and operating
profit growth of 25.4% in constant
currency, an another year of strong
performance for Airtel Africa.
JAIDEEP PAUL CHIEF FINANCIAL OFFICER
In the last 12 months we have focused on
three key financial objectives. First, supporting
the business in delivering profitable growth by
improving underlying EBITDA margin. Second,
maintaining a balanced capital allocation
policy by prioritising investments in the
business and by continuing to deleverage
our balance sheet. Third, focusing on creating
long-term value for shareholders.
Improved underlying EBITDA
margin
We have improved our underlying EBITDA
margin by 94bps as a result of double-digit
growth in revenues as well as continued
reengineering of our operating cost model.
In turn this contributed to grow operating
profit by 25.4%.
Maintaining a balanced capital
allocation policy
We continued to invest in the business to
support growth, and especially in improving
our network.
Better operating profitability along with
deleveraging our debt position has resulted
in an improvement of 168bps in return on
capital employed
Increased cash and lower debt meant we
reduced net debt. Our leverage position
improved to 2.1x net debt to underlying
EBITDA. We aim to maintain our leverage
ratio at the lower end of the 2.0x to 2.5x
range, which is the anchor of our capital
structure policy.
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OUTLOOK
Our assessment of the impact of COVID-19
on our business is described on page 9 of this
report. Our focus will be on minimising the
impact of COVID-19.
Finally, while our leverage ratio is within the
lower range of our capital structure policy,
we will focus on rebalancing our foreign and
local currency exposure to achieve a more
effective natural hedging of our balance
sheet, and also continue to explore asset
monetisation opportunities to further
deleverage our debt position.
JAIDEEP PAUL
CHIEF FINANCIAL OFFICER
13 MAY 2020
Performance highlights
• Customer base up by 11.9% to 110.6 million
• Revenue increased by 11.2% to $3,422m, with Q4 revenue
growth up 15.1%
• Revenue in constant currency grew by 13.8% in the full year and
17.9% in Q4. Growth recorded across all business segments, with
voice revenue up by 5.2%, data by 39% and mobile money by 37.2%
• Operating profit was $901m, up by 22.8% and increased
by 25.4% in constant currency
• Free cash flow was $453m, more than double compared
to the same period last year
• Earnings per share (EPS) before exceptional items was 7.3 cents
and basic EPS was 10.3 cents, a decrease of 9.2 cents
• Underlying EBITDA up by 13.8% to $1,515m, with underlying
• Net debt to underlying EBITDA was 2.1x, compared to 3.0x
EBITDA growth in constant currency at 16.3%
in March 2019
• Reported underlying EBITDA margin improved to 44.3% by
• The Board recommended a final dividend of 3 cents per share,
100 bps (up 94 bps in constant currency)
to a total dividend of 6 cents per share
Profit and loss snapshot
Description
Revenue1
– Voice revenue
– Data revenue
– Airtel Money revenue2
– Other revenue
Expenses
Underlying EBITDA3
– Underlying EBITDA margin
Depreciation & amortisation
Operating exceptional items
Operating profit4
Net finance costs
Non-operating exceptional items
Profit before tax5
Tax
Tax – exceptional items
Total tax charge
Profit after tax
Non-controlling interest
Unit of
measure
$m
$m
$m
$m
$m
$m
$m
%
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Profit attributable to parent company shareholder – pre-exceptional items $m
Profit attributable to parent company shareholders
$m
Year ended
March
2019
3,077
1,915
683
234
309
(1,772)
1,332
43.3
(532)
(62)
734
(354)
(8)
348
(110)
188
78
426
(38)
278
388
Reported
currency
change %
Constant
currency
change %
11.2%
2.9%
36.1%
32.9%
(2.3%)
8.6%
13.8%
100 bps
13.8%
(93.9%)
22.8%
5.3%
995.3%
71.7%
115.6%
(74.9%)
343.7%
(4.4%)
0.3%
(6.4%)
(4.8%)
13.8%
5.2%
39.0%
37.2%
(0.2%)
11.3%
16.3%
94 bps
16.4%
(93.8%)
25.4%
5.6%
995.3%
77.2%
126.1%
(75.1%)
330.7%
(2.2%)
0.3%
(2.6%)
(2.4%)
March
2020
3,422
1,970
930
311
302
(1,924)
1,515
44.3
(605)
(4)
901
(372)
69
598
(237)
47
(190)
408
(38)
261
370
1 The revenue in above table includes intra-segment elimination of $91m for the year ending March 2020 and $64m for the year ending March 2019
2 Airtel Money revenue post intra-segment eliminations with mobile services is $220m for the year ending March 2020 and $170m for the year ending March 2019
3 Underlying EBITDA includes other income of $17m for the year ending March 2020 and $27m for the year ending March 2019
4 Operating profit includes $5m CSR (Corporate social responsibility) expense in the year ending March 2020 and $4m in the year ending March 2019
5 Profit before tax in the year ending March 2019 included a $24m share of loss from joint ventures and associate companies
6 In July 2019, following the announcement of the Initial Public Offering (IPO), the company issued 676,406,927 new shares. Earnings per share (EPS) has been restated
considering all the shares as at 31 March 2020 had been issued on 1 April 2018 for like-for-like comparison
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Strategic report
Financial review
GAAP measures
Revenue
Reported revenue grew by 11.2% as 13.8% constant currency growth was partially offset
by currency devaluation. The strong performance was largely driven by the growth of our
customer base, up by 11.9% to 110.6 million, as well as a 3.3% growth in ARPU. Across the
regions, Nigeria and East Africa continued to deliver strong performance and performance
in Francophone Africa continued to improve with revenue up by 4.1% in Q4 2020.
Revenue growth was broadly based across all key segments: voice up by 5.2%, data by
39.0% and mobile money by 37.2% in constant currency terms.
Operating profit
Reported operating profit was $901m, up by 22.8% and 25.4% in constant currency.
This was the result of strong revenue growth with broadly stable operating expenditures
as a percentage of revenue.
Revenue ($m)
13.8%*
11.9%*
3,077
3,422
2018/19
2019/20
Net finance costs
Net finance costs increased by $18m driven by higher other finance costs which more than
offset reduced interest costs of $64m as a result of lower debt. The increase in other finance
costs was primarily driven by higher impact of devaluation on foreign exchange denominated
liabilities which was in turn largely driven by $75m increase in Q4 2020 as a result of the
devaluation of Nigerian naira, Kenyan shilling, Ugandan shilling, and Zambian kwacha.
* Growth % in constant currency
Operating profit ($m)
Taxation
The total tax charge amounted to $190m, versus a tax gain of $78m in the previous financial
year. This was due to the higher operating profit and withholding tax on dividend declared.
FY 2019 also benefited from one-off items amounting to $170m for deferred tax recognition
in Nigeria and a $55m reversal of a tax provision.
Profit after tax
Profit after tax was $408m, down by 4.4% due to a one-off deferred tax recognition in Nigeria
in the year ending 30 March 2019 and a lower exceptional item gain in the current period.
Post one-off tax benefit, profit after tax for the year increased by $43m, or 17%.
Basic earnings per share (EPS)
Basic EPS was down 47% to 10.3 cents, due to an increase in shares issued. If all the shares
as of 31 March 2020 had been issued on 1 April 2018, the restated basic. EPS for the year
would have been 9.8 cents and 10.3 cents for the year ending 31 March 2019. Restated EPS
reduced as a result of higher tax and finance costs. This was primarily the result of a $75m,
or 2 cents per share, higher impact of foreign exchange on debt due to the devaluation of
the Nigerian naira, Kenyan shilling, Ugandan shilling, and Zambian kwacha in Q4 2020.
25.4%*
901
734
2018/19
2019/20
* Growth % in constant currency
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Alternative performance measures
Underlying EBITDA
Underlying EBITDA grew by 13.8% to $1,515m. This was largely driven by 16.3% constant
currency growth, partially offset by currency devaluation. The reported underlying EBITDA
margin of 44.3% improved by 100 bps, and by 94 bps in constant currency.
Foreign exchange had an adverse impact of $76.5m on revenue and $31.7m on underlying
EBITDA, largely driven by the devaluation of the Zambian kwacha, Central African franc,
Nigerian naira and other East African currencies.
Tax
The effective tax rate was 48.6% compared to 41.9% in the previous year, largely as a result of
the profit mix between countries and higher withholding tax on dividend declared. The effective
tax rate at 48.6% is higher than the weighted average statutory tax rate of approximately 32%,
largely due to the profit mix between various countries.
Underlying EBITDA ($m)
44.3%*
43.3%*
1,332
1,515
2018/19
2019/20
The adjusted effective tax rate was 38.7% compared to (1.0%) largely as a result of
a recognition in the prior year of deferred tax asset in Nigeria amounting to $170m.
* Margin % in constant currency
Description
Reported effective tax rate
Adjusted for:
Exceptional items
Foreign exchange rate movements for non-DTA
operating companies and holding companies
One-off tax adjustment
Effective tax rate
Deferred tax triggered during the year
Adjusted effective tax rate
Year ended March 2020
Year ended March 2019
Unit of
measure
Profit before
taxation
Income tax
expense
Profit before
taxation
Income tax
expense
%
%
$m
$m
$m
$m
$m
$m
$m
598
190
31.8%
348
(78)
(22.4%)
(65)
(21)
512
512
47
12
249
(51)
198
48.6%
38.7%
69
(22)
395
395
189
55
166
(170)
(4)
41.9%
(1.0%)
Exceptional items
Exceptional items of $112m includes $72m gain related to the expired indemnity to certain pre-IPO investors and $51m gain related to
recognition of deferred tax asset in Democratice Republic of the Congo (DRC). The previous year’s $119m exceptional items includes $170m
in deferred tax recognition in Nigeria partially offset by a $41m accelerated depreciation resulting from a network modernisation.
Profit after tax ($m)
(119)
24
426
331
(18)
109
(128)
112
295
408
FY19 PAT –
Reported
Exceptional
items
JV loss
FY19 PAT –
Excl. one-offs
Operating
profit
Finance
cost
Tax
FY20 PAT –
Excl. one-offs
Exceptional
items
FY20 PAT –
Reported
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47
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Financial review continued
Free cash flow
Free cash flow grew by 201% to $453m, largely due to the underlying EBITDA increase and
reduced interest payments related to lower debt.
Free cash flow ($m)
Description
Unit of measure
March 2020
March 2019
Growth %
Year ended
Underlying EBITDA
Capex incurred
Operating free cash flow
Cash tax
Cash interest
Change in working capital
Free cash flow
$m
$m
$m
$m
$m
$m
$m
1,515
(642)
873
(114)
(288)
(18)
453
1,332
(630)
702
(115)
(355)
(81)
151
13.8%
1.9%
24.4%
(0.7%)
(18.7%)
(78.3%)
200.7%
453
151
2018/19
2019/20
Net debt, leverage and balance sheet measures
Description
Free cash flow (a)
Purchase of intangible assets
Issue of share capital
Proceeds from sale of shares to non-controlling interests
Acquisition of non-controlling interest
Settlement of derivatives
Proceed -sale of Assets (Including leased back)
Dividend paid by subsidiaries
Dividend received by Holdcos
Dividend to Airtel Africa plc shareholders
Others
Sub total (b)
Conversion of shareholders loan into equity
Adjustment of shareholders loan against sale of investment
Addition of lease liabilities
Foreign exchange on borrowings and cash flows
Sub total (c)
Net debt (increase)/decrease d= a+b+c
Opening net debt
Closing net debt
Year ended
March 2020
March 2019
Net debt and leverage ($m)
3.0
4,005
2.1
3,247
2018/19
2019/20
Net debt
Leverage
453
(155)
680
34
–
97
–
(221)
216
(113)
(96)
442
–
–
(155)
18
(137)
758
4,005
3,247
151
(125)
2,387
–
(74)
–
65
(112)
108
–
(44)
2,205
1,107
208
(160)
239
1,394
3,750
7,755
4,005
Purchase of intangible assets
Purchase of intangible assets in the year ending March 2019 include $79m paid for licence
in Francophone Africa. For the 2019/20 financial year, it includes $128m paid for spectrum
in Nigeria and $6m for spectrum in East Africa.
Issue of share capital
For the year ending March 2019, this represents shares issued to pre-IPO investors in Airtel
Africa plc. For the year ending March 2020, it represents $680m net proceeds from Airtel
Africa plc IPO.
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Settlement of derivatives
We took interest rate swap and currency swap contracts from various banks against our
outstanding USD bonds. These bonds are all fixed-rate bonds, and to hedge our exposure from
market interest rate fluctuations, we entered fixed-to-floating interest rate swap (IRS) contracts
for USD bonds. In the year ended March 2020, these IRS contracts were cancelled and realised
in cash for $122m. Further, an amount of $25m paid on maturity of derivatives taken against
CHF bonds.
Acquisition of non-controlling interest
The acquisition of non-controlling interest in the year ended March 2019 represents the
acquisition of non-controlling interest in Nigeria and one of our operating companies in
Francophone Africa.
Others
Others includes payment to capex creditors over and above capex incurred, share issue
expenses and changes in non-operating working capital.
Foreign exchange on borrowings and cash flows
Foreign exchange on borrowings and cash flows for the year ended March 2019 primarily
represents gain on account of restatement of EUR and CHF bonds due to appreciation
of US dollar against these currencies.
Dividend paid to shareholders
An interim dividend of 3 cents per share was paid to shareholders in November 2019.
Leverage
Description
Foreign Currency
HoldCo
OpCos
Local currency
OpCos
Less: Cash and cash equivalents
Net debt excluding lease obligations
Lease obligations
Net debt including lease obligations
March 2020
March 2019
Underlying
EBITDA
$m
Underlying
EBITDA
$m
2,791
2,330
461
297
297
1,010
2,078
1,169
3,247
1.8x
1.5x
0.3x
0.2x
0.2x
0.7x
1.4x
0.8x
2.1x
3,342
2,696
645
294
294
848
2,787
1,218
4,005
2.5x
2.0x
0.5x
0.2x
0.2x
0.6x
2.1x
0.9x
3.0x
Net debt was $3,247m compared to $4,005m in March 2019. The $758m reduction in net debt
is due to an increase in cash of $680m from the IPO proceeds and of $122m in proceeds from
cancellation of derivatives. As a result, leverage improved to 2.1x at the end of March 2020
from 3.0x at the end of March 2019.
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Strategic report
Financial review continued
Earnings per share (EPS) before exceptional items
Description
Weighted average shares outstanding 2019
Weighted average shares outstanding 2020
March 2019 EPS before exceptional items
Exchange
Operating profit (constant currency)
Net Finance charges
Derivatives and Forex gain/(loss)
Finance Charges (excluding derivatives and Forex)
Tax
Others
Number of shares changed
March 2020 EPS before exceptional items
Unit of
measure
m
m
cents
cents
cents
cents
cents
cents
cents
cents
cents
cents
March 2020
Reported
Restated
1,986
3,586
3,758
3,758
In July 2019, after the announcement of
Initial Public Offering (IPO), the company
issued 676,406,927 new shares. EPS has
been restated considering all the shares
as at 31 March 2020 had been issued on
1 April 2018 for like for like comparison.
14.0
(0.6)
6.4
(1.0)
(2.2)
1.2
(6.7)
0.9
(5.8)
7.3
7.4
(0.3)
3.4
(0.5)
(1.2)
0.6
(3.6)
0.5
6.9
EPS before exceptional items was down 48.2% to 7.3 cents, primarily due to the increase in the
number of shares issued. If these shares had been issued on 1 April 2018, the restated EPS
before exceptional items would have been 6.9 cents for the year ending 31 March 2020 and
7.4 cents for the year ending 31 March 2019. Restated EPS reduced by 0.5 cents as a result of
higher tax and finance costs primarily as a result of a $75m, or 2.0 cents per share, and higher
impact of foreign exchange on debt due to the devaluation of the Nigerian naira, Kenyan shilling,
Ugandan shilling and Zambian kwacha in Q4 2020.
Restated EPS (cents)
(1.2)
0.6
3.4
(0.3)
(3.6)
0.5
7.4
6.9
Mar’19 EPS before
exceptional items
Exchange
Operating profit
(Constant currency)
Finance charges –
Derivatives and
Forex gain/(loss)
Finance charges
(excluding derivatives
and Forex)
Tax
Others
Mar’20 EPS before
exceptional items
Financial information by service
We provide performance data for our mobile voice and data services and Airtel Money in our
business review on pages 40-43.
Financial information by market
We provide performance data for each of our markets in our business review on pages 34-43.
Consolidated statement of financial position
The consolidated statement of financial position is set out on page 127. Details on the major
movements of our assets and liabilities in the year are set out on this page.
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Assets
Property, plant and equipment
Property, plant and equipment (including capital work in progress) increased by $128m to
$2,091m. This was due to capital expenditure of $642m linked to continued investment in
network assets, which was partially offset by $406m of depreciation and $111m of foreign
currency translation reserve.
Other intangible assets
Other intangible assets (including assets under development) increased by $67m to $486m.
This was related to $157m investment in licence/spectrum and partially offset by $83m of
amortisation.
Current assets
Current assets increased by $250m to $1,671m largely due to increases in:
a) cash and cash equivalents – this rose by $162m due to a $680m IPO proceeds. This was
partially offset by a $365m repayment of CHF bonds on maturity and the $113m interim
dividend paid to shareholders of Airtel Africa plc.
b) balance held under mobile money trust – these increased by $57m, it represents balance
held under mobile money trust on behalf of mobile money customers which are not
available for use by the Group.
Total equity and liabilities
Equity attributable to owners of the company
Equity attributable to the owners of the company increased by $762m to $3,388m. This was
linked to the $370m profit for the period and $680m share capital issued on IPO, and partially
offset by $224m unfavourable foreign exchange movements and $113m interim dividend
paid to shareholders of Airtel Africa plc.
Borrowings
Gross borrowings (including short-term borrowings and current portion of long-term
borrowings) decreased by $560m to $4,279m. This was largely due to a $365m repayment
of scheduled debt on maturity. Net debt of the Group as at March 2020 is $3,247m.
Current liabilities (net of borrowings)
Current liabilities decreased by $109m to $1,625m. This was largely due to a $93m decrease
in derivative instruments, indemnity reversal of $72m and $54m decrease in trade payables,
and partially offset by $54m increase in mobile money wallet balance, as well as increase in
corporate taxes payable by $77m. Further details on Group’s liquidity position and going
concern assessment are shown on page 131, note 2.2 of financial statements.
Initial public offering
Airtel Africa plc
On 28 June 2019, Airtel Africa plc announced the successful pricing of its IPO on the
London Stock Exchange at 80 pence (NGN 363) per share. The offer comprised 676,406,927
new shares (637,178,959 shares available to institutional investors outside of Nigeria and
39,227,968 shares available to qualified institutional investors and high net worth investors
in Nigeria). Unconditional trading of the shares on the London Stock Exchange began on
3 July 2019 and on the Nigerian Stock Exchange on 9 July 2019.
Airtel Malawi plc
On 24 February 2020, Airtel Malawi made its debut on the Malawi Stock Exchange as the
largest IPO in Malawi’s history. The listing, which debuted at a price of MK12.69 (2 cents)
per ordinary share consisted of secondary offer of 2.2 billion shares, representing 20%
of issued share capital. Gross proceeds amounted to MK27.92bn ($37.5m) and the price
implies a market capitalisation on admission of MK139.59bn ($187.4m).
Dividends
The Board has recommending a final dividend of 3 cents per ordinary share. The proposed
final dividend will be paid on 24 July 2020 to shareholders who are on the register of
members at the close of business on 3 July 2020. We will announce more details in due
course. We paid an interim dividend of 3 cents per ordinary share in November 2019.
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Airtel Africa plc Annual Report and Accounts 2020
51
Strategic report
Corporate social responsibility
We connect over 110 million people –
to each other, to the global economy,
and to new opportunities. We’re building on
our positive social impact through our active
community programmes, our work to protect
the environment, and by acting as a
responsible employer and corporate citizen.
We see the impact our products and services
have on the people around us every day.
Mobile voice, data, and money services are
providing an essential bridge to sustainable
development across sub-Saharan Africa.
In delivering these services, we’re bringing
employment and opportunities to more
than a million people in our business and
distribution network.
Like our customers, we live and work in some of
the world’s most challenged countries – while the
markets we operate in are growing fast, many
lack the essential infrastructure that underpins
developed economies. Our services are helping
to create a new, digital infrastructure. They’re
promoting growth today, and laying the
foundations for future growth. This is why working
closely with governments and regulators to
encourage financial inclusion and empowerment
– vital enablers of the United Nations Sustainable
Development Goals (SDGs) – is at the heart of our
business strategy (see page 21).
A responsible corporate citizen,
active in the community
Beyond our products and services, we have always aimed to
make a positive difference through what we do, and who we are.
As a newly-listed company, we know that we have work to do to
on developing systems to measure and report our non-financial
performance and the ways in which we contribute to those around
us. We are confident, though, that we are making a substantial
contribution through our sustainability framework, which outlines
our core responsibilities and opportunities as a business.
Our people
• Fair workplace
• Diversity and
inclusion
• Health and safety
Our business
• Transparent
governance
• Respect for
human rights
Our environment
• Responsible use
of energy and
resources
• Supporting
biodiversity
Our community
• Education
• Health
• Disaster relief
support
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Financial inclusion and the UN’s
sustainable development agenda
Research by the UN and others is
providing increasing evidence of the
importance of financial inclusion to
achieving the UN SDGs.
In the words of Her Majesty Queen
Máxima of the Netherlands, the UN
Secretary General’s Special Advocate
for Inclusive Finance for Development:
‘Financial inclusion is not an end in and
of itself but an important enabler of
development progress and a powerful
tool to reach our main goal: achieving
the SDGs.’
Engaging with our stakeholders
Understanding the needs and
expectations of all our stakeholders
helps us boost our positive impact –
and makes us a better business.
We describe how we engage with our
stakeholders on page 32.
A simple set of principles guides all of
our corporate social responsibility (CSR)
programmes. We work with initiatives that:
Do:
• Draw on our own technology
• Align with local development plans
or goals
• Address a pressing social need
• Offer opportunities to create
partnerships with customers,
employees, and public and private
sector actors
Do not:
• Harm the environment
• Discriminate because of race or gender
• Support a political party, candidate
or movement
• Support a particular religious doctrine
Our community
Supporting the communities in which
we work is part of what makes us who
we are as a business, and as Airtel Africa
employees. Across our markets,
employees volunteer in a wide range of
community programmes, from providing
meals to children at Christmas in Kenya
to donating blood in Uganda, and from
supporting orphanages in Madagascar
to raising money for hospitals in Tanzania.
Alongside our support for our employees’
volunteering efforts, we have a Group-wide
approach to key community activities.
After consulting our employees and other
stakeholders, and assessing how we could
add the most value to communities, we now
focus on three main areas: health, education
and disaster relief.
Giving a remote community
a passport to the world
In October 2019, we opened a brand
new ICT (Information Communication
Technology) Centre serving 30,000 people
in a large rural community in Southwest
Nigeria. The many students, budding
entrepreneurs and families in Imodi Ijebu
now have uninterrupted internet access
through 30 desktop computers with a suite
of printers and scanners.
This new centre was the result of months of
research and collaboration with community
leaders and members to understand how
best to support learning, innovation and
social development in the area. The robust
network in the Imodi Ijebu ICT Centre will
help to unlock future success for this
vibrant Nigerian community.
We’re always excited to offer
opportunities that will help
uplift communities, empower
young people and transform
lives – and believe an ICT centre
is critical to the development
of both young and old.
EMEKA OPARAH DIRECTOR, CORPORATE
COMMUNICATIONS & CSR, NIGERIA
OUR COMMUNITY
PROGRAMMES IN ACTION
Bridging the health
information gap
Mobile and data technology is playing
an important role in helping people get
trustworthy information about their health.
One example is our support for Malawi’s
Chipatala Cha Pa Foni (health centre by
phone), a programme we run in partnership
with the Ministry of Health. People can use
this hotline free of charge to reach out to
trained health professionals for advice.
This is currently helping thousands of people
each month, mainly young women and carers,
with over 30,000 calls made in 2019.
In Nigeria, we operate a toll-free awareness
hotline in partnership with the Lagos State
Aids Control Agency to educate people about
HIV and Aids, while supporting free testing,
counselling and medication.
30,000
calls made to Chipatala Cha Pa Foni
(health centre by phone) in 2019
300,000
students across our markets have
benefited from the free internet
Empowering young people
through knowledge
Digitalisation is helping drive economic
development across sub-Saharan Africa
– and it provides a clear path for young
people to improve their life chances and
the contribution they can make to their
communities.
So beyond the impact we’re having as a
business in expanding data access, we run
programmes specifically aimed at making
the internet available to young people.
In Uganda, for example, we support 14
libraries with fast, free Airtel 4G internet
– a programme that has been used
by over 21,000 learners so far.
1,200
people have used the state-of-the-art
community ICT Centre
Kawempe Public Library, part of the Kawempe
Youth Centre in Kampala, is one of 14 libraries in
Uganda we’re supporting with free internet access.
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How we monitor our progress
Country management teams receive
monthly briefings on our diversity and
inclusion initiatives, and they report to
our Group Executive Committee and
HR Committee each quarter.
Health and safety
We know that a safe and healthy working
environment helps people to be more
productive – and aim to ensure the health
and safety of all our employees and business
associates at all our office locations and
facilities. Our health and safety policy is part
of our Code of Conduct and applies to all of
our employees, as well as contractors and
partners on Airtel Africa premises. We have
training programmes in place for employees,
including during induction, to raise awareness
of how to stay healthy and safe at work.
We provide medical insurance to all our
full-time permanent employees, and our
health insurance partners hold a health
screening and wellness day each year.
Each of our country operations has detailed
procedures in case of emergencies.
How we monitor health
and safety
Monthly reports on health and safety
issues are reviewed by managing directors
at country level. All major incidents are
reported immediately to the Group CEO
and CHRO.
Strategic report
Corporate social responsibility continued
Opening the world of data
to Zambian students
Supporting schools and their students
with access to data is one of the main
ways we can serve the communities
in which we work.
At Matero Girls’ School in Lusaka, Zambia,
we’ve helped more than 1,000 students
by supplying their ICT (Information
Communication Technology) hub with
free data since it was opened as part of
our then partnership with the British
Council in 2015. The British Council have
since moved on to support other
educational programmes, however our
programme has continued to expand to
include 19 ICT hubs in schools across
the country, directly supporting Zambia’s
7th National Development Plan.
The benefits to students are clear – at
Matero Girls’ School, 100% of grade
9 pupils who took Zambia’s ICT exams
achieved a pass mark at the end of 2019.
With schools closed due to the
coronavirus pandemic, teachers
are able to send work for pupils
via email and other online
platforms using the ICT hub.
In spite of various financial
challenges the school
encounters, we are still able to
access a variety of materials
online to enable us to continue
acquiring knowledge.
ESAU NKHOMA HEAD TEACHER,
MATERO GIRLS’ SCHOOL
19
schools in Zambia supported with
free data for their ICT hubs
Our people
Our colleagues are an essential part
of our business. We strive to be an
employer of choice with a dynamic
working environment that encourages
productivity and fosters the health,
knowledge, skills, experience, drive
and inventiveness of our colleagues.
We have three main focus areas for our
people: making sure our workplaces are fair
through a robust human resources and policy
framework, improving our diversity and
inclusion, and ensuring the health and safety
of our people.
A fair workplace
From our Code of Conduct
We are an equal opportunity employer
and are committed to creating a safe
and conducive work environment that
enables employees to work without fear
of prejudice, gender bias and/or sexual
harassment.
Our Code of Conduct, available on our
website, outlines the framework of robust
policies we have in place to make sure we
respect human rights throughout our
operations. This is supported by our
commitment to support people who speak
out and ensure they have no reason to worry
about retaliation.We have an independent
whistleblowing mechanism in place which
is managed by KPMG, described in Audit and
Risk Committee report on page 83.
A diverse and inclusive environment
From our diversity and
inclusion policy
Championing diversity and inclusion is
embedded in our values. We recognise
that a diverse and inclusive workforce
is key to delivering our value proposition
to customers.
We want to create an environment that
embraces our differences and fosters
inclusion, so that people can maximise their
potential. We’re committed to supporting the
development of women in management and
leadership roles and in the broader business,
and we will be developing our measurement
and reporting in this area in the coming year.
From our Code of Conduct
As part of our Code of Conduct, we do
not discriminate on the basis of ethnicity,
gender, language, age, race, sexual
orientation, religion, socio-economic
status, or any other arbitrary ground.
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Our business
Integrity, transparency and respect for
human rights underpin everything we do.
Our Code of Conduct sets out how we do
business, and what we expect from both
ourselves and the people we work with.
Not only are we committed to respecting
and upholding human rights in our
operations, but also to making sure our
employees and business partners respect
the rights of the people we interact and
work with.
Responsible use of energy
Our offices, tower infrastructure and data
centres all depend on energy to operate.
We take a responsible approach to our use
of energy. We recognise that every company
must contribute if the world is to address the
climate crisis. We are committed to using
energy from renewable sources whenever
this is available and reliable enough to support
our network. The continued modernisation
of our infrastructure is contributing to more
energy efficiency across the Group.
Protecting rhinos
Putting our technology to good use is an
important part of our strategy. In Kenya,
we do this through Project Ngulia, which
is helping to address the tragic loss of
the country’s black rhinos to poaching.
With our 3G voice and data technology,
the Kenya Wildlife Service and others are
able to better monitor and protect the
rhinos, whose numbers have fallen from
around 20,000 to around 700 over the
last 50 years.
700
number of black rhinos
today, compared to around
20,000 50 years ago
In the UK, our energy consumption is less
than 40,000 kWh, which is below the
threshold for energy and greenhouse gas
emissions disclosure. We will report further
on our progress next year.
Supporting biodiversity and
reducing waste
Reducing the amount of plastic and other
waste in our business is an important part of
our sustainability ambition. Disposable plastic
bottles are no longer available in our offices,
while the use of e-billing and e-recharge
systems is helping us to use and dispose
of less paper.
At the same, we draw on our technology and
expertise in our markets to support local
biodiversity programmes such as Project
Ngulia in Kenya (see case study below).
Overseeing our progress
Our Group Executive Committee has
appointed a sustainability committee
to monitor and report progress on
our environmental initiatives.
We always consider whether a prospective
partner’s values align with our own when
making contracting and supplier decisions.
For more information on our governance
processes, including our zero tolerance of
bribery and corruption, see page 84 of the
governance report.
From our Code of Conduct
We will conduct our business in a way
which respects human rights. We are
committed to combatting any form of
slavery, trafficking, child labour, forced
labour, inhuman treatment or working
conditions that are a threat to life or
hinder the physical, emotional and/or
mental wellbeing of a person.
Our environment
From our environment and
sustainability policy
We are committed to conducting
business in a responsible manner that will
not intentionally harm the environment.
We understand the importance of the
natural environments we work in – to our
communities and to the world. As well as
ensuring we comply with all legal and local
environmental requirements, we aim to
promote good environmental practices and
reduce the impact of our business on the
natural world.
We have two broad areas of focus:
responsible use of energy and resources,
and supporting biodiversity.
We take care of our people, our customers
and the communities we serve – it is who we
are and how we do business. We understand
that if we don’t, there is no business.
ROGANY RAMIAH CHIEF HUMAN RESOURCES OFFICER
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55
Strategic report
Managing our risk
We operate in 14 countries across Africa.
Our markets offer both long-term growth
opportunities and a diverse range of risks
and uncertainties.
Managing these risks is an essential
part of delivering our strategy.
It means we can continue to
create value for our business and
shareholders, and for the millions of
people whose lives we help transform.
Identifying and managing risk
The directors have carried out a robust assessment
of the company’s principal and emerging risks to
comply with Provision 28 of the Governance Code.
We have designed our risk management
framework to give us a consistent means of
identifying, mitigating and monitoring risk across
all 14 of our operating companies and Group
entities. It provides senior management and our
Board with oversight over our principal risks, and
promotes a bottom-up approach to identifying
and managing risks across the Group.
14 operating companies and Group
entities use a consistent method of risk
identification, mitigation and monitoring.
Risk identification process
As we’re a technology-driven
business working in complex
regulatory environments, an
actively managed risk framework
is essential to our key operating
and financial decisions. Assessing
and managing risk runs through
the day-to-day working in all of our
operating companies and functions –
this is part of the fabric of Airtel Africa.
RAVI RAJAGOPAL CHAIR, AUDIT AND RISK COMMITTEE
IDENTIFY
RISK ANALYSIS
RANK
OpCo
Function
Risks are identified by
analysing external and
internal context both at an
operating subsidiary and
at a Group functional level
Discuss and
validate each risk
Assess each risk
Likelihood
Impact
Score and
prioritize
each risk
Each risk is then assigned
a risk rating based on the
likelihood of occurrence
and the possible impact/
consequence
Airtel Africa’s
principal risks
Risks impacting the
Group’s strategy,
business model
and solvency
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Risk management
governance
The Airtel Africa plc Board has overall
responsibility for the Group’s risk
management framework and processes.
Through the Audit and Risk Committee,
the Board oversees the Group’s risk
management framework and regularly
reviews its principal risks as well as emerging
risks that may impact the Group.Within that
overarching framework, the governance
of risk management has been cascaded
to various levels across the organisation
to allow effective management of the
Group’s risks.
The framework covers the interplay
between risks impacting Airtel Africa
as a whole and risks identified at either
the operating company (OpCo) level
(geography-related) or the functional level
(business function-related). Our Group
Executive Risk Committee evaluates
and prioritises the principal risks with
the potential to undermine our strategy,
business model and solvency, in line with
our overall risk appetite.
Group functional teams identify functional
risks cutting across our operating companies
(OpCos) to create a consistent Group-wide
risk mitigation strategy for similar risks.
We operate a similar risk management
governance structure at Group level and
within our OpCos, with both having an
Executive Risk Management Committee, and
with overall risk management responsibility
resting with the respective boards.
Each OpCo identifies risks within their
business environment and takes appropriate
mitigation actions. The governance of risk
management at each OpCo rests with the
OpCo Executive Risk Committee (ERC) and
the OpCo Board, which is responsible for risk
management processes and oversees the
OpCo’s principal risks and the effectiveness
of its mitigation actions.
The Board’s Audit and Risk
Committee
The Board has overall responsibility for
the Group’s risk management processes.
Through the Audit and Risk Committee,
the Board oversees the Group risk
management framework and regularly
reviews our principal risks.
Group Executive Risk Committee
The Executive Risk Committee (ERC) is
responsible for the implementation of the
risk management framework across the
Group. The ERC reviews our significant
risks and the progress and effectiveness
of mitigation actions. It continually
monitors and assesses new and
emerging risks.
Functional Risk Management
Committee
The Group executive functional heads are
responsible for identifying and mitigating
risks at a functional level. The Group’s risk
register is created from risks identified
either by the Group functional heads or
the OpCo Executive Risk Committees.
OpCo Executive Risk Committee
and OpCo Board
The OpCo Executive Risk Committee
(ERC) performs a similar role to the
Group ERC. They are responsible for
implementing the risk management
framework in our subsidiaries. They
identify risks within the local environment
and mitigation actions to manage those
risks. Each OpCo Board has overall
responsibility for the risk management
process within that OpCo.
How we classify our risks
We classify our risks in four categories, described in this table.
This allows a consistent approach to risk identification across Airtel Africa.
Strategic risks
External risks such
as changes in
market dynamics
or risks to strategic
partnerships
Financial risks
Risks impacting our
liquidity or solvency,
financial reporting
or capital structure
Operational risks
Risks affecting our
ability to effectively
operate our business
model across a
variety of functional
areas
Governance and
compliance risks
Risks affecting our
ability to comply with
our legal, regulatory
and governance
obligations
Risk heat map
t
s
o
m
A
l
i
n
a
t
r
e
c
d
o
o
h
i
l
e
k
L
i
l
y
e
k
L
i
l
i
e
b
s
s
o
P
l
y
e
k
i
l
n
U
7
3
10
4
6
1
8
9
2
5
Minor
Moderate
Significant
Extreme
Impact
1
2
3
4
5
6
7
8
9
Adverse competition
and market disruption
Vendor governance
Digitisation and innovation
COVID-19
Technology obsolescence
Cyber and information
security threats
Increase in cost structure
Leadership succession
planning
Internal controls and
compliance
10
Network resilience
and business continuity
11
Exchange rate fluctuation
12
Debt facilities and
cross-guaranteed debt
13
Compliance to legal
requirements
14
KYC and QoS
non-compliance
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57
13121114
Strategic report
Managing our risk continued
Our principal risks, and how we mitigate them
Our principal risks are those with the most significant
potential impact on the achievement of our overall strategic
objectives. This list of 14 principal risks is drawn from
our consolidated risk register, based on how likely each
is to occur and its potential business impact.
STRATEGIC RISKS
Adverse competition
and market disruption
Vendor governance
Digitisation
and innovation
Link to strategy
Link to strategy
Link to strategy
Risk owner
Chief marketing officer
Risk owner
Chief supply chain officer
Risk owner
Chief information officer
Description
We operate in an increasingly competitive
environment across our markets and
segments, particularly with respect to
pricing and market share. Aggressive
competition by existing players or the entry
of a new player could put a downward
pressure on prices, adversely affecting
our revenue and margins, as well as our
profitability and long-term survival.
The nature and level of the competition
we face varies for each of our markets,
products and services. Likelihood = likely.
Impact = significant.
Description
We operate an outsourced business model,
and our ability to deliver value for our
stakeholders could be impacted by factors
such as over-reliance on certain vendors,
poor governance processes, non-adherence
to service level agreements, or a general
lack of accountability by our partners.
Our business model relies on third-party
suppliers and technology providers to
manage, maintain and operate our network
and IT infrastructure.
Effective governance of our key equipment
and technology providers is important to
prevent any adverse effect on our business
operations. Likelihood = possible.
Impact = significant.
Description
Our industry is continually facing pressure
from non-conventional and over-the-top
(OTT) players (internet-based alternatives
to traditional telephony services) which
provide similar services for our customers.
We need to innovate to simplify our user
experience, make our business processes
more agile, and develop more digital
touchpoints to reach our customers
and meet their changing needs. These
innovations are necessary to avoid the risk
of losing customers. Likelihood = likely.
Impact = significant.
Mitigation
1. Ongoing monitoring of competitive
landscape and competitor activities
2. Driving penetration of bundle offerings
to lock in customers, increase
affordability and reduce churn
3. Growing Airtel Money penetration
as a tool for customer stickiness
4. Simplifying customer experience
through self-care and other customer
touchpoints
Mitigation
1. Continuous monitoring of partner
performance and strengthening of
partner governance capabilities
2. Ongoing review of our strategic vendor
landscape across markets and critical
business processes to mitigate any
long-term continuity risks arising
from possible over-dependence
on particular vendors
Mitigation
1. Setting up the Airtel development centre
as a hub for our digitisation initiatives
2. Simplifying our core IT systems and
integration capabilities to allow for faster
deployment of new products and
services and integration with third-party
applications
3. Rolling out various digital apps in some
of our key markets
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Key to strategic pillars
Win with network
Win with mobile money
Win with customers
Win with cost
Win with data
Win with people
Our strategy is described in detail on pages 21-31
STRATEGIC RISKS
OPERATIONAL RISKS
Adverse competition
and market disruption
Vendor governance
Digitisation
and innovation
COVID-19
Technology
obsolescence
Cyber and information
security threats
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Risk owner
Chief marketing officer
Risk owner
Chief supply chain officer
Risk owner
Chief information officer
Risk owner
Chief executive officer
Description
Description
Description
We operate in an increasingly competitive
We operate an outsourced business model,
Our industry is continually facing pressure
environment across our markets and
segments, particularly with respect to
pricing and market share. Aggressive
and our ability to deliver value for our
from non-conventional and over-the-top
stakeholders could be impacted by factors
(OTT) players (internet-based alternatives
such as over-reliance on certain vendors,
to traditional telephony services) which
competition by existing players or the entry
poor governance processes, non-adherence
provide similar services for our customers.
of a new player could put a downward
pressure on prices, adversely affecting
our revenue and margins, as well as our
profitability and long-term survival.
The nature and level of the competition
we face varies for each of our markets,
products and services. Likelihood = likely.
Impact = significant.
to service level agreements, or a general
We need to innovate to simplify our user
lack of accountability by our partners.
Our business model relies on third-party
suppliers and technology providers to
experience, make our business processes
more agile, and develop more digital
touchpoints to reach our customers
manage, maintain and operate our network
and meet their changing needs. These
innovations are necessary to avoid the risk
of losing customers. Likelihood = likely.
Impact = significant.
and IT infrastructure.
Effective governance of our key equipment
and technology providers is important to
prevent any adverse effect on our business
operations. Likelihood = possible.
Impact = significant.
Mitigation
Mitigation
Mitigation
1. Ongoing monitoring of competitive
landscape and competitor activities
2. Driving penetration of bundle offerings
to lock in customers, increase
affordability and reduce churn
3. Growing Airtel Money penetration
as a tool for customer stickiness
4. Simplifying customer experience
through self-care and other customer
touchpoints
1. Continuous monitoring of partner
performance and strengthening of
partner governance capabilities
1. Setting up the Airtel development centre
as a hub for our digitisation initiatives
2. Simplifying our core IT systems and
2. Ongoing review of our strategic vendor
integration capabilities to allow for faster
landscape across markets and critical
business processes to mitigate any
deployment of new products and
services and integration with third-party
long-term continuity risks arising
from possible over-dependence
on particular vendors
applications
3. Rolling out various digital apps in some
of our key markets
Description
The novel COVID-19 pandemic has paralysed the global
economy, causing massive disruptions in the movement
of people and the global supply chain, and adversely
impacted the cash flow and liquidity of businesses.
Despite the adverse effects of the pandemic, demand for
telecommunications services, especially fixed and mobile
internet, has increased as more people work from home
and require the internet to connect to their work network.
Telecommunication services are considered an essential
service. However, the disruption caused by the COVID-19
pandemic may impact the Group’s ability to operate
its business effectively and achieve its objectives.
Likelihood = likely. Impact = significant.
Mitigation
1. Implementation of business continuity plans for all
functions and operating subsidiaries within the Group
to ensure minimal disruption of our abilities to provide
critical telecom services during this period
2. Set-up of a crisis management centre for the Group
with daily and weekly reviews at three layers: crisis
management teams at the OpCo level, crisis
management team at the Group office providing
oversight over the OpCo crisis management teams, and
the Executive Committee providing overall oversight
3. Ongoing engagement with relevant regulatory bodies in
our operating markets to designate telecom companies
as providers of essential services.This has allowed us to
continue to operate our retail stores, and maintain our
telecoms infrastructure and the movement of essential
employees during lockdowns in some markets
4. To protect the health and safety of our employees,
the Group has activated its work from home policy
irrespective of local governments’ lockdown
restrictions, and instituted various measures.
The company has partnered with relevant health
agencies in our operating markets to support
the governments’ response to the pandemic
Risk owners
Chief technical officer
Chief information officer
Risk owner
Chief information officer
Description
Cybersecurity threats through
internal or external sabotage
or system vulnerabilities could
potentially result in customer data
breaches and/or service downtimes.
Like any other business, we are
increasingly exposed to the risk that
third parties or malicious insiders
may attempt to use cyber-crime
techniques, including distributed
denial of service attacks, to disrupt
the availability, confidentiality and
integrity of our IT systems. This could
disrupt our key operations, make it
difficult to recover critical services
and damage our assets. Likelihood
= likely. Impact = significant.
Mitigation
1. Rolling out a security and cyber
awareness training programme
using various channels
2. Ongoing reviews and updates
to our information security policy
3. Continuing to identify risk and
assess vulnerability
Description
An inability to effectively and
efficiently invest and upgrade
our network and IT infrastructure
would affect our ability to compete
effectively in the market. While we
continually invest in improving and
maintaining our networks and IT
systems to address current levels
of volume and capacity growth,
we need to continue to commit
substantial capital to keep pace with
rapid changes in technology and the
competitive landscape. Likelihood
= possible. Impact = significant.
Mitigation
1. Refreshing our IT infrastructure
with focus on cloud technology
2. Network modernisation project
involving upgrades to our core
(mobile switching) and packet
(mobile data) networks
3. Reducing the cost of network
operations by adopting radio
agnostic technology, ‘single RAN’,
which allows easy switching of
network resources and spectrum
between 2G, 3G and 4G networks
at minimal marginal costs
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59
Strategic report
Managing our risk continued
Key to strategic pillars
Win with network
Win with mobile money
Win with customers
Win with cost
Win with data
Win with people
Our strategy is described in detail on pages 21-31
OPERATIONAL RISKS
Increase in cost structure
Leadership succession
planning
Internal controls
and compliance
Network resilience and
Exchange rate
business continuity
fluctuation
Debt facilities and
cross-guaranteed debt
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Risk owner
Chief supply chain officer
Risk owner
Chief human resources officer
Risk owner
Chief financial officer
Risk owners
Chief information officer
Risk owner
Chief financial officer
Risk owner
Chief financial officer
Description
To maintain our profitability, we need to
keep our cost structure in check. Increases
in costs relative to the growth in revenues
are a threat to our profitability. Our operating
costs are subject to fluctuations, including
in response to changes in global commodity
prices, market uncertainty, energy costs
(such as diesel and electricity), and
the cost of obtaining and maintaining
licences, spectrum and other regulatory
requirements. Prevailing macroeconomic
conditions and a variety of other factors
beyond our control also contribute to this
risk. We need to continually re-evaluate
our operating model and cost structure
to identify innovative ways to optimise
our costs. Likelihood = likely.
Impact = moderate.
Description
We need to continually identify and develop
successors for key leadership positions
across our organisation to ensure minimal
disruption to the execution of our corporate
strategy. Our ability to execute our business
strategies depends in large part on the
efforts of our key people. In some of the
countries in which we operate, there’s a
shortage of skilled telecommunications
professionals. Any failure to successfully
recruit, train, integrate, retain and motivate
key skilled employees could have a material
adverse effect on our business, the results
of our operations, financial condition and
prospects. Likelihood = possible.
Impact = significant.
Description
Gaps in our internal control and
compliance environment could affect our
reputation and lead to financial losses. Our
financial reporting is subject to the risk that
controls may become inadequate due to
changes in internal or external conditions,
new accounting requirements, or delays or
inaccuracies in reporting. We continue to
implement internal risk management and
reporting procedures at Group and OpCo
levels to protect against risks of internal
control weaknesses and inadequate
control over financial reporting. Likelihood
= possible. Impact = significant.
Description
Description
Description
Our ability to provide unparalleled quality
Our multinational footprint means
of service to our customers and meet quality
we’re constantly exposed to the risk of
The Group has certain debt notes issued by
Bharti Airtel International (Netherlands) B.V.,
of service (QoS) requirements depends on
adverse currency fluctuations and the
a wholly owned subsidiary of the Group
the robustness and resilience of our network
macroeconomic conditions in the markets
and guaranteed by the Group’s majority
and IT infrastructure and our ability to
respond appropriately to any disruptions.
Our telecommunications networks are
where we operate. Currency depreciation
puts pressure on our liquidity and overall
profitability. We derive revenue and incur
shareholder. These debt notes contain
covenants which could trigger an early
repayment in the event of a default by the
subject to risks of technical failures, aging
costs in local currencies where we operate,
group’s majority shareholder. The outstanding
infrastructure, human error, willful acts of
destruction or natural disasters. This can
but we also incur costs in foreign currencies,
2023 debt note of $505m contains a covenant
mainly from buying equipment and services
that could restrict certain major subsidiaries
include equipment failures, energy or fuel
from manufacturers and technology service
from incurring indebtedness unless the majority
shortages, software errors, damage to
providers. That means adverse movements
shareholder meets a designated consolidated
fibres, lack of redundancy plans and
inadequate disaster recovery plans.
in exchange rates between the currencies in
indebtedness to underlying EBITDA ratio.
our OpCos and the US dollar could have a
This covenant is suspended when the notes
Likelihood = likely. Impact = significant.
negative effect on our liquidity and financial
become designated as investment grade.
condition. Likelihood = likely. Impact =
significant.
Mitigation
1. Continuing to review opportunities to
refine our operating model to further
optimise costs
Mitigation
1. Defined functional and leadership
development plans for the leadership
and critical roles within Airtel Africa
Mitigation
1. Strengthening the Group’s internal
controls over financial reporting and
compliance processes
2. Rolling out various initiatives to optimise
our operating structure to improve
business performance
2. Put talent management processes in
place to identity high potential people
for development
3. The operation of long-term incentive
arrangements structured to encourage
employee retention and to align with the
long-term objectives of the company
2. Implementing a rigorous review process
for addressing findings from internal audit,
with oversight from the Audit and Risk
Committee
3. Continually identifying and mitigating
risks
Mitigation
Mitigation
Mitigation
1. Implementing geographically redundant
1. Renegotiating Forex denominated
disaster recovery sites for our networks
and IT infrastructure across our OpCos
contracts to local currency contracts
2. Hedging foreign currency denominated
1. Obtaining a standalone credit rating for Airtel
Africa plc from global credit rating agencies
to enable access to the capital market
2. Establishing a governance process for
payables and loans, and matching assets
2. Creating a Finance committee, a sub-
the regular testing of fallback plans
for all network and IT systems
and liabilities, where possible
These cross-guaranteed debt notes and
covenants mean that the Group could be
adversely impacted by any material uncertainty
affecting its majority shareholder if the Group is
unable to refinance these debt notes in a timely
fashion or on acceptable terms. Likelihood =
possible. Impact = significant.
committee of the Audit and Risk Committee,
to oversee significant matters relating to
treasury, tax and other financing decisions
3. Making committed and non-committed
debt facilities available to address any
short-term funding needs
4. Reviewing any material development
potentially impacting our major
shareholder’s ability to comply with
debt note covenants
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OPERATIONAL RISKS
FINANCIAL RISK
Increase in cost structure
Leadership succession
planning
Internal controls
and compliance
Network resilience and
business continuity
Exchange rate
fluctuation
Debt facilities and
cross-guaranteed debt
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Link to strategy
Risk owner
Risk owner
Chief supply chain officer
Chief human resources officer
Risk owner
Chief financial officer
Risk owners
Chief information officer
Risk owner
Chief financial officer
Risk owner
Chief financial officer
Description
Description
Description
To maintain our profitability, we need to
We need to continually identify and develop
Gaps in our internal control and
keep our cost structure in check. Increases
successors for key leadership positions
compliance environment could affect our
in costs relative to the growth in revenues
across our organisation to ensure minimal
reputation and lead to financial losses. Our
are a threat to our profitability. Our operating
disruption to the execution of our corporate
financial reporting is subject to the risk that
costs are subject to fluctuations, including
strategy. Our ability to execute our business
controls may become inadequate due to
in response to changes in global commodity
strategies depends in large part on the
prices, market uncertainty, energy costs
(such as diesel and electricity), and
the cost of obtaining and maintaining
licences, spectrum and other regulatory
efforts of our key people. In some of the
countries in which we operate, there’s a
shortage of skilled telecommunications
professionals. Any failure to successfully
changes in internal or external conditions,
new accounting requirements, or delays or
inaccuracies in reporting. We continue to
implement internal risk management and
reporting procedures at Group and OpCo
requirements. Prevailing macroeconomic
recruit, train, integrate, retain and motivate
levels to protect against risks of internal
conditions and a variety of other factors
key skilled employees could have a material
control weaknesses and inadequate
beyond our control also contribute to this
adverse effect on our business, the results
control over financial reporting. Likelihood
of our operations, financial condition and
= possible. Impact = significant.
risk. We need to continually re-evaluate
our operating model and cost structure
to identify innovative ways to optimise
our costs. Likelihood = likely.
Impact = moderate.
prospects. Likelihood = possible.
Impact = significant.
Description
Our ability to provide unparalleled quality
of service to our customers and meet quality
of service (QoS) requirements depends on
the robustness and resilience of our network
and IT infrastructure and our ability to
respond appropriately to any disruptions.
Our telecommunications networks are
subject to risks of technical failures, aging
infrastructure, human error, willful acts of
destruction or natural disasters. This can
include equipment failures, energy or fuel
shortages, software errors, damage to
fibres, lack of redundancy plans and
inadequate disaster recovery plans.
Likelihood = likely. Impact = significant.
Description
Our multinational footprint means
we’re constantly exposed to the risk of
adverse currency fluctuations and the
macroeconomic conditions in the markets
where we operate. Currency depreciation
puts pressure on our liquidity and overall
profitability. We derive revenue and incur
costs in local currencies where we operate,
but we also incur costs in foreign currencies,
mainly from buying equipment and services
from manufacturers and technology service
providers. That means adverse movements
in exchange rates between the currencies in
our OpCos and the US dollar could have a
negative effect on our liquidity and financial
condition. Likelihood = likely. Impact =
significant.
Mitigation
Mitigation
Mitigation
1. Continuing to review opportunities to
1. Defined functional and leadership
refine our operating model to further
optimise costs
development plans for the leadership
and critical roles within Airtel Africa
1. Strengthening the Group’s internal
controls over financial reporting and
compliance processes
2. Rolling out various initiatives to optimise
2. Put talent management processes in
2. Implementing a rigorous review process
our operating structure to improve
place to identity high potential people
for addressing findings from internal audit,
business performance
for development
with oversight from the Audit and Risk
Mitigation
1. Implementing geographically redundant
disaster recovery sites for our networks
and IT infrastructure across our OpCos
2. Establishing a governance process for
the regular testing of fallback plans
for all network and IT systems
Mitigation
1. Renegotiating Forex denominated
contracts to local currency contracts
2. Hedging foreign currency denominated
payables and loans, and matching assets
and liabilities, where possible
3. The operation of long-term incentive
Committee
arrangements structured to encourage
3. Continually identifying and mitigating
employee retention and to align with the
risks
long-term objectives of the company
Description
The Group has certain debt notes issued by
Bharti Airtel International (Netherlands) B.V.,
a wholly owned subsidiary of the Group
and guaranteed by the Group’s majority
shareholder. These debt notes contain
covenants which could trigger an early
repayment in the event of a default by the
group’s majority shareholder. The outstanding
2023 debt note of $505m contains a covenant
that could restrict certain major subsidiaries
from incurring indebtedness unless the majority
shareholder meets a designated consolidated
indebtedness to underlying EBITDA ratio.
This covenant is suspended when the notes
become designated as investment grade.
These cross-guaranteed debt notes and
covenants mean that the Group could be
adversely impacted by any material uncertainty
affecting its majority shareholder if the Group is
unable to refinance these debt notes in a timely
fashion or on acceptable terms. Likelihood =
possible. Impact = significant.
Mitigation
1. Obtaining a standalone credit rating for Airtel
Africa plc from global credit rating agencies
to enable access to the capital market
2. Creating a Finance committee, a sub-
committee of the Audit and Risk Committee,
to oversee significant matters relating to
treasury, tax and other financing decisions
3. Making committed and non-committed
debt facilities available to address any
short-term funding needs
4. Reviewing any material development
potentially impacting our major
shareholder’s ability to comply with
debt note covenants
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61
Monitoring other global or emerging risks
There are also a number of global risks
which we keep under review. While we don’t
consider them principal risks, we monitor
developments in these areas to determine
if we need to elevate their risk rating.
These include:
• Climate change – we continue to evaluate
the potential impact of climate change
on our business operations and on the
economies in which we operate. It is clear
that water scarcity, changing crop patterns,
extreme weather events and other
climate-related matters could have a range
of impacts on the populations we serve,
and therefore on our business, in the
medium term. Our footprint also includes
economies in which fossil fuel production
makes an important contribution to GDP,
and which could therefore be affected by
the transition to a low-carbon economy. We
combine monitoring of these developments
with a focus on how we can operate a
long-term environmentally sustainable
business.
• The UK’s exit from the EU – while we do
not have any operational business in the
UK, we’re continually reviewing how the
post-Brexit business environment could
affect our business directly or indirectly.
Strategic report
Managing our risk continued
Key to strategic pillars
Win with network
Win with mobile money
Win with customers
Win with cost
Win with data
Win with people
Our strategy is described in detail on pages 21-31
GOVERNANCE AND COMPLIANCE RISKS
Compliance to legal
requirements
Know your customer
(KYC) and Quality
of service (QoS)
non-compliance
Link to strategy
Link to strategy
Risk owner
Chief legal officer
Risk owner
Chief regulatory officer
Description
We operate in a diverse and dynamic legal
and regulatory environment. Establishing
and maintaining adequate procedures,
systems and controls enables us to
comply with our obligations in all the
jurisdictions in which we operate. We are
required to comply with data privacy,
anti-money laundering, anti-bribery and
corruption, sanctions, and other laws and
regulations. A failure to comply could lead
to unanticipated regulatory penalties and
sanctions or tax levies, as well as damage
to our reputation. Likelihood = likely.
Impact = moderate.
Description
As we operate in a large number of
jurisdictions, we must comply with an
extensive range of laws and regulations
relating to the licensing, construction and
operation of telecommunications networks
and services. Focus on KYC and QoS
regulations across our operating markets
has increased in recent years. Regulators in
several of the countries in which we operate
have introduced stringent regulations and
guidelines in relation to KYC and maintaining
a certain quality of service. A failure
to comply could lead to unanticipated
regulatory penalties and sanctions and
tax levies, and damage to our reputation.
Likelihood = likely. Impact = significant.
Mitigation
1. Instituting various policies across the
Group to comply with the legal
requirements in the jurisdictions where
we operate
2. Implementing an escalation process for
reporting significant matters to the
Group office
Mitigation
1. Implementing a regular compliance
tracking process against KYC
requirements, identifying root causes
for cases of non-compliance and taking
corrective actions
2. Continuing to engage with regulators on
quality parameters in certain markets
3. Communicating with and training
3. Periodic quality of service KPI monitoring
employees on relevant company policies
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Our long-term
viability statement
The preparation of this viability statement involved
both our management and Board assessing the
Group’s long-term prospects and ability to meet
future commitments and liabilities as they fall due
over the three-year review period. This included
stress tests on various scenarios to test the
resilience and strength of our forecasts.
Management assessment
Viability
Our viability
statement is based
on our current
business model (see
page 18-19 of this
report), a three-year
prospect horizon,
and our strategy
(see pages 22-23).
Long-term plan and
headroom analysis
Our three-year plan
has been prepared
considering organic
growth potential in the
geographies where
we operate. The plan
has been approved by
the Board.
Principal risk assessment
Our risk evaluation is described
on pages 56-62. While each of
principal risk has been carefully
evaluated and an adequate
monitoring and mitigation plan
has been defined, we have also
considered sensitivity analysis
and stress tests on the three-year
projections.
Sensitivity
We have quantified the impact of
sensitivities on cash and liquidity
headroom availability, both individually
and collectively, in worst case
scenarios. In assessing the impact, we
have considered various mitigating
actions which could be undertaken to
ensure sufficient liquidity.
Management assessment of headroom based on forecast cash flows and sensitivities to assess our
ability to meet future commitments and liabilities as they fall due over the next three years.
Board assessment
Assessment of our strategic intent
Adequacy of the assumptions used to
prepare the plans as well as sensitivities
applied to the plans
Additional and potential resources
available to mitigate the combined
impact of sensitivities
Board assessment of the reasonableness of management’s conclusions on our ability to continue
operations and meet our liabilities as they fall due over the assessment period.
Viability statement
of Airtel Africa plc
In line with the UK Corporate Governance
Code, the directors have assessed our
long-term strategic prospects, as well as our
ability to meet future commitments and
liabilities as they fall due. While the prospects
of the company exist for a much longer
period, the directors believe a three-year
period is most appropriate for our long-term
viability assessment. The directors have taken
various factors into consideration in arriving
at this conclusion:
• The three-year period coincides with our
strategic planning cycle.
• The design and payout of the management
incentive plan is built around a three-year
payout cycle.
• The level of visibility and control that can be
exercised over the inputs and assumptions
over a three-year period, specifically
considering the dynamics of the telecoms
industry, such as customer behavior, capital
expenditure planning and visibility of risks
This plan has been prepared based on our
strategy and adequate stress tests have been
conducted through various scenarios, both
individually and collectively, based on our
overall risk assessment framework.
At the time of this report, we have not
experienced any material impact of COVID-19
on our business. Given the rapidly changing
external dynamics, it is extremely difficult
to predict the impact of COVID-19 on our
profitability, solvency and liquidity positions
with any accuracy. We’ve applied various
levels of additional stress tests to our
cash flows in the plan, including possible
incremental revenue decline, an unanticipated
increase in costs, and currency devaluation.
As telecoms and mobile money businesses
are considered essential and critical services
by both customers and governments, the
sector in which we operate is widely thought
to be more resilient to COVID-19 than other
consumer-facing services and industries. The
countries where we operate will also continue
to benefit from strong population growth and
the need for increased connectivity and
financial inclusion in the medium to long term.
Our detailed assessment of the possible
impacts of COVID-19 is explained on page 09
of this report.
The company ended the year in a strong
financial position. Free cash flow more than
doubled in the last 12 months to $453m and
our net debt to EBITDA ratio continued to
improve to 2.1x at the end of this financial
year. Our cash balances and $814m in
committed undrawn facilities ensure we
can meet our financial obligations. We have
$2.3bn in long-term debt, with the first
repayment of €750m due in May 2021.
The next major debt repayment of $505m
is due in March 2023.
We have also concluded standalone credit
rating assessments that will enable us to
access debt capital markets as and when
required. Additionally, we have agreed to
extend the maturity of $254m of debt
facilities due to mature in December 2020
and January 2021 to an average of 18
months to two years, further improving
our liquidity.
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63
Strategic report
Our long-term viability statement continued
Some of the key risks considered in the stress tests along with their potential negative impacts are detailed here:
Stress tests
done for following
scenarios
Link to principal
risks and
uncertainties
Slowdown
in revenue growth
• Adverse competition
and market disruption
• Technology obsolescence
Increase in
operating expenses
• Vendor governance
• Increase in cost structure
Unanticipated
regulatory
and tax levies
Exchange rate
fluctuation
• Compliance to various legal
requirements
• Know your customer (KYC)
• Quality of service (QoS)
compliance
• Exchange rate fluctuation
COVID-19 impact
• Uncertainties arising out
of COVID-19 pandemic
Description
Revenue is projected on a number of assumptions such as subscriber base, rates
and change in average revenue per user. Change in any of the assumptions due
to adverse competition and market disruption may affect overall revenue growth.
In most cases, these changes are compensated either fully or marginally by a
corresponding change in other variables. Changes not fully compensated lead
to a reduction in the rate of revenue growth.
With operations spread across 14 geographies and each country having a different
economic and business environment, there is always a risk of operating costs
increasing beyond projected levels.
As we work in diverse and dynamic legal environments, it’s necessary to establish
and maintain adequate procedures, systems and controls to ensure we comply with
our obligations in all the jurisdictions in which we operate. There will always be a risk
of unanticipated regulatory and tax levies affecting our profitability and hence
considered in the stress tests.
We are constantly exposed to the risk of adverse currency fluctuations, given our
operations in 14 different geographies with different functional currencies. We have
stress tested the plan for various levels of currency devaluation and the resulting
impact on cash flows.
The larger impact of COVID-19 will depend on how the virus spreads across the
geographies where we operate and the response of the authorities to slow the
spread. We’ve carried out extensive scenario analysis looking at the possible
negative affect of the outbreak over shorter (six months) and longer time periods
of time. The severe but plausible scenarios considered include:
1. Changes to customer behaviour leading to revenue loss and an increase in
operating expenses affecting cash flows
2. Currency devaluation
3. Changes to regulatory environments
4. Uncertainty around tax statute changes or demands
We operate largely in the prepaid segment, which has a higher propensity
to changes in both usage and spend as there are no time-specific contracts.
As such, a prolonged impact of COVID-19 would bring additional downside risks
to our revenue and cash flow.
Conclusion
We’ve stress tested the overall plan for the
above sensitivities, including the foreseeable
impact of COVID-19. The directors have a
reasonable expectation that no single or
plausible combination of events would be
enough to affect our viability – and, even
under the severe stress tests, we would
be able to continue operating and meet
our liabilities over the three-year period.
The directors have considered:
• Actions which can be taken to mitigate
the impact of the events in the severe
stress tests, including limiting or delaying
discretionary capital expenditure without
compromising on network quality,
optimising operating expenditure and
reducing or stopping dividend payments
• Our ability to access adequate sources
of funding, including financing facilities
and access to the debt capital markets,
while determining the available liquidity
headroom over the period considered
• The internal and external environment,
current and long-term prospects, and the
strategic intents and directions adopted
by our management
• Our risk framework, potential sensitivities
around the risks and mitigating factors
The directors have concluded that the Group
would be in a position to access debt capital
markets and meet our financing needs
as and when required.
Based on this assessment and in accordance
with requirements of paragraph 31 of the
2018 UK Corporate Governance Code, the
Board has concluded that we have the ability
to continue our operations and be able to
meet our commitments and liabilities over
the assessment period.
The Strategic Report was approved by the
Board of Directors on 13 May 2020 and
signed on its behalf by:
RAGHUNATH MANDAVA
CHIEF EXECUTIVE OFFICER
13 MAY 2020
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Governance
Contents
66 Our Board of directors
69 Our Executive Committee
70 Chair’s introduction
72 Our leadership
77
Board evaluation
78
Engaging with our stakeholders
80 Audit and Risk Committee report
87 Nominations Committee report
90 Our compliance with the UK
Corporate Governance Code
94 Directors’ report
98 Directors’ statement of responsibility
100 Directors’ remuneration report
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Airtel Africa plc Annual Report and Accounts 2020
65
Governance report – Corporate governance
Our Board of directors
Sunil Bharti Mittal
Chair, non-executive
director, and chair of
Nominations Committee
N
Date appointed to Board:
October 2018
Independent: no
Age: 62
Nationality: Indian
Skills, expertise and
contribution
Sunil is the founder and chairman of
Bharti Enterprises, one of India’s leading
conglomerates with diversified interests
in telecoms, insurance, real estate,
agriculture and food, renewable energy
and other ventures. Bharti Airtel, the
flagship company of Bharti Enterprises,
is among the world’s largest telecoms
companies, offering mobile, fixed
broadband and digital TV solutions to
over 400 million customers across India,
South Asia and Africa.
Sunil is the pioneering force behind
the mobile revolution in India – he
revolutionised the business model at
Bharti Airtel to make affordable voice
and data services available to all.
As chair of the Board, his leadership
has brought immense value to Airtel
Africa through his futuristic vision, vast
knowledge and industry expertise.
External commitments
• Founder and chairman of Bharti
Enterprises and Bharti Airtel
• Honorary chairman of the International
Chamber of Commerce (ICC)
• Member of the International Business
Council, World Economic Forum (WEF)
• Member, Global Board of Advisors,
Council of Foreign Relations (CFR)
• Commissioner of the Broadband
Commission
• Trustee at the Carnegie Endowment
for International Peace (CEIP)
• Member, Board of Qatar Foundation
Endowment (QFE)
• Member of the India-US, India-UK
and India-Japan and India-Sweden
CEO Forums
• Co-chair of the India-Africa Business
Council
Previous roles
Sunil has served on the boards of
several international bodies. He was the
chairman of the International Chamber
of Commerce (ICC) from June 2016 to
June 2018 and the chairman of GSM
Association (GSMA) from January
2017 to December 2018. He was the
president of the Confederation of Indian
Industry (CII) from 2007 to 2008. Sunil
is closely associated with spearheading
the Indian industry’s global trade,
collaboration and policy – he has served
on the Prime Minister of India’s Council
on Trade and Industry.
Sunil has also served on the boards
of several multinational companies
including Unilever PLC, Standard
Chartered Bank PLC and SoftBank Corp.
Andrew Green CBE
Senior non-executive
director
AR N M
Awuneba Ajumogobia
(née Iketubosin)
Non-executive director
R
Date appointed to Board:
April 2019
Date appointed to Board:
April 2019
Independent: yes
Age: 64
Nationality: British
Independent: yes
Age: 61
Nationality: Nigerian
Skills, expertise and
contribution
Andy brings many years of global
financial and strategic experience to the
Board. Through his work with a number
of multinational organisations, he is able
to draw on a wide knowledge of diverse
issues and outcomes to provide
constructive challenge and robust
scrutiny of matters that come before
the Board.
External commitments
• Group chairman of Simon Midco
Limited (the holding company of
Lowell Group)
• Non-executive director at Link
Administration Holdings Limited
• Commissioner at the National
Infrastructure Commission
• Trustee of WWF UK and Disasters
Emergency Committee
Previous roles
Andy was previously senior independent
director of Avanti Communications plc
and ARM Holdings plc and chairman of
the Digital Catapult and IG Group plc.
He was Group chief executive officer
of Logica plc until its sale in 2012. His
prior roles include those at BT Group plc,
including CEO of BT Openworld, CEO of
BT Global Services and CEO of Group
Strategy and Operations and various
roles at Shell and Deloitte. Andy has held
a number of non-executive directorships
in the US, Hong Kong, Germany and
the UK.
Skills, expertise and
contribution
Awuneba is a chartered accountant
with broad experience in assurance,
taxation, finance and advisory services
across several industries. Her expertise
as an assurance and finance specialist,
garnered at leading professional
services firms, make her an asset to
Board decision-making.
External commitments
• Executive director at Multistream
Energy Limited
• Board chair at CAP Plc
• Board member of UPDC (UACN
Property Development Company) Plc
• Governing council chair at Grange
School, Lagos
• Board Member of University of
Ibadan Research Foundation
• Member of Finance Committee
MUSON (Musical Society of Nigeria)
• Executive council member of WIMBIZ
(Women in Management, Business
and Public Service)
Previous roles
Awuneba was a board member at UAC
of Nigeria Plc (UACN) from 2009 to
2019. During her tenure, she chaired the
Risk Management Committee and was
a member of the Statutory Audit
Committee. Prior to this, she developed
her career at Peat Marwick, Deloitte and
Accenture. Awuneba has also had
advisory and implementation roles with
a number of national development
projects in Nigeria.
Raghunath Mandava
Chief executive officer
M
Date appointed to Board:
July 2018
Independent: no
Age: 53
Nationality: Indian
Skills, expertise and
contribution
Raghu has held a variety of sales,
marketing, customer experience and
general management roles in the FMCG
and telecoms industries. Raghu joined
Airtel Africa Group as chief operating
officer in 2016 and took over as CEO in
January 2017. To his role as CEO, he
brings a deep understanding of
telecoms and a strong belief that
connectivity can accelerate growth by
helping to bridge the digital divide and
advance financial inclusion. Raghu takes
an innovative problem-solving approach
to achieve disruptive growth and
profitabiity. He has guided Airtel Africa in
building a modernised 4G network. In
his last role in Airtel India, he helped
deliver a substantially improved
customer experience while considerably
reducing costs. He has an electronics
engineering degree and an MBA
specialising in marketing.
Other commitments
Board member of Bharti Airtel
International (Netherlands) B.V., Bharti
Airtel Africa B.V. and Airtel Networks
Limited.
Previous roles
Raghu represented the Airtel Africa
Group on the Board of Bharti Airtel until
January 2019. He held various roles at
Airtel India starting in 2003 as chief
operating officer for Tamil Nadu, Circle
CEO for Rajasthan, chief marketing
officer of the Mobile Business, regional
operations director for East India Mobile
Business, regional operations director
for B2C Business for West India, and
customer experience director for India.
Before joining Airtel India, Raghu held
various sales, marketing and business
operations roles at Hindustan Unilever.
Raghu is participating in a targeted
mentoring programme to enhance his
UK listed plc experience.
Key to committees
AR Audit and Risk Committee
N Nominations Committee
R Remuneration Committee
M Market Disclosure Committee
Committee chair
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Douglas Baillie
Non-executive director
and chair of Remuneration
Committee
N R M
John Danilovich
Non-executive director
R
Annika Poutiainen
Non-executive director
AR
Date appointed to Board:
April 2019
Date appointed to Board:
April 2019
Independent: yes
Age: 69
Independent: yes
Age: 49
Nationality: American
Nationality: Finnish
Date appointed to Board:
April 2019
Independent: yes
Age: 64
Nationality: British
Skills, expertise and
contribution
Doug brings vast leadership experience
in both private and public sectors to
the Board and his role as the chair of
the Remuneration Committee. His
background in diverse leadership roles
and human resources is particularly
useful to the Board when considering
the Airtel Africa culture, employee
management, executive remuneration
and other employee-related activities.
External commitments
• Vice chairman of the MasterCard
Foundation
• Director of the Leverhulme Trust
• Non-executive director of the
Huhtamaki Group
Previous experience
Doug spent 38 years at Unilever, and
his roles there included president of
Western Europe in the Netherlands until
2011, Group vice president of South
Asia, CEO Hindustan Unilever in India
until 2008, Group vice president Africa
and the Middle East from 2004 until
2006, and chief HR officer from 2011
until 2016.
Ravi Rajagopal
Non-executive director
and chair of Audit and
Risk Committee
AR N M
Date appointed to Board:
April 2019
Independent: yes
Age: 64
Nationality: British
Skills, expertise and
contribution
With experience in diverse industries
such as healthcare and consumer
brands, Ravi brings a wealth of recent
and relevant financial experience and
cultural insight to the Board and our
Audit and Risk Committee.
External commitments
• Chairman of Fortis Healthcare, India
Independent director and chair of
•
the Audit Committee of Vedanta
Resources, UK
• Chairman of JM Financial, Singapore
Skills, expertise and
contribution
Annika’s wide-ranging experience in
audit and regulatory engagements
contributes to her role as the member
of the Board and Audit and Risk
Committee. With her legal background
and deep knowledge of auditing,
accounting and financial reporting,
she brings a keen scrutiny to all
governance and regulatory matters.
External commitments
• Working chair of the Council for
Swedish Financial Reporting
Supervision
• Member of the Swedish Audit
Academy
• Member of the Nasdaq Helsinki
Pte Ltd
Listing Committee
• Trustee of the Science Museum
• Board member of the Carpe Diem
Foundation (UK)
Previous experience
Ravi held financial leadership roles
at Diageo until retiring in 2015, such
as group controller in the UK with
responsibility for the spirits business
across sub-Saharan Africa and global
head of mergers and acquisitions.
Starting in 1979, Ravi held various roles
at ITC India, including a secondment
to West Africa with BAT. He has held
numerous positions on various joint
venture boards and Diageo’s India
advisory board, and was non-executive
director of United Spirits in India.
Foundation, which runs the
top-ranked Swedish elementary
school, Fredrikshovs Slott Skola
Previous experience
Annika has been a board and audit
committee member of listed companies
eQ Abp, Hoist Finance AB, Saferoad AS
(delisted in September 2018) and
Swedbank AB, as well as industry
advisor to strategic communications
firm JKL Group. She advised the
Swedish government on the national
implementation of the reformed EU
market abuse regime and was head
of market surveillance Nordics at
Nasdaq and head of unit, prospectuses,
exchanges and clearing houses at
the Swedish Financial Supervisory
Authority. She was also an associate in
the Capital Markets Group at Linklaters
London and has been a practising
solicitor in both the UK and Finland.
Skills, expertise and
contribution
John has held executive leadership
roles in international business and
government for several decades. As a
global business leader and distinguished
diplomat, he has extensive experience in
regional and international trade-related
issues. He brings skills in building
international partnerships and advocacy
with policymakers, foreign dignitaries
and business leaders to Airtel Africa,
and provides constructive challenge
and robust scrutiny of matters that
come before the Board.
External commitments
• Board member at d’Amico
International Shipping
• Board and council member at the
Harvard Chan School of Public
Health, the Center for Strategic
International Studies (CSIS) and
Chatham House (UK)
• Member of the Council on Foreign
Relations (New York) and of the
American Academy of Diplomacy
Previous experience
John was Secretary General of the
International Chamber of Commerce
(ICC) in Paris from 2014 to 2018 and
CEO of the Millennium Challenge
Corporation in Washington from 2005
to 2009. He has been the US
ambassador to Brazil and to Costa Rica.
While on the board of the Panama Canal
Commission, he acted as chairman of
the Commission’s Transition Committee
prior to the handover of the canal by
the US to Panama. In his distinguished
career, he also played a significant role
in the Central American Free Trade
Agreement (CAFTA).
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67
Governance report – Corporate governance
Our Board of directors continued
Arthur Lang
Non-executive director
Date appointed to Board:
October 2018
Akhil Gupta
Non-executive director
Date appointed to Board: October
2018
Shravin Bharti Mittal
Non-executive director
Date appointed to Board: October
2018
Independent: no
Age: 48
Independent: no
Age: 64
Nationality: Singaporean
Nationality: Indian
Independent: no
Age: 32
Nationality: British
Skills, expertise and
contribution
Arthur brings powerful global telecoms
experience and strong financial acumen
to the Board. As CEO International at
Singapore Telecommunications Limited
(Singtel), he oversees the growth of
regional associates across Africa, India,
Indonesia, the Philippines and Thailand.
This includes strengthening
relationships with overseas partners
and driving regional initiatives such as
mobile, financial and gaming businesses.
External commitments
• CEO International at Singtel
• Board member of Globe Telecom,
Bharti Infratel, NetLink NBN Trust, the
Land Transport Authority of
Singapore, the National Kidney
Foundation and the Straits Times
School Pocket Money Fund
• On the advisory board of the Lee
Kong Chian School of Business,
Singapore Management University
Previous experience
Arthur was Group chief financial officer
of CapitaLand, where he also ran the
real estate fund management business.
Before this, he was co-head of Morgan
Stanley’s Southeast Asia investment
banking division and chief operating
officer of its Asia Pacific investment
banking division.
Skills, expertise and
contribution
Akhil brings vast financial, strategic and
telecoms expertise to our Board. He has
played a pivotal role in the Bharti
Group’s phenomenal growth in the
telecoms sector, both organically and
through various acquisitions. With
innovative thought leadership, he has
helped Bharti Airtel to achieve healthy
margins while offering some of the
lowest tariffs in the world.
External commitments
• Vice chairman of Bharti Group
• Executive chairman of Bharti Infratel
• Chairman of Tower and Infrastructure
Providers Association (TAIPA)
• President of Telecom Sector Skill
Council (TSSC)
Previous experience
Akhil led the formation of various
partnerships for Bharti with operators
like British Telecom, Telecom Italia,
Singapore Telecom and Vodafone, as
well as with financial investors such as
Warburg Pincus, Temasek, KKR, Qatar
Foundation Endowment, AIF and
Sequoia. He was behind the separation
of passive mobile infrastructure and the
formation of one of the largest tower
company in the world – a notable
example of collaborating at the back
end while competing at the front end.
He also executed the acquisition of
Zain Group’s mobile operations in 15
countries across Africa, the second
largest outbound deal by an Indian
company.
Skills, expertise and
contribution
As the youngest Board member
and the entrepreneurial founder of
a top-performing global technology
investment firm, Shravin brings a
diversity of view and expertise in the
tech sector to our discussions and
decision-making.
External commitments
• Founder of Unbound, a long-term
investment firm aiming to build
and back technology companies
• Managing director of Bharti Global
Limited
• On the Board of Softbank Energy
• Board member of technology
companies mPharma, Cars24, Syfe,
Paack and FreightHub
Previous experience
Shravin was previously at SoftBank
Vision Fund, a US$100 billion fund
investing in technology companies,
and assistant director at Better Capital,
a private equity firm in London where
he turned around distressed retail and
manufacturing businesses. Previously,
he was involved in the launch of 3G
at Airtel India and on the senior
management team at Airtel Africa,
where he spearheaded the post-
acquisition integration of Zain. Before
Airtel, he worked with J.P. Morgan
investment bank covering technology,
media and telecoms.
Board skills %
Financial reporting
Risk management and
internal controls
Remuneration
Corporate finance
Strategy
Technology/digital
Governance
Non-executive director
45%
36%
9%
18%
82%
27%
55%
91%
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Our Executive Committee
Convened and chaired by our CEO, our Executive Committee (ExCo)
brings together the heads of our main business areas to help him fulfil his
responsibilities. The committee meets fortnightly to ensure the ongoing
success of our strategy and culture. It also monitors our operating and
financial performance, assesses risk, allocates resources and looks after
day-to-day operational management across the business.
Jaideep Paul
Chief financial officer
Jaideep brings 30 years of leadership
and financial experience to our
committee, with over 17 of those in the
telecoms industry. Before becoming our
chief financial officer in 2014, he was
CFO at Airtel Nigeria, Fairtrade LLC
Muscat and Bharti Retail. He held prior
financial roles at Mumbai Circle and
Bharti Airtel Delhi Circle, as well as senior
roles at HCL, Telstra V-Com and Caltex.
Jaideep started his career at
Pricewaterhouse and is a qualified
chartered accountant.
Jaideep is invited to all Board meetings
and is participating in a targeted
mentoring programme to enhance
his UK listed plc experience.
Segun Ogunsanya
Managing director and
CEO, Nigeria
Segun has over 26 years’ business
management experience in banking,
consumer goods and telecoms. Before
joining Airtel, Segun held leadership
roles at Coca-Cola in Ghana, the US,
Nigeria and Kenya (as CEO). He has also
been the managing director of Nigerian
Bottling Company Ltd (Coca-Cola
Hellenic owned) and Group head of
retail banking operations at Ecobank
Transnational Inc, covering 28 countries
in Africa. Segun is a chartered
accountant.
Ian Ferrao
Regional director –
East Africa
Ian has spent the last 14 years leading
telecoms organisations in Africa, both as
an entrepreneur and a corporate CEO.
He joined Airtel Africa in September
2019 to lead the East Africa business
segment, comprising Airtel operations
in Kenya, Tanzania, Uganda, Rwanda,
Zambia and Malawi. Before Airtel Africa,
Ian was the CEO for Vodacom Tanzania
PLC, where he led the company’s IPO
onto the DSE. He’s also served as CEO
of Vodacom Lesotho, CCO for Vodacom
Business Africa and commercial director
and shareholder of AfriConnect Zambia.
Michael Foley
Regional director,
Francophone Africa
Over the last 35 years, Michael has led
telecoms, consumer goods, fintech and
gaming businesses in the US, Asia and
Africa, as well as in his native Canada.
His most recent role was as CEO of
Telenor’s operations in Pakistan,
Bulgaria and Bangladesh.
Razvan Ungureanu
Chief technology officer
Razvan has 27 years’ experience in
telecoms and has worked in Romania,
Belgium, Luxembourg and the
Dominican Republic. Before joining Airtel
Africa in 2016, he was chief technology
and information officer for Digicel, with
responsibility for 29 countries in the
Caribbean and Central America.
Olivier Pognon
Chief legal officer
Before joining Airtel Africa in June 2014,
Olivier worked as senior legal counsel at
MTN Group in Johannesburg. He has
also held roles in corporate law and
project finance at Agence Française de
Développement, CMS BFL and Mayer
Brown in Paris. With postgraduate
degrees in business law, project and
structured finance and executive
education in finance, Olivier brings his
sharp legal acumen to our affairs at
Airtel Africa.
Neelesh Singh
Chief information officer
Neelesh defines and implements the IT
strategy across our business, including
our operating subsidiaries in 14
countries. He specialises in defining and
revamping operating models, delivering
on complex business transformations,
setting up greenfield operations, cloud
infrastructure and architecture
simplification. He brings over 19 years of
international experience in IT across the
public sector, independent software
vendors and communications service
providers to his role at Airtel Africa.
Before joining us in 2017, he held a
senior IT leadership role at the Telenor
group, handling various aspects of IT
across 13 countries in Scandinavia,
Central and Eastern Europe and Asia.
Daddy Mukadi
Chief regulatory officer
Before becoming our chief regulatory
officer in early 2015, Daddy was
executive head of international
regulatory affairs and executive head
of international commercial legal affairs
at Vodacom Group. He has also held
previous legal and regulatory leadership
roles at Gateway Communications
Group, MHA Attorneys (South Africa),
the Communication Users Association
of South Africa and the Cabinet
M.T. (DRC).
With a master’s degree in
communications law and as the author
of a handbook for media law
practitioners, Daddy brings a broad
understanding of legal and regulatory
affairs to his role at Airtel Africa.
Ramakrishna Lella
Chief supply chain officer
Ramakrishna has spent more than 30
years in the telecoms industry, with
more than half of this time at Airtel.
Before becoming our chief supply chain
officer in 2016, he led the team setting
up various types of networks (including
mobile, NLD/ILD, Enterprise and DTH)
and was the director of supply chain
management for Airtel Nigeria. He has
also held different roles in the telecoms
sector covering research and
development, manufacturing (Alcatel
and Indian telephone industries) and
telecom service providers (Airtel and
Reliance Jio).
Rogany Ramiah
Chief human resources
officer
Rogany has more than 22 years’
experience in retail, media and
consulting, including as senior director
with Walmart’s International People
Division and as an executive in
Massmart (a division of Walmart).
To her role as CHRO, she brings global
expertise in supporting businesses
on strategy, cultural transformation,
business process re-engineering and
organisational redesign. She also has
experience in talent acquisition, talent
planning, remuneration strategy, and
developing and leading HR
transformations.
Stephen Nthenge
Head of internal audit
and risk assurance
Stephen has over 24 years’ experience
in audit, enterprise risk and information
security management, having worked
for Deutsche Bank AG, JP Morgan
Chase and KPMG in senior
management roles in Australia,
Singapore, London and New York.
In addition to leading regional and global
audit teams, he helped to establish risk
and governance frameworks for new
products and services as well as
regulatory governance frameworks.
He has also led strategic risk mitigation
and transformational programmes.
Stephen is a certified information
systems auditor.
Luc Serviant
Group enterprise director
Luc has more than 25 years’
international experience in marketing
and implementing core network and
ICT solutions for the enterprise sector.
He has held various roles at Orange
Business Services – from head of global
services in Switzerland to head of
consulting and solutions integration
APAC in Singapore, and most recently
as vice president Middle East and Africa,
based in Dubai. He has also held a
variety of positions at SITA (Société
Internationale de Télécommunications
Aéronautiques), Global One
Telecommunications and Alcatel-
Lucent.
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69
Governance report – Corporate governance
Chair’s introduction
Committed to strong governance
and transparent reporting against the
2018 UK Corporate Governance Code
Governance highlights for the
year ended 31 March 2020
• Substantially met all the requirements
of the UK Corporate Governance Code
applying to Airtel Africa for 2019/20 –
see page 74
• Began to set out our strategy for
improving diversity and inclusion at all
levels of our business – see page 87
• Conducted a comprehensive
externally facilitated Board evaluation
– see page 77
• Enhanced our succession and
contingency planning processes
– see page 88
I believe we are set apart by our
commitment to good governance,
our entrepreneurial energy and
our vision to enrich the lives
of our customers.
SUNIL BHARTI MITTAL CHAIR
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The past year has been transformative for
Airtel Africa. On 3 July 2019, Airtel Africa
became a dual-listed company in London
and Lagos, operating in 14 unique and
growing markets in Africa and a challenging
regulatory and governance environment.
In these highly competitive markets, I believe
we are set apart by our commitment to good
governance, our entrepreneurial energy and
our vision to enrich the lives of our customers.
As chair of the Board, I’m pleased to be
able to make a personal statement on our
approach to corporate governance. We have
embraced the rigorous requirements of listing
in London as part of our commitment to
strong governance and transparent reporting,
identifying three areas of non-compliance
pursuant to the 2018 UK Corporate Governance
Code, which are explained in this report.
The Board’s priority over the last 12 months
has been two things. One, to move towards
a position where our business has the
appropriate structure and quality of capital,
debt and liquidity. And two, to make sure we
have a suitable and effective governance
structure in place for a premium listed company.
To strengthen the adequacy of our
governance, the Board has been working,
since our UK listing, on a financial position and
prospects procedures (FPPP) review. This has
focused on post-IPO priority areas impacting
the financial reporting environment, which
will embed good governance and corporate
reporting processes throughout the business.
Both the Board and our employees have
been through a robust compliance training
programme. In addition to putting in place an
effective governance and financial structure
for a company listed in both the UK and
Nigeria, we have also focused this year
on the performance and continuing
development of Airtel Africa.
I strongly believe that the opportunities
of operating in Africa outweigh the risks,
given our strategy, appetite for risk and
risk management, strong culture and
commitment to good governance.
In this governance report, we explain how
our Board has sought to comply with the
principles of good governance, applied
these to the business and addressed
the challenges in doing so.
A responsible business
We recognise the importance of considering
our responsibilities to our shareholders and
believe that strong corporate governance
benefits all our stakeholders.
The Board has taken a number of steps
to ensure that these legal and regulatory
obligations become part of our culture and
decision-making processes. For example,
the directors’ duties under section 172 of
the Companies Act 2006 help to underpin
the good governance at the heart of how
we work. Details of how the Board takes
into account shareholder and wider
stakeholder interests when making
decisions and strategic planning are
set out on pages 32-33.
The Board receives regular briefings and
updates on corporate governance at Board
and committee meetings. In this report on
corporate governance, we aim to clearly
explain the governance-related processes
and procedures we have in place and which
are so critical to our long-term success.
We are always very pleased to engage
with our shareholders and appreciate
their constructive input.
I firmly believe that a responsible business
has a duty to give back to the communities
in which it operates. More on this is set out
on pages 53-54.
Board and governance
The first independent board evaluation
confirmed that our Board functions effectively.
It’s well balanced and diverse, with a strong
mix of relevant skills and experience. With the
help of the company secretary, I’ve drawn up
a list of action points for the Board – these
include a more sustained focus on business
and strategic issues, continuing to improve
our engagement with stakeholders, and
developing board knowledge of regional
markets. The Board will also keep its
composition under review, with a view to
bolstering the Group’s technology expertise
and understanding of technological
developments. Related to this will be a
cybersecurity deep-dive exercise conducted
by our Audit and Risk Committee.
A strong culture
We firmly believe that good governance
should be focused not only on how the Board
operates, but importantly, on the culture that
informs our business and affects how our
employees do their jobs. There have been
some challenging discussions around
the boardroom table during the year,
particularly after the adverse judgment by
the Honourable Supreme Court of India on
24 October 2019 affecting telecoms service
providers in India including our parent
company Bharti Airtel Limited. I’m pleased
to report that all discussions have been
resolved amicably and with mutual respect.
Our three company values are alive, inclusive
and respectful – and we expect all employees
across our business to reflect these every day.
I’m grateful to all the members of the Board
for their individual contributions, and
particularly to the chairs of each committee
for establishing and steering their committees
during the year. The Audit, Remuneration and
Nominations committee chairs have provided
their own report on their committee’s
activities – see pages 80-89 and 100.
In conclusion
I am confident that your Board is effective and
works well. We have the right balance of skills,
expertise and professionalism to continue to
deliver strong governance, while allowing the
CEO and CFO to implement and deliver our
strategy (as set out on pages 21-43) within
the culture we’ve worked so hard to establish.
Although I’m pleased with the Board’s
activities and approach when it comes to
corporate governance, we continually look
for ways to learn and improve.
I very much look forward to meeting with
shareholders at the AGM on Wednesday
24 June 2020, which will be livestreamed
from London and Lagos. Along with all
of your directors (who will be at the AGM),
I am available to respond to your questions,
concerns and suggestions at any time.
SUNIL BHARTI MITTAL
CHAIR
13 MAY 2020
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71
Governance report – Corporate governance
Our leadership
Our governance structure
Our Board of directors is the primary decision-maker at Airtel Africa.
Its members are responsible for our operational and financial
performance, for setting our strategy and for making sure that
we manage risk effectively. See pages 66-68 for details of
our Board members. As shown below, the Board has delegated
certain responsibilities to specialist committees while maintaining
overall accountability.
Board committees
In addition to the formal schedule of matters the Board considers,
it delegates certain key aspects of governance to its committees.
We have four main governance committees: Audit and Risk,
Remuneration, Nominations and Market Disclosure. Each committee
has written terms of reference which are available to view on our
website: www.airtel.africa.
Governance committees
Board
Audit and Risk Committee
Monitors the integrity of financial reporting
and helps the Board in reviewing the
effectiveness of our internal controls and
risk management
Meets at least three times a year
Chair:
Ravi Rajagopal
Members:
Andy Green and Annika Poutiainen
Remuneration Committee
Determines the overall and specific
remuneration for executive directors,
officers and senior management
Meets at least twice a year
Chair:
Doug Baillie
Members
Awuneba Ajumogobia
John Danilovich
All independent non-executive directors
All independent non-executive directors
See Audit and Risk Committee report page 80
See Remuneration Committee report page 100
Nominations Committee
Advises on appointments, retirements
and resignations from the Board and its
committees and reviews succession
planning and talent development for
our Board and senior management
Meets at least twice a year
Chair:
Sunil Bharti Mittal (NED)
Members:
Doug Baillie (independent NED)
Andy Green (independent NED)
Ravi Rajagopal (independent NED)
See Nominations Committee report page 87
Market Disclosure Committee
Oversees our disclosure of information to
meet our obligations under the Market
Abuse Regulations (MAR) by determining
whether information is insider information,
when it needs to be disclosed and whether
it needs to be announced; also monitors
compliance with our MAR disclosure,
controls and procedures. Other
responsibilities include monitoring the
release of information under the
Information Protocols and Services
Agreement with Bharti Airtel
Meets as necessary
Chair:
Andy Green (independent NED)
Members:
Doug Baillie (independent NED)
Raghu Mandava (CEO)
Ravi Rajagopal (independent NED)
Administrative committees
The Board also delegates certain
responsibilities to our Finance Committee
and Share Scheme Committee.
Finance Committee
• Approves funding and other financial
matters in line with our delegated
authorities
• or as requested by the Board. Initiates
and manages key policies and major
operational decisions relating to
treasury and direct taxes
Chair:
Jaideep Paul, CFO
Members:
Ravi Rajagopal (independent NED)
Annika Poutiainen (independent NED)
Raghu Mandava (CEO)
Pier Falcione (deputy CFO and treasurer)
Akhil Gupta (NED) attends to represent
the interests of Bharti Airtel in proposed
treasury transactions affecting the parent
group and to convey actions of Bharti
which may affect Airtel Africa
Share Scheme Committee
• Administers our share schemes
• Composed of any two directors,
including at least one non-executive
director
Executive Committee
Our CEO oversees the operation of our business with advice and support from our Executive
Committee (ExCo). Convened and chaired by our CEO, this committee helps him to fulfil his
responsibilities by, for example, developing and implementing our strategy, monitoring our
operating and financial performance, assessing risk, allocating resources and day-to-day
operational management. The committee meets fortnightly.
More details on the ExCo can be found on page 69.
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The Board’s focus in 2019/20
Regular items at our Board meetings include:
• Reviewing the activities of our Audit and Risk, Nominations
• Reports from the CFO on our financial position and prospects
and Remuneration Committees
• Reports and compliance updates from senior executives
• Reports from the CEO on our progress towards strategic objectives
on legal and corporate governance matters
Other presentations received during the financial year included human resourcing and wider employee matters, updates on our FPPP progress,
and updates from our Investor Relations team and brokers on shareholder movements, market and peer activity, and share price performance.
Preparing for our 2019 listing
2019 was a milestone year for Airtel Africa
with our listing in both London and Nigeria.
While becoming a listed entity took
considerable effort, with good planning,
effective execution and sheer hard work
by our Board and company project teams,
Airtel Africa plc is now a standalone and
independent business. As part of this
process, the Board established some new
teams, including Treasury and Investor
Relations, and a robust conflicts of interest
framework. We have a services agreement
in place to regulate a limited number of
services, including global procurement and
corporate advice, which Bharti Airtel may
provide at our request. The agreement also
regulates shared service centre teams which
are part of day-to-day finance team activity.
Ahead of our listing, the Board formalised
future arrangements for the limited sharing
of information with our parent company,
Bharti Airtel. This was necessary for
three reasons:
1. Bharti Airtel’s Group-wide policy and
approach to ongoing monitoring,
governance and oversight of subsidiary
investments, which is informed in large
part by its own regulators, the Securities
Exchange Board of India and Reserve
Bank of India
2. The legal requirement for Bharti Airtel
to publish quarterly consolidated
financial results
3. Bharti Airtel’s obligations during the year
arising from various bond covenants
We have protocols in place to make sure
information is shared with Bharti Airtel
in a way that complies with our legal and
regulatory obligations. None of these
arrangements in any way influences
our Board’s discretion or ability to make
independent decisions. These separation
and information-sharing protocols and our
mutual adherence to them were externally
audited by ANB Global in early 2020 and
found to be in order.
The Board is fully aware of our obligations
under the Listing Rules and Market Abuse
Regulations (MAR) obligations in making
these arrangements.
Becoming listed on the London Stock
Exchange brought new compliance and
regulatory requirements to our business,
in particular:
• Financial Conduct Authority’s (FCA)
Disclosure and Transparency Rules
sub-chapters 7.1 and 7.2 which set
out certain mandatory disclosure
requirements (handbook.fca.org.uk)
• FCA’s Listing Rules 9.8.6R, 9.8.7R and
9.8.7AR which include the ‘comply or
explain’ requirement pursuant to the
2018 UK Corporate Governance Code
(frc.org.uk)
• BEIS Directors’ Remuneration Reporting
Regulations and Narrative Reporting
Regulations contained in the Large and
Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008
In order to meet these requirements and
transform Airtel Africa to a standalone
listed business, the Board undertook
several key activities in 2019, including:
• Reviewing and approving the prospectus
prepared for the admission of our shares
to trading
• Appointing a senior independent director
to support the Board chair and act as a
liaison for shareholders
• Working since our UK listing to embed
good governance and corporate reporting
processes and controls throughout the
business
• Appointing a corporate legal adviser and
corporate brokers
• Establishing an Investor Relations team
and beginning market consensus
reporting with analysts, in addition to the
company and consensus reports included
in standard Board reporting packs
The Board also benefited from a series
of pre-IPO training sessions, including:
• Introductory meetings between our chair,
chief executive and company secretary
and our auditors, brokers and legal
advisers covering Board processes,
corporate governance requirements
and shareholder views
• An induction by our then legal adviser,
Freshfields, providing insights into the
wider legal and regulatory responsibilities
of a listed company director
• A longer briefing by JPM, our listing
sponsor, giving an external perspective
on market and shareholder views
Our CEO and CFO are also participating in
targeted mentoring programme to enhance
their UK listed plc experience.
While we have made good progress in
moving towards full compliance with the
2018 UK Corporate Governance Code,
we do still have three areas of non-
compliance. The following table sets out
these areas at listing as compared to our
position today.
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Airtel Africa plc Annual Report and Accounts 2020
73
Governance report – Corporate governance
Our leadership continued
The Company complied with the provisions of the Code during the financial year save as set out below:
Code provision
Explanation
Provision 9: the chair should be
independent on appointment when
assessed against the circumstances
set out in provision 10
Remuneration Committee chair –
prior service
Executive director shareholding
The Board has concluded that Sunil Bharti Mittal did not on appointment meet the independence
criteria of the Code due to his interests in the company. However, in view of his extensive involvement
with the company and the Bharti Airtel Group over many years, the Board considers that he has
made a major contribution to our growth and success and unanimously agrees that his continued
involvement is crucially important to the ongoing success of Airtel Africa. The Board recognises
a number of safeguards in place to ensure robust corporate governance during his tenure as chair.
The Board believes he continues to effectively oversee our leadership and maintain a balanced
shareholder agenda.
The Board acknowledged at the time of listing that we did not comply with the requirements of the
Code in this respect, but saw Doug Baillie as a seasoned HR professional with the experience and
expertise to effectively manage the committee on its behalf.
Having reviewed this appointment, the Board confirms that Doug has since displayed the skills
and experience required for the role and has the full support of the Board.
Raghu Mandava is expected to reach the target as soon as reasonably possible. A minimum
requirement of 250% of salary will apply while he is in position.
The Remuneration Committee is aware of investor guidance around post-employment share
ownership. It considers that, in light of the company’s unusual circumstances, with senior executives
located in Africa where additional requirements on the holding of shares are not market practice,
the operation of bonus deferral and post-vesting holding requirements currently provide sufficient
alignment after employment has ended. We will, however, continue to keep this aspect of policy
under review.
For details of our share ownership policy see page 102.
Special matters considered during the year
July 2019 – at the first meeting after our
admission to the London Stock Exchange, the
Board received a presentation on the share
register and market liquidity, assessed the
overall success of the listing and identified
post-IPO priorities. The Board also approved
the appointment of our two corporate
brokers. The CEO gave his perspective
on the business environment with
a performance update.
October 2019 – the Board received
information on market dynamics and
expectations from our brokers; approved
the publication of our half-year financials and
RNS announcement; discussed our dividend
policy and proposals for the interim dividend;
discussed the implications of the Indian
Supreme Court’s adverse judgment affecting
the telecoms providers in India, including our
parent company Bharti Airtel, for our working
capital requirements; and received a report on
people, culture and diversity.
January 2020 – the Board conducted an
externally facilitated Board evaluation and
considered at its February Board meeting
the recommendations for improvement
and discussed a plan to achieve this.
May 2020 – the Board approved our full-year
consolidated IAS and IFRS financials and RNS
announcement, our investor presentation and
final dividend.
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Selected Board priorities
Strategy and execution
2019/20 objectives
• Ensuring our strategy remains robust in
the light of forecast market and economic
changes (in line with the disclosure
requirement under Provision 1 of the Code)
• Monitoring and overseeing operational
performance
• Authorising spectrum purchases and other
key capital expenditure
Objectives for 2020/21
• To make sure our strategy remains
robust in the light of forecast market
and economic changes
• To ensure our performance is on track
to achieve the strategy
• To develop a plan to act on and close
within the financial year the agreed
recommendations from the externally
facilitated Board evaluation
• Responding to the challenges presented
• Discussing and authorising new strategic
by the COVID-19 pandemic
initiatives
To achieve these objectives, the Board:
• Regularly reviewed performance towards
our strategic objectives, together with
year-end performance projections
• Reviewed and agreed our 2020/21 budget
and received a detailed review of our
financial position, borrowing facilities and
financing alternatives in relation to our
strategic direction and latest forecasts
• Considered our dividend policy in light
of performance reports, our strategic
direction and outlook, and our financial
position
• Received regular briefings on governance
and compliance
• Reviewed detailed reports from the
executive team on resourcing requirements
for capital, finance and people
• In light of this information, and with input
and advice from our Audit and Risk
Committee:
– determined the final ordinary dividend for
2020 and the interim dividend for 2019
– approved in principle the full-year results
statement, the half-year results
statement and the quarterly statements
• Held additional meetings to discuss our
strategic and operational response to the
COVID-19 pandemic
Governance and values
2019/20 objectives
• Ensuring continued and improved
compliance with the UK Corporate
Governance Code
• Implementing the improvements
recommended by the externally
facilitated Board evaluation
• Monitoring and taking account of
stakeholder feedback and continuing
to actively promote wider engagement
• Launching the Finance Committee,
including approved terms of reference
• Monitoring and reviewing the effectiveness
of the information-sharing and separation
protocols between Airtel Africa and
Bharti Airtel
• Delivering the annual reporting process
to the required timeline
• Resolution of post-IPO priorities for financial
reporting processes at the point of listing
To achieve these objectives, the Board:
• Received regular updates on governance,
regulatory and remuneration developments
during the year from both internal and
independent external sources
• Established a Finance Committee
• Approved a remuneration policy and
directors’ remuneration report to submit
to shareholders at our 2020 AGM
• Conducted an externally facilitated
Board evaluation and acted on the
recommendations for improvement
• Assessed Airtel Africa and Bharti Airtel’s
adherence to separation and information-
sharing protocols as part of an externally
facilitated governance audit conducted
from February through April by ANB Global
and also considered whether additional
training is required
• Retained external expertise and trained
relevant teams to complete the annual
reporting process
• Appointed a corporate legal advisor
and broker
Objectives for 2020/21
• Ensuring our continued compliance with
the Code and with wider statutory and
regulatory requirements
• Considering the articulation of Airtel Africa’s
corporate purpose – building on our strong
vision and values as stated in our business
model
• Making sure our remuneration policy
is appropriate and able to incentivise
our executive team; that it remains
flexible enough to adapt to each year’s
developments and strategy; and that
remuneration is implemented in line
with our Remuneration Policy
• Developing a plan to act on and close
within the financial year the agreed
recommendations from the externally
facilitated Board evaluation
• Conducting another Board evaluation
• In keeping with our modern slavery
statement, establishing processes and
detailed guidance around the business
and selecting key employees to be
trained to identify, assess and report
concerns to help reduce the risk of
modern slavery and related practices
• Monitoring shareholder feedback and
continuing to actively promote wider
engagement
• Ensuring the success of the Finance
Committee
• Supporting the CEO and CFO in their
one-to-one mentoring programme
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75
Governance report – Corporate governance
Our leadership continued
Board attendance
In addition to the quarterly scheduled meetings, during the 2019/20 reporting period the Board met another five times in connection with our full
year financial statements and annual report approvals process. The Board regularly reviews the frequency of its meetings and has concluded
that quarterly meetings are appropriate for the time being. The Board has decided to extend quarterly Board and committee meetings from one
day to two to allow more time for strategic discussions. In addition to extra Board meetings when necessary, we have processes in place for
approving transactions and other matters arising between meetings.
Directors make every effort to attend all Board and committee meetings – there was full attendance at all committee meetings and all but one
Board meeting in 2019/20. If a director is unable to attend a meeting, they receive the papers in advance and give their comments to the chair
to communicate at the meeting; he/she also follows up with them after the meeting about decisions taken.
Details of each director’s attendance at Board and committee meetings are set out in this table.
Scheduled
Board
meetings
Number of
additional
Board meetings1
attended
Audit and
Risk
Committee
Remuneration
Committee
Nominations
Committee
Market
Disclosure
Committee7
Board members during 2019/20
Sunil Bharti Mittal2 (chair)
Raghunath Mandava (CEO)
Andrew Green3 (independent non-executive director)
4 (4)
4 (4)
4 (4)
Awuneba Ajumogobia (independent non-executive director) 4 (4)
Douglas Baillie (independent non-executive director)
John Danilovich (independent non-executive director)
Annika Poutiainen (independent non-executive director)
Ravi Rajagopal (independent non-executive director)
Akhil Gupta2 (non-executive director)
Arthur Lang4,5 (non-executive director)
Shravin Bharti Mittal6 (non-executive director)
4 (4)
4 (4)
4 (4)
4 (4)
4 (4)
4 (4)
4 (4)
10 (10)
10 (10)
10 (10)
4 (4)
4 (4)
4 (4)
1 (1)
1 (1)
1 (1)
9/(9)
9/(9)
9/(9)
1 (1)
9/(9)
5 (5)
5 (5)
4 (5)
5 (5)
5 (5)
5 (5)
5 (5)
5 (5)
5 (5)
5 (5)
5 (5)
1 Additional unscheduled Board meetings took place in connection with the approval of the annual report and related matters
2 Appointed as a nominee of AAML in line with the Relationship Agreement
3 Unable to attend an unscheduled Board meeting on 31 March given a previous Board commitment; provided his comments to the chair before the meeting
4 Unable to attend one scheduled Board meeting in October 2019 and sent an alternate director, Koh Boon Chye
5 Appointed as a nominee of Singtel in line with the Relationship Agreement
6 Appointed as a nominee of ICIL in line with the Relationship Agreement
7 Meets on an ad hoc basis via written resolution before releasing information pursuant to the Information Protocols and Service Agreement with Bharti Airtel
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Board evaluation
In early 2020, we engaged Lintstock to evaluate the Board’s
performance since the IPO, and to identify priorities for the coming
year to further improve our effectiveness. Lintstock is a London-based
advisory firm specialising in board effectiveness reviews and has no
other connection with Airtel Africa or its directors.
Process
The first stage of the review involved
Lintstock working with the company
secretary to set the context for the evaluation,
and to tailor survey content to our company
circumstances. The surveys addressed
core aspects of board performance,
with a particular focus on:
• The clarity of our strategy, including internal
and external communication, and the
progress being made around our strategic
pillars
• The Board’s understanding of the markets
and competitive context in which Airtel
Africa operates, as well as the opportunities
and threats presented to the business by
technological developments
• The Board’s oversight of succession and
talent management processes, as well
as company structure at senior levels
and the capacity to deliver the strategy
• The Board’s engagement with key
stakeholders, including employees,
and the effectiveness with which the
Board monitors culture and behaviours
throughout the company
• The Board’s focus on risk and oversight
of various aspects of the company’s risk
management, as well as the quality of
risk discussions at meetings
• The atmosphere in the boardroom, in terms
of encouraging candid discussion and
critical thinking, and the extent to which
the Board provides effective support
and challenge to management
• The appropriateness of the Board’s size
and composition, including the skills,
experience and diversity among members
The Board, each of its committees, all of the
directors and the CFO and company
secretary were either subject to or took part
in the review. The evaluation was conducted
using an online questionnaire. The
performance of the chair and the Board
committees were evaluated, and members
were invited to assess their own individual
contributions to the Board. All responses were
kept anonymous throughout to promote
open and honest feedback. Lintstock
analysed the survey results and delivered
detailed reports on the performance of the
Board, the committees, the chair and
individual directors.
While the results of the evaluation were
positive overall, the Board acknowledged that
the process took place relatively early on in
the Board’s cycle and oversight in certain
areas is still developing. We look forward to
continuing progress in key areas over the
coming year. The chair drew up a list of action
points based on the evaluation – these will be
implemented by the Board with progress
reviewed at each meeting.
Recommended priorities
Strategy, portfolio and positioning
– to move beyond the necessary focus
on governance in preparation for our IPO
to a more sustained focus on business
and strategic issues by:
• increasing members’ understanding of the
primary growth drivers
• developing board knowledge of – and
exposure to – regional markets in Africa
by, for example, visiting subsidiaries and
meeting colleagues in the regions
• focusing on the readiness plan for a digital
future
Governance and compliance – this includes
developing a clear environmental, social and
governance (ESG) policy and continuing
to improve board engagement with
stakeholders. The Board will also extend its
quarterly Board and committee programme
to two days, with more meetings in Africa.
Board process and composition – this
includes keeping the Board’s composition
under review, with a view to increasing gender
diversity in the near term and bolstering the
Group’s technology expertise, as well as
considering whether the CFO should join
the Board.
Talent and succession – increasing
engagement with our talent management
framework to better understand the internal
and external talent pipeline
Key actions
AR
Audit and
Risk Committee
R
N
Remuneration
Committee
Nominations
Committee
• Consider adding a fourth member to the committee
• Additional training and induction on developments in UK regulations, including new codes such as Brydon
and Kingman Reports, section 172 requirements and corporate governance standards
• Better coordination between internal and external auditors (EY and Deloitte, respectively) while charting out
annual plans
• Greater understanding of capex controls
• Greater independence and the ability to assess systems of internal controls rather than relying on
management information
• Significant progress on monitoring risk management versus concentrating on controls
• Billing controls to avoid leakages, with network configuration hacking seen as a key potential risk
• Future planning – agreeing on the agenda with management and external auditors
• Training on different aspects of remuneration, including STIP, LTIP and benchmarking
• Deeper focus and discussion on senior management remuneration
• Provide updates on emerging and future trends in compensation
• Greater engagement with new hires and other senior executives
• Robust succession plan for critical roles, with two to three candidates in the two- to four-year readiness bracket
Chair’s review
• Support and encourage more strategic discussions in Board meetings
• Share his larger vision for Airtel and Airtel Africa in particular
• Update the Board on critical conversations with individual members
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Governance report – Corporate governance
Engaging with our stakeholders
The telecoms and financial services we provide affect a wide range of people, and we
work hard to understand the interests of our many stakeholders and to reflect these
in the decisions we make as a Board. Our overall ambition is to proactively engage
with our stakeholders in a variety of ways to drive both financial and digital inclusion.
The description here of our Board’s efforts to engage with and consider stakeholders
in the 2019/20 financial year, taken alongside pages 32-33 of our strategic report,
serves as our section 172(1) statement.
How we work to
understand our
stakeholders
Our directors receive information about
our stakeholders through various channels.
One is through regular reports and briefings
in board and committee meetings,
when concerns and initiatives related
to stakeholders are presented to directors
by, for example, our Investor Relations
team or our chief HR officer.
Another is through direct interaction and
engagement, something we place much
importance on at Airtel Africa. Our directors
spend time in our markets and at our
businesses meeting with employees, leaders,
customers, regulators and other partners.
We aim for at least one board meeting each
year to take place at a regional location
with representatives from the business
in the room.
How we consider
stakeholder interests
Our directors foreground stakeholder
interests when making key decisions for Airtel
Africa. Sometimes this means considering the
results of a direct consultation, such as the
one between our Remuneration Committee
and our shareholders. Other times, it involves
distilling data and other metrics to inform
improvement programmes, such as our move
to a ‘single screen’ service advisor workspace
to empower employees to better serve our
customers (see side panel).
Our Board has also established clear business
standards to which stakeholder interests are
integral. Our Code of Conduct, for example,
approved by the Board in 2019, encompasses
everything from respect for human rights to
data privacy to acting lawfully. This sets out
our high expectations for how all of us at Airtel
Africa should act in ways that create value for
– and build trust in – our many stakeholders.
STAKEHOLDERS
Customers
Over the 2019/20 period, our Board
objectives were to encourage customer
engagement through our 24/7 on-shore call
centres, more than 1,500 Airtel stores, and
email and social media channels. We also
wanted to continue to empower customers
and bring all Airtel products and services on
to self-service platforms like IVR, USSD, web
and MyAirtel app. Our Board is kept informed
of significant customer concerns and
priorities through the CEO’s regular update.
Partners and suppliers
During the year, our business engaged
proactively at both Group and operational
company level with all of our top vendors.
These are mainly mobile brands, IT
companies and telecoms infrastructure
providers, who collectively contribute
around 90% of the value of all
procurements. Relevant information
from these engagements is communicated
to the Board through the CEO’s update
at quarterly meetings.
Governments and
regulators
Over the financial year, we continued to
engage with governments to understand
key policy considerations and the direction
in which governments are driving their
countries. We also used a multi-layered
approach to engage with regulatory
stakeholders around potential changes
to licensing frameworks in some countries,
proposed policy initiatives that might
increase our tax burden, mergers and
acquisitions, and change of control issues
arising from our listing.
The Board has empowered the CEOs and
chief regulatory officers of our operating
companies to represent them at various
country-level engagements with
governments and regulators. Management
keeps the Board informed of regulatory
developments in the markets on a monthly
and quarterly basis. From time to time, we
also commission audits to verify levels of
regulatory compliance.
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Improving the Airtel
customer experience
We know that customers want to be able
to quickly and easily find information about
our services and reach us through various
channels. So we’re re-engineering our
customer journeys to make them quick
and seamless – easier onboarding, a more
dynamic and contextual IVR system, and
self-service through a new app. We’ve
piloted our My Airtel app in four countries
and are rolling this out to all markets in
2020. We’re also introducing a ‘single
screen’ workspace for our customer
service advisors – this will hold each
customer’s complete details and contact
history, making it easier for us to help
people effectively.
Staying on top of regulatory
requirements
Operating across 14 countries means
we work hard to stay ahead of regulatory
changes in different markets. Our Board
leads the way by maintaining a productive
and open dialogue with regulatory bodies
and policymakers, and by setting high
standards of governance across
our business.
In 2019, for example, our directors
supported restructuring in our local
businesses to better meet evolving
regulations around mobile financial
services. This involved forming new
subsidiaries, appointing directors and
injecting the capital necessary to support
these changes, which were critical to give
central banks confidence in the security
of their customers’ funds in our system.
Our directors have also authorised
businesses to add new licences or
spectrum bands where necessary for
business growth. And crucially, the Board
has insisted on the full implementation of
a compliance management system across
all operations to ensure we’re working in
line with regulations in all of our markets.
STAKEHOLDERS
Communities
Airtel Africa works in many ways to support
the communities in which we operate, with
a particular focus on creating educational
opportunities, improving health, providing
access to the internet in rural communities
and institutions, and using our technology
for good in disaster situations.
We run local programmes focused on these
areas through our employees, who are best
placed to make direct contributions in the
places where they live and work. We support
charitable work of all types, both individual
and through Airtel Africa – and have a formal
programme of community initiatives in place.
The Board periodically reviews these and
approved a Code of Conduct in 2019. This
sets out our standards on community work,
among other things, emphasising our focus
on technology and employee volunteerism
and specifying the types of projects we will
not invest in, such as ones aligned to a
particular political party or religious group.
Our intention from 2020 onwards is to
increase our community programmes that
focus on sustainability, in line with growing
concerns and challenges related to the
effects of climate change.
3,300
employees
engaged quarterly through
CEO-led town halls
Shareholders
We have an ongoing aim to actively
encourage shareholder participation through
clear messaging and reporting and careful
review of shareholder feedback. Towards this
aim, in 2019/20 we took part in a variety of
activities, including:
• Holding investor roadshows before listing
and after publishing our quarterly results
in July, October and January, as well as ad
hoc meetings and calls with both existing
and prospective shareholders
• Encouraging shareholder attendance
at our first AGM (June 2020) and voting
on resolutions proposed through briefings
to analysts and the press
• Reviewing shareholder feedback on our
half year and quarterly results
From these interactions, we know that many
shareholders are interested in our outlook on
trading and market demand, our guidance for
2020 and beyond, and our financial targets
and dividend policy.
All directors have formal briefings during the
year about our investor relations programme
and receive detailed shareholder and
institutional feedback. This enables directors
to act on major strategic and operational
decisions with a good awareness of the views
of our shareholders.
As set out in the remuneration report, our
Remuneration Committee consults with
shareholders each year on remuneration
policy and, as part of this, the committee chair
engages directly with shareholders and their
representative bodies. More details are set
out on pages 100-114.
All shareholders on the register receive any
declared dividend, the information they are
entitled to receive pursuant to applicable law
and regulation, and have the right to receive
the Annual Report as well vote at the AGM.
We describe our relationship with our majority
shareholders on pages 95-96.
Our people
We know that the almost 3,300 people we
employ across 17 countries have made Airtel
Africa the success it is, and our Board works in
various ways to interact with and understand
employees across the business.
Over the 2019/20 financial year, the Board
focus was to make sure we are in line with
the 2018 Code requirement that companies
must adopt one or a combination of three
mechanisms (designated NED, workforce
advisory panel or employee director) or agree
on suitable alternative arrangements to
engage with employees. Our Board chair is
the Group’s designated workforce director,
given his regular travel to our operating
companies. He will report to each Board
meeting on his findings and engagement with
our workforce. Over the 2020/21 financial
year, we will formally review other ways for
Board members to engage directly with
employees by appointing more than one
non-executive director to better cover each
of the 16 markets in which we have offices.
This will be in addition to existing Board
engagement with our employees, which
includes:
• Quarterly CEO-led town halls and
explanations of our performance around
quarterly, half-year and full-year reporting
announcements
• Regular director visits to local operations
• Board meetings taking place at regional
locations with representatives from the
business present
• A company-wide employee engagement
survey every other year, with the next
taking place in 2020
• Quarterly Board reports from the HR Forum
and Remuneration Forum chair
• Chief HR officer presentations to directors
twice a year and one-to-one meetings
as necessary
• A full report on people and culture each
quarter to the Remuneration Committee
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Governance report – Corporate governance
Audit and Risk Committee report
PART 1
Chair’s statement
I am pleased to present the Audit and Risk
Committee report for the reporting period
ended 31 March 2020. This report gives
insight into the committee structure and
functions. It explains how the committee
has worked during this period to ensure
the independence and effectiveness of our
internal and external audit functions and
the integrity of our financial reporting and
narrative statements. As well as our usual
matters, including the financial results for
each quarter, half year and full year, applicable
accounting policies and going concern
assumptions, we looked in depth at certain
aspects of the control environment.
The committee meets with our external
auditor and the head of internal audit,
independent of the executive, to make
sure our reporting, forecasting and risk
management processes are rigorously
reviewed throughout the reporting period.
Our committee terms of reference were put
in place on listing, and we have determined
that they reflect our roles and responsibilities
under the Code and other related regulations.
We evaluated the committee’s performance
against these roles and responsibilities and
are satisfied that we have complied with
them as outlined in the committee’s terms
of reference.
We will continue to focus on making sure that
we work in line with all relevant codes and
regulations so that the business is operating
in a controlled and managed way. Between
3 July 2019 and 31 March 2020, we complied
with all but three provisions of the 2018 Code.
For more information on our compliance with
the Code see pages 90-92.
Our risk assessment this year included an
assessment around the treasury control
environment, following which we established
a finance committee, and an analysis of
the impact of COVID-19 as it stood at
12 May 2020.
RAVI RAJAGOPAL
CHAIR, AUDIT AND RISK COMMITTEE
13 MAY 2020
Committee members
and attendance
Our Audit and Risk Committee consists of
three independent non-executive directors:
Ravi Rajagopal (chair), Andy Green and Annika
Poutiainen. The committee as a whole has
competence relevant to the telecoms sector,
including recent and relevant financial
experience and expertise gained over the
years through various corporate and
professional appointments. For more about
Ravi, Andy and Annika, see the directors’
biographies on pages 66-67.
Our meetings are also attended, by invitation,
by the CEO, CFO, deputy CFO, other
non-executive directors, head of internal audit
along with internal auditor partners (ANB and
EY) and other senior executives. Our external
auditor, Deloitte, was invited to and attended
all meetings.
Our scheduled quarterly meetings generally
take place shortly before Board meetings.
At each meeting, we review the summary
reports of both internal and external auditors,
as well as financial results and details of
action taken or proposed in response. The
committee chair then reports to the Board
on our activities, recommendations and other
relevant matters.
Throughout the period during which Bharti
Airtel, Airtel Africa Mauritius Limited (AAML)
and Bharti Telecom and their associates have
a 10% or more interest in Airtel Africa plc
ordinary shares, each can appoint one
observer (who must be a director) to attend
meetings of our committee. This observer can
attend and speak at meetings but does not
count towards quorum or have a right to vote.
As such, Akhil Gupta attends our Audit and
Risk Committee meetings.
We will continue to focus
on making sure that we
work in line with all
relevant codes and
regulations so that the
business is operating
in a controlled and
managed way.
RAVI RAJAGOPAL
CHAIR, AUDIT AND RISK COMMITTEE
Attendance
Ravi Rajagopal
Chair
Andy Green
Annika Poutiainen
Meetings
attended
10 (10)
10 (10)
10 (10)
Committee responsibilities
• Advises the Board on proposed full year,
half year and quarterly reporting and
connected announcements
• Reviews our annual and half year
financial statements and accounting
policies, internal and external audits
and controls
• Recommends the dividend policy
to the Board
• Assesses the effectiveness of our
financial reporting procedures
• Oversees our relationship with the
external auditor – advising on their
appointment, effectiveness, reviewing
and monitoring the scope of the annual
audit and the extent of non-audit work
• Reviews the effectiveness of our internal
audit, internal controls and fraud systems
• Reviews our whistleblowing
arrangements, where employees
and contractors can raise concerns
in confidence
• Reviews our controls for preventing
bribery, our code of corporate conduct/
business ethics and our policies for
ensuring full compliance with regulatory
and legal requirements
• Through the committee chair, engages
with shareholder interests relevant
to committee responsibilities
• Advises the Board on whether the
annual financial statements are fair,
balanced and understandable
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PART 1
PART 2
2019/20 committee
objectives
• To review and agree our risk appetite in line
with our strategic objectives
• To make sure risk remains within our
agreed appetite and is monitored and
reviewed as needed to reflect external
and internal changes
• As part of the risk management framework,
to continually identify, assess and monitor
new and emerging risks
• To regularly review the robustness of our
systems for risk reporting, assessment
and control
To achieve these objectives, we:
• Reviewed the risk management framework
in detail during the committee induction
in Nairobi
• Advised the Board on their own risk
review at their October meeting,
covering reported risks
• Identified climate change and Brexit as
emerging risks and COVID-19 as a new risk
• Received quarterly reports from
Internal Audit
• Received management reports on the
monitoring and updating of post-FPPP
priorities, together with comments
by the auditor
• Reviewed other internal control
environment actions
2020/21 areas of focus
Our committee will adopt a programme
of in-depth reviews into specific financial,
operational and regulatory areas. As part
of these reviews, we’ll meet with the business
colleagues responsible for each area.
Our 2020 priorities will include:
• COVID-19, as per the CEO’s statement
Financial reporting
We reviewed the integrity of the quarterly,
half year and full year financial statements,
as well as other statements containing
financial information including trading
updates and investor presentations and
packs, and recommended their approval
to the Board.
on page 9
We assessed:
• Discussing and defining the proper level
• The quality, appropriateness and
of risk appetite for the company
• Increasing our oversight of various aspects
of the company’s risk management and
improving the quality of risk discussions
at meetings
• A deep-dive review of cybersecurity
to assess both risks and necessary
mitigating actions
• A review of our GDPR and data protection
completeness of the significant accounting
policies and practices and any resulting
changes to these
• The reliability of underlying processes
leading to the integrity of financial reporting
• The clarity, consistency and completeness
of the disclosure, including compliance with
relevant financial reporting standards and
other reporting requirements
compliance arrangements
• Significant issues where management
• Providing training for committee members
on areas such as developments in UK
regulations and section 172 obligations
• Supporting the internal audit team in a
continuous review of internal financial
controls and monitoring
Our committee will
adopt a programme
of in-depth reviews
into specific financial,
operational and
regulatory areas.
judgements and/or estimates had been
made that were material to the reporting,
or where discussions had taken place
with the external auditor to arrive at the
judgement or estimate
• Whether the Annual Report and Accounts
taken as a whole were fair, balanced and
understandable and present a good view
of the business – taking into consideration
all the information available to the
committee and whether other information
presented in the Annual Report is
consistent with the financial statements
• The application of the FRC’s guidance on
clear and concise reporting
The committee also deliberated and
challenged the CFO’s reports. These set out
the rationale for the accounting treatment
and disclosures regarding judgements and
estimates, as well as for the sensitivities of
the estimates to changes in assumptions.
Deloitte also shared their views on the
treatment of significant quarterly, half year
and full year matters. They summarised each
issue and assessed the appropriateness of
management’s judgements or estimates.
In considering whether there was evidence
of bias, the committee examined the overall
level of reasonableness applied during
the year.
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Governance report – Corporate governance
Audit and Risk Committee report continued
PART 2
Specific considerations and our response
After considering the following significant issues, judgements and estimates in the context of the financial statements and discussing them with
our external auditor, the committee agreed that the response to each was appropriate and acceptable.
Significant issue
Actions taken
Going concern
assessment
Viability
statement
Significant
one-off
transactions
The committee took into account all factors likely to affect our future performance and financial position, including
cash flows under a base case and number of reasonable worst-case scenarios (capturing risks and uncertainties),
solvency and liquidity positions, and borrowing facilities, and ensuring appropriate updates to reflect the expected
impact of COVID-19. The committee confirmed that the going concern basis of accounting was appropriate for
preparing the financial statements. For more details on the basis of going concern assessments performed during the
year - see note 2.2 of the financial statements.
The viability statement is a longer-term view of the sustainability of our strategy and business model, including
resourcing in the light of projected economic and market developments. The committee reviewed company prospects,
the time period under consideration, principal risks, emerging risks, longer-term cash flow forecasts and the related
sensitivities included in management’s stress-testing mode, including expected impact of COVID-19. The committee
was satisfied with the viability statement and endorsed a three-year period as a basis for preparation. More details on
the assessment of viability and the statement are on page 63.
In June 2019, Bharti Airtel Tanzania B.V., Bharti Airtel International (Netherlands) B.V. and Airtel Tanzania signed three
settlement agreements with the government of Tanzania (see note 5 for settlement details). Prior to this, the
committee reviewed and challenged management’s assumptions and judgements for:
Tanzania settlement
• The issue of additional shares to the government of Tanzania, which was considered a transaction with non-
controlling interest shareholders in our consolidated accounts and consequently recorded in equity
• Support services – on the basis of the management’s assessment, the committee believes that Airtel Tanzania is
receiving support services from the government as prescribed in the agreement in the form of a discounted licence
fee and lit fibre arrangements. As such, we have capitalised the support service cost to the intangible asset,
recognised with a corresponding liability for the deferred element of support service fee payments
The committee recommended to the Board that we accept the settlement agreements.
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PART 2
In addition to the significant issues mentioned above, the committee also considered the following accounting and financial reporting
issues, judgements and estimates in the context of the financial statements, discussing these with our external auditors.
Other issues
Actions and conclusions
Goodwill
Impairment
The committee considered the appropriateness of assumptions and judgements used for the annual impairment
testing exercise during December 2019 and updated in March 2020 for currency devaluation, discount rates and
potential impact of COVID-19, including:
• Operating cash flow forecasts over ten years
• Discount rates
• Terminal growth rates
• Resulting headroom of recoverable value over carrying value
The committee also reviewed and challenged the recoverable value (of $8.8bn) and resulting headroom (of $1.8bn)
against a set of sensitivities and concluded that no reasonable possible change in any key business assumption would
result in headroom becoming negative. We confirmed that no impairment charge needs to be recorded this year. Given
market volatility over March 2020, the Audit Committee assessed management’s determination of discount rates at
March 2020 and concluded that the discount rates determined were appropriate. Further detail can be found in note
15 in the consolidated financial statements. For more details on COVID-19 see pages 9-10.
As part of our assessment of the trigger of a deferred tax asset, the committee reviewed the past profitability and
expected future profit projections for the Democratic Republic of the Congo. They assessed that, since it’s probable
that taxable profit will be available against which the deductible temporary differences can be used, deferred tax
assets can be recognised for deductible temporary differences, unused tax losses and unused tax credits; a deferred
tax asset of $58m was recognised during the year. See note 12 in the financial statements for details on deferred tax
assets recognised in the current year. This calculation has been reviewed quarterly by the committee.
The committee also reviewed and was satisfied with management’s analysis of the effective tax rate and level of
provisioning for key tax-related demands.
Until Q2 2019/20, we had recognised customer acquisition costs as upfront sales and distribution expenses,
considering the legal contract to be less than 12 months for prepaid customers. With churn percentages having
stabilised over the reporting period, we reassessed the expected life of a customer as 18 months on average across
Africa. In Q3 2019/20, the committee reviewed and approved that it is now appropriate to recognise the cost of
obtaining/fulfilling a contract from ‘upfront recognition’ to ‘deferred amortisation over such expected customer life’, in
line with the requirements of IFRS 15. The impact of the change in previous periods (amounting to $26.8m) was
considered immaterial, so the committee upheld management’s decision not to restate previous periods and to
present this as an exceptional item in the 2019/20 financial year’s income statement.
The committee reviewed the key developments in material legal and regulatory cases during the period,
management’s estimate of key legal and regulatory disputes, and the basis of rating done by management and was
satisfied with the provisioning and disclosures in the financial statements.
Before our IPO, some global investors were given indemnity rights (including minority and other indemnity
adjustments) as part of their investment in Airtel Africa. Under a deed between Airtel Africa, AAML and the global
investors, the terms of minority adjustments were varied so that existing obligations were assumed by our parent
company AAML.
Consequently, these minority adjustment liabilities (amounting to $64m) have been reversed through equity by the
company. Other indemnity adjustments expired on the publication of our registration document in line with the original
share subscription agreement. As such, the reversal of financial liability was recorded as non-operating income
($72m) in the income statement. Since this was a one-off material item, this was presented as an exceptional item.
The committee reviewed the accounting position and was satisfied that this was reasonable.
As part of our listing process, we incurred various costs including those directly related to issuing equity and other
costs related to the IPO as a whole (such as raising fresh equity as well as listing existing shares). Management
concluded that all such costs, including legal and accountancy fees, were associated with our primary objective to
raise equity so should be debited to equity. Listing and registration costs were linked to the entire equity base (out of
which only 18% of new shares were issued). As such, only 18% of the cost linked to the listing of new equity was
debited to equity, with the rest considered as a charge against profit presented as an exceptional item. The committee
reviewed the accounting position and was satisfied that this is reasonable and correct.
Taxation
Customer
acquisition cost
Legal and
regulatory
matters
Indemnity
accounting
IPO cost
accounting
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Governance report – Corporate governance
Audit and Risk Committee report continued
PART 3
Risk management and
internal controls
Our approach to risk
As highlighted in the strategy and risk
sections of the strategic report, risk
management is inherent to our management
thinking and business-planning processes.
The Board has overall responsibility for
establishing and maintaining our risk
management and internal control systems.
For more information on our risks and
mitigation and our risk management
framework, see the risk report on pages
56-62.
Progress in 2019/20
Each quarter, our CEO and CFO provide
a compliance certificate connected to
the preparation of our financial results.
This includes the policies and procedures
for areas of the business under their
responsibility and confirms the existence
of adequate internal control systems
throughout the year. Our committee reviews
any exceptions noted in this exercise.
The key features of our internal control
system which assures the accuracy and
reliability of our financial reporting are listed
on page 99. During the reporting period,
we considered the process by which
management evaluates internal controls
across our business. Key themes for
consideration included IT security and KYC
procedures across all OpCos. The head of
internal audit provided our committee with
an overview of the assurance provided by
our control framework and related testing.
The Board also reviewed more detailed
assessments of risk from our committee.
At its meeting in January 2020 , it agreed that
our system of internal control continues to be
effective in identifying, assessing, and ranking
the various risks we face as a business, as well
as in monitoring and reporting progress in
mitigating potential impact. The Board also
approved the statement of the principal risks
and uncertainties set out on pages 98-99.
Working to minimise the risk of
fraud, bribery and corruption
We apply a range of activities to mitigate the
risk of fraud; and minimising the risk of fraud
remains one of the key areas of focus for
Internal Audit. In doing this, we assess the
quality of balance sheet reconciliations, key
judgement matters, tenders and quotations,
and controls over payments and associated
applications.
We continue to focus on limiting our potential
exposure to bribery and corruption risks, for
example by providing mandatory training,
reviewing financial records and developing
our policies and procedures. Our contract
management system now includes
mandatory certification to our Code of
Conduct and anti-bribery and corruption
policy: each year, every employee must take
part in computer-based training on anti-
bribery and corruption and our Code of
Conduct. Our Internal Audit team reviews our
anti-bribery compliance programme to assess
its continued effectiveness. We will continue
to assess the bribery risks in the markets
where we operate to refine and improve our
anti-bribery compliance programme.
Our committee also monitors and oversees
procedures around allegations of improper
behaviour and employee complaints.
Whistleblowing procedures
Our whistleblowing programme is a
confidential channel through which
employees can report unethical practices or
wrongdoing. We have an independent
whistleblowing process managed by an
external professional services firm from their
Centre of Excellence in South Africa.
Throughout the reporting period, we received
updates on the volume of reports, key themes
emerging from these reports and the results
of related investigations.
Our Audit and Risk Committee chair
provides a report to the Board at each of
its meetings on the operation of our Code
of Conduct, anti-bribery and corruption
and whistleblowing procedures. This report
contains enough detail to enable the Board
to continue to oversee these areas and
ensure that arrangements are in place for the
proportionate and independent investigation
of related matters and for follow-up action.
Going concern and viability
statements
Our committee considered the company’s
going concern statement. We also challenged
the nature, quantum and combination of the
unlikely but significant risks to our business
model, future performance, solvency and
liquidity, which were modelled as part of the
scenarios and stress-testing done to support
our viability statement. As part of this review,
we considered our forecast funding position
over the next three years, conducted a
principal risk assessment and analysed the
impact of sensitivities on cash and headroom
availability, individually and collectively in
reasonable worst-case scenario. These
scenarios considered the mitigating actions
we could take.
We are satisfied that the going concern and
viability statements have been prepared on
an appropriate basis. Our 2019/20 going
concern statement is on page 98 of the
directors’ report and our viability statement is
on page 63 of the strategic report.
Internal Audit
Our Internal Audit function adopts a risk-
based approach to reviewing the design and
operating effectiveness of our internal control
systems governing key business processes
and risks, including compliance to internal
policies, regulatory obligations and minimise
the risk of fraud.
The Internal Audit function and its reporting
lines enable it to be independent of the
executive and to exercise its own judgement.
Internal Audit reports to the committee
functionally and to the Group chief executive
administratively. The head of internal audit
has direct access at all times to the chair of
the committee, the chair of the Board and also
to the chief executive officer.
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PART 3
PART 4
Finance Committee
Given the complexity and importance of
finance, treasury and tax policy matters,
the Board has delegated oversight and
governance to a specialist Finance
Committee. We established this committee
after our IPO on the recommendation of the
Audit and Risk Committee and at the Board’s
direction following a specific treasury control
event arising from a cancellation of banking
facilities and the operation of the Relationship
Agreement. The setting up of the Finance
Committee with requirements to pre-approve
treasury transactions will strengthen
adherence to the Relationship Agreement
and treasury and tax controls. This committee
frames our finance policies and procedures,
creating risk framework mechanisms for
treasury and tax to help achieve our strategic
financial goals with a balance of initiative and
risk control. As this committee is overseen by
the Audit and Risk Committee, it will be under
the stewardship of the chair of the Audit
and Risk Committee for the first 12 months.
The continued participation of the Audit
and Risk Committee chair and other
independent non-executive directors
will be reviewed each year.
Finance Committee duties
• Ensures our treasury activities are carried
out within an agreed policy framework
• Ensures activities are within agreed levels
of risk and that treasury activities will
contribute to our financial performance
through focused management
• Makes sure operations are appropriately
funded and conducted in line with policy
• Ensures the overall treasury objective
and the specific objectives for each main
treasury activity are consistent with both
financial and corporate business objectives
• Recommends the strategic tax policy for
approval by the Board
• Ensures adequate liquidity to meet financial
obligations based on cash flow forecasts
• Optimises the interest cost on gross debt
within prudent risk parameters
• Determines and approves the derivatives
policy on swaps, foreign exchange and
interest rate hedges
• Generates reasonable commercial returns
on investments with approved
counterparties to protect investment
capital and ensure desired liquidity
• Minimises the adverse impact of foreign
exchange movements associated with
transactions and our operating exposure
in various currencies due to multinational
operations
• Maintains diversified access to various local
and global debt and borrowings markets
• Determines and approves our strategic tax
planning policies
• Approve new debt and the cancellation and
modification of borrowing and debt facilities
Finance Committee members
Members were appointed by the Board on
the recommendation of the Nominations
Committee in consultation with the Audit
Committee chair. They are Jaideep Paul, CFO,
as chair; deputy financial officer Pier Falcione;
and two independent non-executive directors,
Ravi Rajagopal and Annika Poutiainen. We
review the composition of the committee
each year.
The annual internal audit plan, and the
individual audits conducted in line with
the audit plan, are driven primarily by an
assessment of the principal and emerging
risks faced by the business. Following each
review, an internal audit report is provided to
both the management responsible for the
area reviewed and the Executive Committee.
These reports outline Internal Audit’s opinion
of the management control framework
in place together with actions indicating
improvements proposed or made as
appropriate. The CEO, the Executive
Committee and senior management consider
the reports on an ongoing basis and are
responsible for ensuring that improvements
are made within the agreed timelines.
Follow-up and escalation processes ensure
that such improvements are implemented and
fully embedded in a timely manner, and this is
reviewed by the committee. The progress of
the plan is monitored throughout the year and
the plan may be revised during the year as a
result of our ongoing assessment of key risks.
A report on all completed internal audit
reviews, activities and resulting key issues
is presented quarterly to the committee
for review and discussion.
The updated internal audit charter, which
codifies the aims, processes and outputs
of internal audit, was reviewed for ongoing
appropriateness and approved by the
committee during the year. Given that this
was our first year of reporting after listing,
there was no independent formal evaluation
of the Internal Audit function carried out
on behalf of the committee. Based on its
experience and the views of senior
management, the committee requested a
self-assessment by the head of internal audit
and internal audit partners focusing on the
methodology and planning approach. This
resulted in a number of initiatives to ensure
our Internal Audit function continues to meet
both current good practice and the evolving
needs of the Group. These included a revised
issue assessment and reporting framework
and a risk-based audit planning approach and
more concise Board reporting.
To ensure that the internal audits are
performed effectively, the Internal Audit
function continues to work with two
professional firms to enhance our in-house
skills and enable access to technical and
specialist skills.
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Governance report – Corporate governance
Audit and Risk Committee report continued
PART 5
External auditors
Engaging our auditor
Our external auditor is Deloitte. The audit
partner is Mark Goodey who has been in
place since October 2018 and is due to be
rotated in 2023. The appointment of Deloitte
as the Group’s external auditor is kept under
review. Deloitte has audited Airtel Africa Ltd
since October 2018.
The Committee has approved Deloitte’s
terms of engagement and is fully satisfied
with the performance, objectivity, quality
of challenge and independence of the
external auditor.
The Committee will continue to comply with
the Code and extant regulations on audit
tendering. Accordingly, Deloitte will be subject
to a mandatory tender after ten years.
Using our auditor for non-audit
services
Where we consider our external auditor
to have the most appropriate experience,
technical skills and expertise, in addition
to appropriate safeguards, we may consider
using them for non-audit services in
accordance with the available whitelist of
acceptable services. Their knowledge of our
business may also make such services more
cost-effective and ensure confidentiality.
The continued objectivity and independence
of our auditor is a priority for us. To this end,
we have a non-audit services policy which
restricts the provision of non-audit services
prohibited by the FRC Revised Ethical
Standard 2019 and provides a monetary
threshold for approved services. Our
committee reviews and pre-approves any
non-audit services with fees above the
threshold or not stipulated by the policy.
Our review of the auditor’s performance
during the reporting period included
non-audit services and the ability of Deloitte
to maintain its independence whilst providing
these services. The value of non-audit
services work for the year ended 31 March
2020 was $4.4m representing approximately
52% of the total auditor’s remuneration as set
out in note 8 to the consolidated financial
statements on page 152. Of this, $2.5m fees
related to pre IPO reporting accounting and
$1.9m related to quarterly review and audit
work.
Effectiveness of the external audit
process
The committee has discussed and reviewed
the effectiveness of the external audit
throughout the reporting period. It considered
the performance of the auditor, based on the
committee’s own evaluation and feedback
of senior finance personnel across the Group,
focusing on a range of factors considered
relevant to audit quality. Based on these
reviews, the committee concluded that there
had been appropriate focus, critical analysis
and challenge by the auditor on the key areas
of the audit and that it had applied robust
challenge and scepticism throughout
the audit.
We recommended to the Board, which in turn
will recommend to shareholders in resolution
15 at our 2020 AGM, that Deloitte should
continue as auditor.
Auditor Independence
The Committee believes that the
independence of the external auditor is one
of the primary safeguards for shareholders.
The Committee reviewed audit independence
and the scope of the non-audit services and
independence safeguards with Deloitte.
As part of this review, Deloitte has confirmed
that in Deloitte’s professional judgement,
Deloitte is independent within the meaning
of all UK regulatory and professional
requirements and the objectivityof the audit
partner and audit staff is not impaired.
The committee concluded that
Deloitte had applied robust challenge
and scepticism throughout the audit.
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Our areas of focus
As part of our corporate governance review
each year, we examine the independence
and diversity of our Board and the balance
of skills and development needs of members.
As chair, I’ve written to the 30% Investor
Club in response to their letter on gender
diversity at Board level assuring them that
the Nominations Committee will actively
engage with recruiting another woman
to the Board to move towards the 30%
target in the near term.
The Nominations Committee also
monitors the succession planning for
senior management immediately below
the Board. One of our priorities is to support
and encourage the professional growth of
our colleagues. So at our first committee
meeting, we began to identify executives
with potential and to discuss how to
encourage their development.
Another area of focus for the committee is
diversity and inclusion across our business.
From 2020, we’ll report regularly on and
discuss this with the Board.
Above all, we’ll focus on making sure that the
present and future composition of our Board
and executive management facilitates the
delivery of our strategy, and that we continue
to focus on meeting the requirements of the
UK Corporate Governance Code.
SUNIL BHARTI MITTAL
CHAIR, NOMINATIONS COMMITTEE
13 MAY 2020
Nominations Committee report
Chair’s statement
I’m pleased to introduce the priorities of our
Nominations Committee, to outline the work
begun this year and to share our plans for the
coming year.
The Board
We’re privileged to have a Board of directors
with the broad range of skills, experience, age
and nationality to perform such a vital role.
All our directors have served at senior levels
in global organisations and have international
experience across a variety of businesses.
Most have spent a considerable amount of
time living outside the UK, and this diversity is
invaluable in developing our business strategy
and enhancing our governance capabilities.
The membership of the Board changed
during the year as we took steps to establish
ourselves ready for listing. Airtel Africa plc
(formerly known as Airtel Africa Limited) was
incorporated on 12 July 2018. The majority
of the pre-IPO directors, being Alok Sama,
Sunil Kant Munjal, Vishal Kashyap Mahadevia,
Ravi Lambah and Richard Gubbins, resigned
on or before April 2019.
Our new Board was formed in April 2019, and
there was an immediate focus on the training
and induction of all Board members into their
new roles before listing in late June. As this
was our first year, the committee conducted
a light review of the tenure of the directors
and of the future Board composition and
agreed to review the current and future
needs of the Board and its committees
more deeply on an ongoing basis. As you will
see from the biographies on pages 66-68,
the committee chairs and other committee
members have recent and relevant skills,
experience and expertise.
We’re privileged to have a Board of directors
with a broad range of skills, experience, age
and nationality to perform such a vital role.
We’re privileged to have
a Board of directors with
the broad range of skills,
experience, age and
nationality to perform
such a vital role.
SUNIL BHARTI MITTAL
CHAIR, NOMINATIONS COMMITTEE
Attendance
Sunil Bharti Mittal
Chair
Andy Green
Senior independent
non-executive director
Ravi Rajagopal
Independent non-executive
(Audit and Risk Committee chair)
Doug Baillie
Independent non-executive
(Remuneration Committee chair)
Meetings
attended
1/1
1/1
1/1
1/1
Committee responsibilities
• Reviews the balance, diversity,
independence and effectiveness
of the Board
• Oversees the selecting, interviewing
and appointing of new Board members
• Reviews succession and contingency
planning for the Board and senior
leadership, including training,
development and talent management
• Makes recommendations to the Board
about the continued service of directors,
including suspensions and terminations
of service
• Makes sure directors disclose the nature
and extent of any actual or potential
conflicts of interest, monitors and
assesses these disclosures and makes
recommendations to the Board
as appropriate
• Oversees, with the chair of the Board,
an annual evaluation of Board, committee
and director performance – in particular,
determines with the chair whether this
evaluation should be externally facilitated
and, if so, the nature and extent of the
external evaluator’s contact with the Board,
committees and individual directors
• Oversees policy and objectives on Board,
senior management and employee diversity
and inclusion, considering our strategy,
objectives and culture, and monitors the
implementation of policies and progress
towards objectives
• Through the committee chair, engages
with shareholders on subjects relevant
to committee responsibilities
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Governance report – Corporate governance
Nominations Committee report continued
About the committee
We met formally once during the 2019/20
financial year, as well as informally around
the time of listing, and will meet at least
twice a year in future. Our primary focus is
on longer-term succession planning for the
senior executive team, diversity across the
business and the progress of newly appointed
directors. Led by the chair of our Board, the
committee consists of independent non-
executive directors.
Activities during 2019/20
The committee met during the reporting
period to:
• Consider the balance and composition
of the Board, including the role of the CFO
• Be updated on progress with succession
planning and related development plans
• Review plans for developing talent
• Consider the directors’ annual re-election
at the 2020 AGM
• Receive the external evaluation of the
committee and review its performance and
effectiveness during the period
During the year, the committee reviewed the
composition and performance of the Board
and its committees. We believe that our Board
has the experience, expertise and appetite for
challenge to take Airtel Africa forward in line
with our strategy while maintaining good
governance. We will, of course, keep this
under regular review.
Committee priorities
for 2020/21
• To review the Board’s composition, balance,
diversity, skill sets, individual directors’ time
commitment and overall effectiveness
against future needs
• To review our succession and contingency
planning across the business, making
sure there’s a clear link to individuals’
professional development and supporting
the development of a diverse pipeline
of talent
• To drive our diversity and inclusion agenda
across all levels of the business and ensure
progress is effectively embedded
During the year, the committee will identify
key prospects and tailor development plans
for our senior management level to help them
demonstrate their potential for progression.
As part of our succession planning, Executive
Committee members are given direct access
to the Board, including the chance to attend
Board meetings and other Board-related
functions. This gives Board members
a good sense of the strength of our
management team.
Developing our Board
During the year, the committee reviewed
the induction programme for directors
and considers this appropriate.
In addition to the pre-IPO training sessions,
the Board benefited from a series of sessions
after our listing. We held an induction day
at our Nairobi head office with our CEO,
CFO and members of our Executive
Committee focusing on strategy, operating
and financial performance, budget and
forecasts, human resourcing, diversity
challenges and medium-term plans. The day
included presentations by the heads of key
departments such as Compliance, Internal
Audit and HR on their initiatives, challenges
and plans.
Spending time with
our businesses
To engage with employees and understand
the business at all levels, all directors are
encouraged to regularly visit our local
operations. To this end, we arrange Board
visits each year to operations – and at least
one Board meeting will take place at a
regional location with representatives
from the business present.
During 2019/20, Board members visited
Kenya, Uganda, Nigeria and Tanzania to
speak directly to regional managers about
local operations, finance and initiatives.
Annual Board evaluation
See page 77 for details of how this evaluation
was conducted, actions taken and plans to
address its outcome.
Board and committee
balance, diversity,
independence and
effectiveness
The chair of the Board is responsible for
making sure independent non-executive
directors are able to constructively challenge
executive directors, while supporting them to
implement the strategy and run the business
effectively. He works with this committee to
make sure the Board has the right blend of
skills, independence and knowledge.
Appointing and re-electing
directors
The Board has the power to appoint
additional directors or to fill any vacancy.
Every director will seek election or re-election
at our annual AGM, starting with our meeting
in June 2020. All directors will stand for
re-election at each year’s AGM while in office.
Each director proposed for re-election at our
AGM has been unanimously recommended
by other members of the Board. This
recommendation was made following
the assessment of our annual Board
evaluation process.
More information on our appointments
process can be found on page 92.
Effectiveness: advice available
to the Board
All directors have access to the advice and
services of the company secretary. Directors
may also take independent professional
advice at our expense where this is judged
necessary to fulfil their responsibilities.
During the year, the Board took
advice from:
• Aon via the Remuneration Committee,
as reported in more detail on page 100
• Brokers on the sector and the relative
performance of our share price
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Diversity
We fully recognise the importance of diversity
for our Board. Airtel Africa listed in 2019 with
a talented group of directors representing
a broad range of skills, experience, age,
ethnicity, gender and nationality and fulfilling
our immediate business needs. Our youngest
director is 32 and the group is ethnically
diverse. Most have spent a considerable
amount of time living outside the UK, and this
diversity is invaluable in developing our
business strategy and enhancing our
governance capabilities.
Our Board policy which applies to the entire
business, including the Board, is to appoint
and promote the best person for each role
only considering factors such as educational
and professional backgrounds as appropriate
for the position, and without regard to age,
gender, ethnicity or disability. Our objective
is to build diversity into our appointment and
promotion processes from Board level down.
We believe diversity underpins the successful
operation of our Board and is a key ingredient
in creating a balanced culture across our
business. The Board regularly reviews its
balance and composition taking into account
targets and recommendations for gender
diversity, as well as the Parker Review and
its report into ethnic diversity. We are happy
to report that we have met the Parker review
targets. While we fully endorse the Hampton-
Alexander Review’s proposal to increase
senior leadership diversity, we have not
achieved the target introduced for the
proportion of women on FTSE 350 company
boards to be 33% by 2020. 18% of our Board
are women (2 out of 11), representing 33% of
our independent directors (2 of 6). During the
coming year the Nominations Committee will
actively engage in the recruitment of more
women Board members to meet this target.
Diversity and inclusion are, and will continue
to be, a key focus for Airtel Africa.
Pay ratio reporting
Quoted companies with more than 250 UK
employees are required to report each year
on the difference in pay between their CEO
and their UK employees. As Airtel Africa
is outside the scope of this requirement,
we will not be disclosing our pay ratio for
this reporting period.
Gender balance
Category
Group senior Executive Committee member
OpCo Executive Committee
Senior and middle management
All other employees
Grand total
Female
1
30
109
783
923
Male
11
107
513
1,809
2,440
Total
12
137
622
2,592
3,363
Female %
8.3%
21.9%
17.5%
30.2%
27.4%
Male %
91.7%
78.1%
82.5%
69.8%
72.6%
Senior management is all general managers and above, excluding OpCo Executive Committee
Middle management includes all employees at senior manager level
Our diversity policy
Purpose
Diversity and inclusion are a part of who we
are and how we do business – wholly in line
with our values of being alive, inclusive and
respectful.
Policy statement
We recognise that a diverse workforce is key
to delivering value to our customers. So we
work to create an inclusive environment
that embraces our differences and helps
employees work to their true potential.
Our practices and policies to foster this
include global mobility, talent acquisition
and focused learning and development.
We’re particularly focused on developing
women in management and leadership
roles and across our business.
Initiatives
1. Searching for and using diverse talent
pools for all management and senior
leadership recruitment
2. Building succession and leadership
development plans that encourage
the promotion of women
3. Plans to launch a CEO’s Women
in Leadership council
4. Focused mentoring programmes
5. Facilities for expectant and new
mothers, such as reserved parking
and mothers’ rooms
6. Putting in place a women’s
entrepreneurship programme
to increase the percentage of
self-employed women in sales
and distribution roles
Policy, training and awareness
1. At the February 2020 leadership meeting
with the MDs of our regional businesses,
our CEO mandated MDs to work on
increasing the number of women at
senior levels
2. The rollout of a programme to counter
unconscious bias
3. Using town hall sessions as a platform to
drive awareness and tone from the top
4. All employees completing annual Code of
Conduct training and certification, which
covers our commitments on diversity,
inclusion and anti-discrimination
Monitoring and reporting
1. Monthly diversity review by our chief
HR officer with HR directors of our
regional businesses
2. Quarterly progress reports to our
Executive Committee
3. Quarterly progress reports to our
management Human Resources
Committee
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Governance report – Corporate governance
Our compliance with the UK Corporate Governance Code
Airtel Africa plc ordinary shares were admitted
to trading on the main market of the London
Stock Exchange on 3 July 2019. This milestone
required us to apply the principles and
provisions of the 2018 UK Corporate
Governance Code (the Code), and explain any
non-compliance. (See the Code at frc.org.uk.)
While we have a secondary listing on the
Nigerian Stock Exchange, we are permitted
by the NSE Listings Requirements to follow
the corporate governance practices of our
primary listing market in London.
The UK Financial Reporting Council (FRC)
promotes high quality corporate governance
and reporting through the Code, with which
all companies with a premium listing on the
UK Stock Exchange must either comply in full
or explain why and to what extent they do not
comply. Between 3 July 2019 and 31 March
2020, we complied with all but three provisions
of the 2018 Code.
This section explains how we have applied
the Code principles.
1. Board leadership and company purpose
A. An effective and entrepreneurial board
Our Board is responsible for Airtel Africa’s system of corporate
governance. As such, directors are committed to developing and
maintaining high standards of governance that reflect evolving good
practice.
The Board provides strategic and entrepreneurial leadership within
a framework of strong governance, effective controls and an open
and transparent culture; this enables opportunities and risks to
be assessed and managed appropriately. Our Board also sets our
strategic aims and risk appetite, makes sure we have the financial
and human resources in place to meet our objectives, and monitors
our compliance and performance against our targets. And finally,
the Board ensures we engage effectively with all of our stakeholders
and considers their views in setting our strategic priorities.
Roles and responsibilities
We have well-documented roles and responsibilities for directors,
and a clear division of key responsibilities between our chair and CEO
to help maintain a strong governance framework and the effectiveness
of our Board. Our clearly defined policies, processes and procedures
govern all areas of the business, and these will continue to be reviewed
and refined to meet business requirements and changing market
circumstances.
We re-examine budgets in light of business forecasts throughout
the year to make sure they are robust enough to reflect the possible
impact of changing economic conditions and circumstances.
We conduct regular reviews of actual results and future projections
compared with the budget and prior year results, as well as with
various treasury reports. Any disputes that could lead to significant
litigation or contractual claims are monitored at each Board meeting,
with updates tabled by the company secretary.
We have a Board-approved framework of delegated authority to
identify and monitor individual responsibilities of senior executives.
B. Purpose, values and strategy and alignment with
culture
Our Board believes that a healthy culture protects and generates value
and that our employees engagement with our values and culture will
lead to the successful delivery of our strategy. It is responsible for
defining our values and setting clear standards from the top. Our chair
leads the way on this by ensuring our Board operates correctly and
with a clear culture of its own which can extend to our wider operations
and dealings with all stakeholders. Our CEO, with the help of the CFO
and his management team, is responsible for the culture within our
wider operations. A report from our chief HR officer on culture, diversity
and inclusion will be a standing agenda item at future Board meetings.
In 2020, the Board will identify a number of areas to review and will
share their findings in next year’s report.
To meet their 2019/20 objective of ensuring our training and
development plans support continuous improvement and contribute
towards better organisational diversity, our Board:
• Reviewed both current and predicted availability of financial, people
and supplier resourcing, as well as our financial performance,
at each meeting
• Reviewed our strategy for Board and executive-level succession
planning and put into place plans for achieving this (Nominations
Committee)
• Reviewed arrangements for GDPR compliance, as well as actions
to further improve the resilience and security of our information
technology systems
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In 2020/21, the Board will continue to ensure our resourcing –
including capital, finance and people – is sufficient to achieve our
strategy while continuously improving performance and diversity.
While our leadership establishes our culture and leads by example,
our clear policies and Code of Conduct ensure that our obligations
to shareholders and other stakeholders are clearly understood and
met, as described in more detail on page 54.
C. Company performance and risk management
Our CEO manages the Group’s business in line with the strategic plan
and approved risk appetite and takes responsibility for the operation
of the internal control framework. Our Audit and Risk Committee
oversees potential risks and provides the Board with strategic advice
on current and potential future risk exposures. Our risk management
framework supports informed risk-taking by our businesses, setting
out the risks that we are prepared to be exposed to and the risks that
we want to avoid.
More information on risk management can be
found on page 56
D. Stakeholder engagement
Our Board members take an active role in engaging with shareholders
and wider stakeholders. Our director induction process includes
directors’ duties under section 172 of the Companies Act 2006.
The Board regularly receives feedback on shareholder sentiment
and sell-side analysts’ views of our business and the wider industry.
Our Investor Relations team and management have frequent contact
with the five equity research analysts who follow Airtel Africa.
In February 2020, the Board held an additional meeting to review
its understanding of the needs of each stakeholder group and to
determine how best to consider stakeholder issues during Board
discussions. Our aim is to better embed stakeholder issues in Board-
level decision-making, as well as through key subsidiary and decision-
making committees throughout the organisation.
As a first step, our Board agreed the following:
1. We will develop our stakeholder engagement framework so that
we can better understand their perspectives and their expectations
of us.
2. Since the February 2020 Board meeting, all Board papers must
show that stakeholder considerations have been taken into account
as part of the decision-making process.
3. For all major decisions, the Board will make sure it discusses the
impact on employees before drawing its conclusion. We will also
consider stakeholder impact in relation to material acquisitions
and strategic expansion.
The Board factored the needs and concerns of our stakeholders into
its discussions and decisions throughout the year, in accordance with
section 172 of the Companies Act 2006 (see statement on page 33).
More on our approach to stakeholder engagement can be found on
pages 32-33 of the strategic report and pages 78-79 of the
governance report.
E. Workforce policies and practices
We expect all businesses and employees to work with the highest
standards of integrity and conduct at all times. Our Code of Conduct,
which can be found on our website, sets out our expectations in detail.
We also have policies on areas like anti-bribery and corruption,
whistleblowing and data protection (GDPR) setting out the ethical
framework that all companies and employees are expected to follow.
Each year, our employees receive up-to-date training on legislative
and regulatory matters.
Our management processes and divisions of responsibility are detailed
in the following documents, which can be seen on our website:
• Schedule of matters reserved for Board decisions, including profit
expectations and dividend policy
• Terms of reference for Audit and Risk, Nominations and
Remuneration Committees
• Policies covering operational, compliance, corporate responsibility
and stakeholder matters, including ones related to the Bribery Act
2010 and anti-corruption – these are updated as necessary in line
with developments in corporate governance and legislation
• Our Articles of Association
Our policies are reported against to the Board and/or Audit and Risk
Committee by the head of internal audit, chief compliance officer or
the company secretary.
Description of our whistleblowing procedures is set out on page 84.
2. Division of responsibilities
F. Role of the chairman
The roles and responsibilities of the chair and the CEO have been
clearly defined, set out in writing and signed by Sunil Bharti Mittal and
Raghu Mandava.
The chair leads our Board and is responsible for its overall
effectiveness in directing the company.
Our chair and the senior independent director hold separate meetings
at least once a year with non-executive directors without the CEO
present. Each did this once during the 2019/20 reporting period.
The chair also met formally with independent non-executive directors
without our CEO or other non-executive directors present. Through
these meetings, the chair ensures we maintain a fair and open culture
where all Board members are able to make a strong contribution.
The Board has concluded that Sunil Bharti Mittal did not meet the
independence criteria of the Governance Code when he was
appointed, due to his interests in the company. However, in light of the
his extensive involvement with Airtel Africa and the Bharti Airtel Group
over many years, the Board has considered his major contribution to
the company’s growth and success and unanimously agrees that his
continued involvement is crucially important to our ongoing success.
The Board recognises a number of safeguards which are in place
to ensure robust corporate governance during his tenure as chair,
including Andrew Green in position as a strong senior independent
director.
The Board believes Sunil Bharti Mittal continues to effectively oversee
our leadership and maintain a balanced shareholder agenda.
G. Composition of the Board and division of
responsibilities
Our Board consists of 11 directors: non-executive chair Sunil Bharti
Mittal, who is not independent, CEO Raghu Mandava, six independent
non-executive directors and three non-executive directors. Andrew
Green, CBE, is the senior independent director and Simon O’Hara is
our Group company secretary. For more on our Board composition,
see page 66.
The Board has an established framework of delegated financial,
commercial and operational authorities which define the scope and
powers of the CEO and of operational management.
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Governance report – Corporate governance
Our compliance with the UK Corporate Governance Code continued
H. Role of non-executive directors
Our independent non-executive directors offer advice and guidance
to the CEO and CFO from their wide experience in business and
diverse backgrounds. They also provide a constructive challenge and
hold management to account – monitoring the overall direction and
strategy of the company, scrutinising the performance of the CEO
and CFO, and ensuring the integrity of the financial information made
available to the Board and our shareholders. They play an important
part in general succession planning for the Board and other executive
and senior management positions.
The senior independent director and the independent directors also
play a critical role in fulfilling the requirements of the separation
governance framework and ensuring Airtel Africa’s independence.
Following their appointment, each of our non-executive directors
(both independent and non-independent) received an induction that
focused on the culture, operational structure and key challenges
of Airtel Africa. You can see details of this induction on page 88.
I. Board processes and role of company secretary
We have a range of processes in place to make sure the Board is fully
informed in a timely manner to be able to meet its duties. Directors
receive papers before each Board and committee meeting. This allows
them to prepare for meetings and also to send in their views if they’re
unable to attend.
The CEO also sends updates to members on important issues
between meetings; and members receive a monthly report on key
financial and management information, as well as regular updates on
shareholder issues and analysts’ notes. This information is distributed
through a secure online portal.
All directors have direct access to the advice and services of the
company secretary, and non-executive directors are able to take
independent legal advice at our expense when necessary to fulfil
their duties to the company.
3. Composition, succession and
evaluation
J. Board appointments
As part of our 2019/20 Board evaluation, we reaffirmed that each of
our independent non-executive directors is independent in character
and that there are no relationships which could affect their judgement.
After the IPO, no new Board or committee appointments were made
during the reporting period. The main objective of our Nominations
Committee is to ensure that we have the best possible leadership
team by overseeing a formal, rigorous and transparent process for
appointing and removing directors to or from the Board, our
committees and other senior roles. The committee also works with the
aim of improving diversity and developing our succession-planning
processes.
Our appointment process
When considering the recruitment of new members of the Board, the
Nominations Committee adopts a formal and transparent procedure
which considers the skills, knowledge and level of experience required,
as well as diversity.
The recruitment process begins by evaluating the balance of skills,
knowledge and experience of existing Board members, the diversity of
the Board and the ongoing requirements and strategic developments
of the business. This enables us to focus our search process on
appointing a candidate who will complement and enhance the Board’s
effectiveness and overall performance.
The committee will use the services of a professional search firm to
identify appropriate candidates. The committee will only choose firms
that have adopted the voluntary code of conduct addressing gender
diversity and best practice in search assignments. We retained no
such firm during the reporting period.
We review a long list of globally drawn potential candidates and
shortlist candidates for interview based on the objective criteria set out
in the agreed specification – this addresses the strategic requirements
of the Group, the balance of skills, knowledge and experience of
current members, and the diversity of the Board. Non-executive
appointees must be able to show that they have time available to
devote to the role, and before being appointed all candidates must
identify any potential conflicts of interest.
Short-listed candidates are interviewed by the committee chair, other
committee members and the CEO. The committee then recommends
the preferred candidate, who is invited to meet other Board members.
Finally, the committee takes up detailed external references before
making a formal recommendation to the Board for appointment.
No director took on a significant new appointment during the year.
For more on our Nominations Committee’s
activities and processes, see pages 87-89.
K. Skills, experience and knowledge of the Board and its
committees
We have an engaged and diverse Board who reflect the cultural and
ethnic diversity of the countries in which we operate. Our Board
members bring a range of practical experience and deep expertise
to our business – and at least half of our directors, excluding the chair,
are independent non-executive directors, in line with the Code’s
recommendations. While not an executive director, our CFO attends
all Board and Audit and Risk Committee meetings.
The Board acknowledged at the time of listing that the company did
not comply with the requirements of the Governance Code in relation
to the relevant experience of the Remuneration Committee chair, but
saw Doug Baillie as a seasoned HR professional with the experience
and expertise to effectively manage the Committee on its behalf.
Having reviewed his appointment, the Board confirms that he has
displayed the skills and experience required for the role and has the
full support of the Board.
The Board considers that each director brings relevant and
complementary skills, experience and background to the Board, details
of which are set out in the biographies on pages 66-68.
L. Board evaluation
As part of good governance, it’s important to make sure our Board as
a whole, its committees and each director is operating and performing
effectively. While the Code requires an externally facilitated evaluation
at least every three years, we have chosen to do this in our first year
to enable us to plan effectively for the future.
In 2019, we engaged Lintstock to facilitate this evaluation –
a completely independent advisory firm specialising in Board
performance reviews. All Board members and our company secretary
were invited to complete an online survey on the performance of the
Board, its committees and the chair, as well as their own contributions
to the Board. The survey was completely anonymous to promote an
open and frank exchange of views.
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4. Audit, risk and internal control
5. Remuneration
M. Independence and effectiveness of internal and
external audit
During 2019, we enhanced our control environment through a robust
risk assessment and review led by our Audit and Risk Committee.
This identified the key risks to be reviewed and assessed by Internal
Audit as part of its programme of work during the year. For more on
the activities and processes of this committee, see pages 80 and 86.
During 2019/20 Deloitee performed an external statutory audit of year
end 31 March 2020, and three quarterly reviews. Refer to page 86 for
consideration of their independence and effectiveness.
P. Remuneration policies and practices
Our proposed policy is intended to attract, motivate and retain
high-calibre directors, to promote the long-term success of Airtel
Africa, and to be in line with best practice and the interests of our
stakeholders. There are two key principles of our remuneration policy.
One, the structure of remuneration packages and, in particular, the
design of performance-based schemes, should be aligned with
stakeholders’ interests and support our business strategy and
objectives. And two, the performance-based element of remuneration
should be appropriately balanced between the achievement of
short-term objectives and longer-term objectives.
N. Fair, balanced and understandable assessment
Pages 1-64 of the strategic report set out our performance, business
model and strategy, as well as the risks and uncertainties relating to
the company’s future prospects. When taken as a whole, the directors
consider the annual report is fair, balanced and understandable and
provides information necessary for shareholders to assess our
performance, business model and strategy.
The directors made their assessment following the Board’s review
of the document at its meetings on 31 March, 14 April, 27 April and
12 May 2020.
O. Risk management, internal control and determining
principal risks
As highlighted in the strategy and risk sections of the strategic report,
risk management is inherent to our management thinking and
business planning processes. The Board has overall responsibility for
establishing and maintaining our risk management and internal control
systems. Our Audit and Risk Committee supports the Board in
reviewing the effectiveness of our internal controls, including financial,
operational and compliance, as well as our risk management systems.
For more on the activities and processes of this committee, see pages
80 and 86.
Our directors’ remuneration policy (DRP) which sets out our policy
for paying our CEO, chairman and non-executive directors will be
put to a binding shareholder vote at our next AGM.
Raghu Mandava is expected to reach the minimum shareholding
target as soon as reasonably possible. A minimum requirement
of 250% of salary will apply while he is in employment.
The Remuneration Committee is aware of investor guidance around
post-employment share ownership. It considers that, in light of the
company’s unusual circumstances, with senior executives located
in Africa where additional requirements on the holding of shares are
not market practice, the operation of bonus deferral and post-vesting
holding requirements currently provide sufficient alignment after
employment has ended. It will continue to keep this aspect of the
policy under review.
Q. Procedure for developing remuneration policy
In 2019/20, we thoroughly reviewed the remuneration arrangements
for our directors which had been put in place before our IPO. Our goal
was to make sure our new policy would incentivise our management
team to deliver longer-term shareholder value. We also wanted to
make sure this reflects the latest Code requirements and is in line with
UK good practice. As such, we have proposed a number of changes
to the policy in the prospectus and consulted on this proposed policy
with our largest shareholders who indicated their support.
R. Exercising independent judgement
In the year to 31 March 2020, Aon provided remuneration advice and
benchmarking data to our Remuneration Committee. Aon was
appointed by the committee in light of their experience and expertise
in independent remuneration advisory work.
The committee uses its discretion, within the maximum policy limits,
to consider the target bonus taking account of market development
opportunities, specific events and evolving roles. While the committee
has the discretion to change the choice of metrics and weighting for
the bonus plan from year to year, we would normally consult with
major shareholders before making any significant changes.
See our remuneration report on pages 100-114
for more detail.
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Governance report – Corporate governance
Directors’ report
About this report
The directors of Airtel Africa present this report
together with the audited consolidated financial
statements for the year ended 31 March 2020.
This report has been prepared in accordance with the
requirements outlined in The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2008 and forms part of our management report as required
under Disclosure Guidance and Transparency Rule (DTR) 4.
Certain information that fulfils the requirements of the directors’
report can be found elsewhere in this document and is referred
to below. This information is incorporated into this directors’
report by reference.
The directors’ report comprises sections from pages 66-93 and
100-114 of the governance report, and this report on pages
94-97. Other relevant information which is incorporated by
reference can be found in the strategic report:
• Financial performance on pages 45-51
• Business environment on pages 14-15
• Outlook and financial management strategies, including
particulars of any important events affecting the company
since the year-end (with subsidiary undertakings included
in consolidated statements) on pages 1-64 and in note 36
on page 188
• Principal risks and risk management framework on pages
56-62
Other relevant information (required by
Listing Rule 9.8.4 R) is incorporated by
reference to the directors’ report and appears
in the Annual Report as follows:
Information
Pages
Likely future developments in the business
of Airtel Africa and its subsidiaries
Profit before tax and after tax and
minority interests
Our viability statement
The Directors’ remuneration report
Details of our long-term share plans
34-43
126
63-64
100-114
109-112
Our subsidiary and associated undertakings,
including branches outside the UK, affecting
our profits or net assets
184
Our treasury management and funding,
including information relating to financial
instruments that fulfils the reporting
requirements of Schedule 7 of the Large and
Medium sized Companies and Group
(Accounts and Reports) Regulations 2008
A statement that this Annual Report and
Accounts meets the requirements of Section
4, Principle N, Provision 27 of the UK
Corporate Governance Code 2018
Engagement with suppliers, customers
and others
180
93
78
This section contains the remaining matters not covered
elsewhere on which the directors are required to report
each year.
Responsibility statement
As required under the DTRs, a statement made by the Board regarding
the preparation of the financial statements is set out on page 98. This
also gives details on the disclosure of information to our auditors and
management’s report on internal control over financial information.
Profit and dividends
Statutory profit for the Group after tax for 2019/20 was $408m
(2018/19: $426m, and for the Company after tax was $383m
2019/20 (2018/19 $2m). Details of our dividend distribution during
the year are set out on page 169 – note 28.1 to the consolidated
financial statements.
Subject to the approval of our shareholders, the directors have
recommended a final dividend for the financial year ended 31 March
2020 of 3 cents per ordinary share, which will be paid out of
distributable reserves. You can find more about the dividend, including
key dates, at www.airtel.africa. On 25 October 2019, the Board
declared an interim dividend of 3 cents per ordinary share. This was
paid on 29 November 2019 to shareholders who were on the UK
and Nigerian share registers on 15 November 2019.
Directors
The names of our current directors, along with their biographical
details, are set out on pages 66-67 and are incorporated into this
report by reference. Those who served during the year are identified
on pages 87.
Details of directors’ interests in our share capital are in our
remuneration report on page 113.
Our Articles of Association govern the appointment, removal and
replacement of our directors and explain the powers given to them.
Avoiding conflicts of interest
The Board regularly reviews each director’s interests outside Airtel
Africa and considers how the chair ensures he is applying objective
judgement in his role, as required by the UK Corporate Governance
Code. To help directors avoid conflicts (or possible conflicts) of
interest, the Board must first give clearance to any potential conflicts,
including directorships or other interests in outside companies and
organisations. This is recorded in a statutory register kept for this
purpose.
If a director considers they are, or might be, interested in any contract
or arrangement in which the company is or may be involved, they must
give notice to the Board in line with the Companies Act 2006 and our
Articles of Association. In this instance, unless allowed by the articles,
the director cannot take part in any discussions or decisions about the
contract or arrangement.
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Re-registration and name change
On 13 June 2019, we re-registered as a public limited company
and changed our name from Airtel Africa Limited to Airtel Africa plc.
Articles of Association
Voting rights of members
There are no restrictions on the size of a holding, the exercise of voting
rights, or the transfer of shares. The directors are not aware of any
agreements between shareholders that might restrict the transfer
of shares or voting rights.
The Articles of Association can be amended in line with the provisions
of the Companies Act 2006 through a special shareholder resolution.
We adopted two new sets of Articles of Association during the year
in preparation for our listing. The information below sets out the
provisions in the Articles of Association in place at the date of this
report.
Rights under the employee share scheme
We operate an Employee Benefit Trust (EBT) for some employee share
plans. The trustees of the EBT have all rights attached to Airtel Africa
shares unless specifically restricted in the plan’s governing document.
It’s the trustees’ policy to abstain from exercising voting rights on Airtel
Africa shares held in trust.
Share capital and control
We have two classes of shares:
1. Ordinary shares of $0.50 – each carrying the right to one vote
at our general meetings and other rights and obligations as set
out below.
2. Deferred shares – these carry no voting rights.
Details of our share capital movement during the year are set out
in note 27 on page 168.
Purchase of own shares
The articles do not restrict Airtel Africa purchasing its own shares.
No one person has any rights of control over our share capital and
all issued shares are fully paid.
Major shareholders
Major shareholders have the same voting rights as other shareholders. We publish information given to us by substantial shareholders through
the regulatory information service and on our website www.airtel.africa, in line with the FCA’s Disclosure Guidance and Transparency Rules. At 31
March 2020, we had been notified, in keeping with Rule 5, of the following holdings of ordinary share voting rights:
Shareholder
Airtel Africa Mauritius Limited
Indian Continent Investment Limited
Singapore Telecom International Pte Ltd
Warburg Pincus LLC
Hero Inc Limited
Qatar Holding LLC
Bharti Global Limited
1 % interest in voting rights attaching to issued shares
Number of
voting rights at
31 March 2020
% of capital1
2,105,108,805
56.01
292,424,330
208,093,705
187,907,574
145,720,186
134,726,964
127,147,531
7.78
5.54
5.00
3.88
3.58
3.38
The company has not received any
notifications in accordance with
DTR5 from 1 April 2020 to the date
of this annual report
Significant agreements
(change of control)
Airtel Africa’s borrowing and bank facilities contain the usual provisions
which could potentially lead to prepayment and cancellation by the
other party if there’s a change of company control. There are no other
significant contracts or agreements that would take effect, change or
come to an end on a change of control following a takeover bid. All our
share plans contain provisions for a change of control as summarised
in the directors’ remuneration report on page 105.
We do not have agreements with any director or employee that
would compensate for loss of office or employment resulting from
a takeover bid.
Details relevant to the relationship agreement follow.
Relationship agreement
Airtel Africa entered into a relationship agreement with Bharti Airtel,
Airtel Africa Mauritius Limited (AAML), our majority shareholder and
an indirect subsidiary of Bharti Airtel, and Bharti Telecom on 17 June
2019. This agreement regulates the ongoing relationship and ensures
that transactions and arrangements between parties are conducted
at arm’s length and on normal commercial terms, and contains the
independence undertakings and provisions required by the Listing
Rules (the ‘Listing Rule Independence Undertakings’). During the
financial year, Airtel Africa has complied with the terms of the Listing
Rule Independence Undertakings contained in the relationship
agreement.
So far as Airtel Africa is aware the majority shareholder and its
associates have complied with Listing Rule Independence
Undertakings contained in the relationship agreement.
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Future developments
The strategic report contains details of likely future developments
within Airtel Africa.
Group policy compliance
Each Group policy is owned by a member of the Executive Committee
to ensure clear accountability and the authority to make sure the
associated business risk is adequately managed. The senior leadership
team member responsible for each Group function has primary
accountability for ensuring compliance with all Group policies by all our
markets and entities. Our Group compliance team supports the policy
owners and local markets in implementing policies and monitoring
compliance. All of the key Group policies have been consolidated
into our Code of Conduct which applies to all employees and those
who work for or on behalf of Airtel Africa. It sets out the standards
of behaviour expected in relation to areas such as insider dealing,
bribery, and raising concerns through our whistleblowing process.
Directors’ indemnities
We have agreed to indemnify directors for certain losses and liabilities
in connection with their duties, powers and office. Qualifying third-
party indemnity provisions (as defined by section 234 of the
Companies Act 2006) were in force during the course of the financial
year ended 31 March 2020. We also hold directors’ and officers’
liability insurance covering our directors for any legal action against
them. We took legal advice on this subject.
Branch and representative offices
Bharti Airtel International (Netherlands) B.V. has a branch office in
Nairobi, Kenya. It was issued a certificate of compliance on 7 October
2010 with number CF/2010/33117.
On 2 October 2019, the Kenyan branch of Netherlands-based Bharti
Airtel Services B.V. registered in Nairobi under number F97/2007
was deregistered.
Anti-bribery and anti-corruption
In line with the Bribery Act 2010, we have written policies on avoiding
and not tolerating bribery or corruption. These apply across all our
businesses and can be found on our website. All employees are
trained in anti-bribery and anti-corruption to help mitigate the risk
of reputational damage, financial penalties and possible exclusion
from certain approved partnerships.
Charitable donations
We support charities and local community causes relevant to our
business, communities, partners and people. We aim to make a
positive impact through donations of time, money and materials,
as well as through encouraging our employees to get involved.
See page 96 for more about our donations, activities and
community initiatives.
Governance report – Corporate governance
Directors’ report continued
Board and meeting participation
As long as Bharti Airtel and/or AAML are a controlling shareholder,
Board meetings and certain committee meetings must include
a non-executive director nominated by Bharti and/or AAML
(subject to certain exemptions) to be valid (quorate). Each Board
and committee meeting must include three directors including
two independent directors to be valid.
As long as Bharti Airtel and/or AAML and their associates hold (directly
or indirectly) ordinary shares in Airtel Africa, they are entitled to appoint
non-executive directors to the Board as follows:
• One non-executive director for 10% or more interest in the ordinary
shares
• Two non-executive directors for 15% or more interest in the ordinary
shares
The first two Board members appointed under this agreement were
Sunil Bharti Mittal and Akhil Gupta on 23 October 2018.
For every 10% or more interest (directly or indirectly) in the ordinary
shares above 15% in aggregate, Bharti Airtel and/or AAML can
nominate one additional non-executive director to the Board, up to
a maximum of four directors. Independent non-executive directors
must form the majority of the Board.
Similarly, as long as Bharti Airtel and/or AAML and Bharti Telecom and
their associates have a 10% or more interest in Airtel Africa ordinary
shares, each can appoint one observer (who must be a director) to
attend meetings of the Audit and Risk Committee and Remuneration
Committee. This observer can attend and speak at meetings but does
not count towards quorum or have a right to vote. As such, Akhil Gupta
attends the Audit and Risk Committee meetings.
Other provisions
The agreement provides that Airtel Africa will not make any market
purchases that would cause Bharti or Bharti Telecom to have to make
a mandatory offer under rule 9 of the Takeover Code, unless Airtel
Africa has the necessary consents and waivers to prevent a
mandatory offer obligation.
Amendments can only be made to this relationship agreement in writing
and with the recommendation of a majority of the independent directors.
The relationship agreement will come to an end upon the earlier of:
• Ordinary shares of Airtel Africa no longer being listed on the premium
listing segment and traded on the London Stock Exchange (LSE)
• Bharti Airtel, AAML and Bharti Telecom Limited, together with their
associates, ceasing to be interested (directly or indirectly in
aggregate) in at least 10% of issued ordinary shares
The relationship agreement will terminate upon the shares ceasing to be
listed on the LSE’s main market or the principal shareholders and their
associates ceasing to be interested in at least 10% of the issued shares.
We believe that the terms of this relationship agreement enable
Airtel Africa to carry out its business independently of Bharti Airtel,
AAML and Bharti Telecom.
Services agreement
Bharti Airtel Limited provides services to Airtel Africa and its
subsidiaries including Bharti Airtel International (Netherlands) B.V.
(BAIN) under a services agreement.
Provision of information
To provide services to Airtel Africa under the services agreement,
Bharti Airtel Limited will have access to information related to the Airtel
Africa Group which may include sensitive or confidential information.
Bharti Airtel will ensure its affiliates comply with the terms of the
information flow protocol to the extent that it is legally able to do so.
Airtel Africa will provide Bharti Airtel with service-related information
necessary for it to provide services under the agreement.
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Annual general meeting (AGM)
Our AGM will be live-streamed on Wednesday 24 June 2020 at 11:00
hrs BST from 53/54 Grosvenor Street, London W1K 3HU. Details of
the business to be transacted at the AGM are included in our 2020
Notice of the AGM available on our website at www.airtel.africa.
In line with recent practice and good governance, we’ll conduct all
voting on resolutions at this year’s AGM by poll. The Board believes
that this way of voting gives as many shareholders as possible the
opportunity to have their votes counted.
The Directors’ Report has been approved by the Board and is signed
on its behalf by:
SIMON O’HARA
GROUP COMPANY SECRETARY
13 MAY 2020
Political donations
In line with our policy, we have not made any donations to political
parties during the year.
At our next AGM, our directors will be asking for the authority to
make political donations of no more than £25,000 in total. This is to
strengthen our corporate governance by making sure that neither
Airtel Africa nor our subsidiaries inadvertently breach the wide
definitions in Part 14 of the Companies Act.
Employing people with disabilities
It is our policy that people with disabilities should be fairly considered
for any job vacancy.
We are committed, wherever possible, to making sure people with
disabilities are supported and encouraged to apply for employment
and able to work successfully at Airtel Africa.
Important events since the end of the
financial year
Details of those important events affecting the Group which have
occurred since the end of the financial year are set out in the Strategic
Report and note 36 to the consolidated financial statements on page
188. Information related to COVID-19 is set out on pages 9-10.
Our auditor
Deloitte LLP have confirmed their willingness to continue as our
auditor. Following our Audit and Risk Committee’s review of their
effectiveness (described on page 85), we will propose at our AGM
that we reappoint Deloitte.
Our policy is that our auditor will not carry out non-audit services,
except where appropriate and in line with our policy for doing such
work. Our Audit and Risk Committee also considers the ethical and
auditing professional standards related to non-audit services by our
external auditor. Deloitte provided limited non-audit services during
the year in line with our policy as described in the Audit and Risk
Committee report – see page 80.
Audit and Risk Committee
recommendations and statements
of compliance
The committee has completed its review of the effectiveness of
internal controls, including risk management, during the year and up to
the date of this Annual Report. The review covered all material controls
including financial, operating and compliance. As such, we can provide
assurance to the Board under the 2018 UK Corporate Governance
Code. This is covered in more detail in the Audit and Risk Committee
report – see pages 80-86.
Airtel Africa has complied throughout the reporting period with the
provisions of the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee responsibilities) order 2014.
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Governance report – Corporate governance
Directors’ statement of responsibility
Financial statements and accounting
records
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements
for each financial year. Consequently:
• The consolidated financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB) as adopted by
the European Union (EU), the Companies Act 2006 and Article 4 of
the EU IAS Regulations
• The company only financial statements are prepared in accordance
with FRS 101 “Reduced Disclosure Framework”
Under company law the directors must not approve the accounts
unless they are satisfied that they give a true and fair view of the state
of affairs of the company and of the profit or loss of the company for
that period.
In preparing the parent company financial statements, the directors
are required to:
• Select suitable accounting policies and then apply them consistently
• Make judgments and accounting estimates that are reasonable
and prudent
• State whether applicable Accounting Standards have been followed,
subject to any material departures disclosed and explained in the
financial statements
• Prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in
business
In preparing the Group financial statements, International Accounting
Standard 1 requires that directors:
• Properly select and apply accounting policies
• Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information
• Provide additional disclosures when compliance with the specific
requirements in IFRS are insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the entity’s financial position and financial performance
• Make an assessment of the company’s ability to continue as a
going concern
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are
also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of
the corporate and financial information included on the company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in
other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• The financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole
• The strategic report includes a fair review of the development and
performance of the business and the position of the company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face
• The annual report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information
necessary for shareholders to assess the company’s position
and performance, business model and strategy
This responsibility statement was approved by the Board of directors
on 13 May 2020 and is signed on its behalf by:
RAGHU MANDAVA
CHIEF EXECUTIVE OFFICER
13 MAY 2020
Disclosing information to our auditors
The directors have made the requisite enquiries and are not aware
of any relevant audit information (as defined by section 418(3) of the
Companies Act 2006) that our auditors are unaware of. The directors
have taken all the necessary steps to make themselves aware of any
relevant audit information and to establish that our auditors are also
aware of that information.
Going concern
Based on our assessments, the directors have concluded that
Airtel Africa plc should continue to adopt a going concern basis
of accounting in preparing the financial statements. See the
directors’ statement of responsibilities for more details.
Business planning process and
performance management
Our forecasting and planning cycle consists of preparing forecasts for
one year and three year and long-range plans. These generate income
statement, cash flow and net debt projections for assessment by our
Board and Executive Committee.
Each forecast is compared with prior forecasts and actual results to
identify variances and understand the drivers of changes and their
future impact so that management can take action where appropriate.
The key assumptions underpinning the forecasts are also reviewed.
Cash flow and liquidity reviews
The business-planning process provides outputs for detailed cash flow
and liquidity reviews to ensure that we maintain adequate liquidity
throughout the forecast periods. The prime output is a rolling liquidity
forecast prepared and updated on a periodic basis which highlights
the extent of the Group’s liquidity based on projected cash flows and
the headroom.
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At the time of this report, there has been no material impact from
COVID-19 on our business. Given the rapidly changing global
dynamics, it’s extremely difficult to predict with any accuracy what the
impact of COVID-19 will be on our profitability, solvency and liquidity
positions. We have applied various levels of stress tests by way of
revenue decline, increase in costs and the possibility of currency
devaluation to the cash flows as part of the sensitivities applied
to both base and reasonable worst-case scenarios.
Conclusion
The Group has considerable financial resources, and the directors
believe that we are well placed to manage our business risks
successfully. Accordingly, the directors continue to adopt the going
concern basis in preparing the Annual Report and Accounts.
Controls over financial reporting
Our Executive Committee and the Board are responsible for
establishing and maintaining adequate internal control over financial
reporting, emerging risks and principal risks for the Group.
Our internal control over financial reporting includes policies
and procedures that:
• Relate to the maintenance of records that accurately and fairly
reflect transactions and dispositions of assets in reasonable detail
• Are designed to provide reasonable assurance that transactions are
recorded as necessary to permit the preparation of financial
statements in accordance with IFRS as issued by IASB as adopted
by the EU, and that receipts and expenditures are being made only
in line with authorisation by management and directors
• Provide reasonable assurance around prevention and timely
detection of unauthorised acquisition, use or disposition of our
assets that could materially affect the financial statements
Any internal control framework, no matter how well designed, has
inherent limitations including the possibility of human error and the
circumvention or overriding of controls and procedures – and may not
prevent or detect misstatements. Also, projections of any evaluation of
future effectiveness are subject to the risk that controls may become
inadequate because of changes in conditions or because of reduced
compliance with the policies or procedures.
Our Board and Executive Committee have assessed the effectiveness
of our internal control over financial reporting at 31 March 2020.
During the period covered by this document, there were no changes in
the Group’s internal control over financial reporting that have materially
affected or are reasonably likely to materially affect the effectiveness of
our internal controls over financial reporting.
On behalf of the Board
SIMON O’HARA
GROUP COMPANY SECRETARY
The key inputs into this forecast are:
• Cash generation from operations
• Bond and debt maturities
• Change in working capital, etc.
• Periodical cash flow forecast
We also continue to manage our foreign exchange and interest rate
risks within the framework of policies and guidelines authorised
and reviewed by the Board, with oversight provided by our
Finance Committee.
The Group has $2.35bn in intermediate parent guaranteed bonds.
In May 2019 and ahead of our UK listing, we executed a bank facility
agreement (the ‘new Airtel Africa facility’) for up to $2bn, which was
available to draw down for a period of six months. We expressed an
intention at IPO to refinance the bonds through various suitable
means, including a drawdown on the facilities by December 2019,
where the bonds had not been refinanced or unless alternate
committed liquidity had been put in place.
After receiving $680m in IPO proceeds, in October 2019 we further
reassessed the requirement for the bank facility agreement amounting
to $1.2bn ($0.8bn already having been cancelled after the IPO). Having
considered our business performance, free cash flows and liquidity
expectation for the next 12 months, together with other existing drawn
and undrawn facilities, we cancelled the remaining $1.2bn of the
agreement. As part of this evaluation, we have further considered
committed facilities of $814m as of date of authorisation of financial
statements, which should take care of the Group’s cash flow
requirement under both base and a number of reasonable worst-case
scenarios.
On 24 October 2019, the Honourable Supreme Court of India made
an adverse court judgment on Bharti Airtel in relation to a long
outstanding industry-wide case. In light of this, we’ve also considered
whether any events are likely to arise that would result in the need
to repay the balance of the bonds early. We have also assessed any
material restrictions that may be imposed on Airtel Africa due to the
actions or inactions of Bharti Airtel.
In January and February 2020, Bharti Airtel successfully raised
approximately $3.25bn through a combination of qualified institutional
placement of shares and an overseas sale of convertible bonds, as well
as other bond offerings. This has significantly reduced the level of
uncertainty about their ability to comply with the judgment. In light of
this long-term financing, the available liquidity and facilities with the
Bharti Airtel Group and other developments, including payment made
towards adjusted gross revenue (AGR) dues, Bharti Airtel’s
management has concluded that the previously reported material
uncertainty during the period ended 30 September 2019 around its
ability to continue as a going concern no longer exists.
Therefore, the likelihood of early repayment of the balance of the
bonds as a consequence of the actions or inactions of Bharti Airtel
is considered remote. We have also removed the previously reported
material uncertainty during the period ended 30 September 2019
around our ability to continue as going concern. The directors have
taken into account all factors likely to affect our future performance
and financial position, including:
• Our cash flows under both base and a number of reasonable
worst-case scenarios
• Our solvency and liquidity positions
• The availability of committed and uncommitted facilities
• The risks and uncertainty relating to our business activities
• Bharti Airtel’s actions to comply with the Court judgment
• The potential impact arising from the spread of COVID-19 in Africa
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99
Governance report – Corporate governance
Directors’ remuneration report
This report sets out our remuneration policy
for our executive directors, what they’ve been
paid since IPO and how this is linked to the
performance achieved.
There are three sections to the report:
1. An introduction from our committee chair
– this explains our approach to remuneration,
and summarises the key decisions made by
the committee during the year (also part of
the annual remuneration report) and an
overview of 2019/20 approach and policy.
2. The directors’ remuneration policy (DRP)
– this sets out our remuneration policy
for our CEO, chair and non-executive
directors. This policy will be put to a binding
shareholder vote at our next AGM. We’ve
prepared our policy taking into account
our strategy, geography and markets,
as well as market practice and the latest
developments in the UK Corporate
Governance Code (2018 Code). It also
includes a summary of key changes we’re
proposing compared to our June 2019
prospectus for admission to the London
Stock Exchange (LSE).
3. Our Annual Report on Remuneration –
this sets out in detail how we’ve applied
our remuneration policy in 2019/20, the
remuneration received by directors for the
year and how we’ll apply the policy in 2020.
This report will also be put to an advisory
shareholder vote at the AGM.
All amounts in this report are in US dollars ($)
unless stated otherwise.
DOUG BAILLIE
CHAIR OF THE REMUNERATION COMMITTEE
Chair’s introduction
I’m pleased to present the Remuneration Committee’s report
for 2019/20, and to propose our first directors’ remuneration
policy for shareholder approval at our 2020 AGM to be held
on Wednesday 24 June 2020.
Work of the committee
As this is our first remuneration policy report, the committee spent
considerable time fully understanding the UK and London Stock
Exchange (LSE) requirements, as well as those of key shareholders
and shareholder representative groups. We did this in the context of
Airtel Africa’s current practices, the environment that we operate in
and the importance of getting this right – for shareholders and other
stakeholders, including our executive director and all of our colleagues.
We also spent time understanding the pre-IPO executive remuneration
schemes and agreeing executive awards, the targets set and the
discretion applied in relation to the awards are detailed in this directors’
remuneration report.
Policy overview
Remuneration for our executive directors is based on the key principles
of simplicity, pay for performance, and alignment with shareholders and
other stakeholders. At present, our CEO is the only executive director of
Airtel Africa and the only executive formally subject to this policy.
The new policy contains elements of balance, given that we’re listed
on the London Stock Exchange (with a secondary listing on the Nigerian
Stock Exchange) and operate in 14 countries in Africa from headquarters
in Nairobi. We reviewed our remuneration arrangements at the time of
IPO and made some revisions to bring them in line with UK good practice.
Proposed changes and key features
• Executive salary – salary increases will be generally guided by the level
of increase for the broader employee population. Increases above this
level may be made in specific situations – for example, to recognise
development in the role or a change in responsibility, material changes
to the business or exceptional company performance
• A total variable pay opportunity set at or below the median for listed
companies of our size
• The introduction of an annual bonus deferral for a period of two years
• The introduction of three-year performance periods for the
long-term incentive plan (LTIP)
• An LTIP comprising performance shares and restricted stock units
with stretching performance measures and a financial underpin
• A new total shareholder return (TSR) peer group comprising the
constituents of the MSCI Emerging Markets Communication
Services Index
• A two-year post-vesting holding period on the LTIP
• A new minimum shareholding for the executive director
• Malus and clawback provisions applying to both the bonus and LTIP
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The policy is consistent with the requirements of the 2018 Code and
subsequent updates. We’ll maintain a disciplined approach to
executive remuneration so that we incentivise and reward the right
behaviours to support our overall strategy and good governance
principles. We developed our remuneration arrangements following
discussions with our main shareholders, and these are intended to
reflect current market and good practice.
We hope that you welcome and support our proposed policy. This is
designed to create a clear link between performance and reward for
our executives, and to support our continued growth in the interests
of our shareholders and other stakeholders.
Applying our policy in the current climate
As I write this, it’s not yet clear what the true impact of COVID-19 will
be on our employees, the more than 110 million subscribers we serve,
and the partners that make up the broader Airtel ecosystem. We know
through dialogue with African governments that the mobile industry
is seen as essential in keeping people connected and the wheels of the
economy turning. We are a resilient company and all our employees
will be all playing their part to ensure Airtel plays its role in seeing this
crisis through.
As a Remuneration Committee, we recognise the difficulty in reviewing
salaries and setting targets and metrics until the impact of COVID-19 is
clear. We will hold a review in June and, if necessary, again at the end of
September and will keep our shareholders posted with developments.
This past year has been a period of considerable change and
challenge, and I would like to thank my fellow committee members for
their diligence and dedication. We look forward to seeing solid support
for our new remuneration arrangements at the 2020 AGM – and, more
importantly, seeing the benefits of our work to all our stakeholders
over the coming years.
DOUG BAILLIE
CHAIR, REMUNERATION COMMITTEE
13 MAY 2020
As Airtel Africa is newly listed, the
committee spent considerable time
understanding the key regulatory
requirements in the context of
our current business practices,
the environments we operate in
and the importance of getting our
policy right – for our shareholders,
executive directors, and all our
other stakeholders.
Remuneration Committee
• Advises the Board on remuneration for Board members,
executive directors, the company secretary, the Executive
Committee and other senior employees
• Makes sure that remuneration arrangements identify and
mitigate reputational and other risks from excessive rewards and
inappropriate behaviour linked to target-based incentive plans
• Ensures that targets are appropriate, geared to delivering our
strategy and enhancing shareholder value
• Makes sure that rewards for achieving or exceeding agreed
targets are not excessive
• Promotes the increasing alignment of executive, employee
and shareholder interests through appropriate share plan
participation and executive shareholding guidelines
• Reviews employee remuneration and policies and the alignment
of incentives with culture, particularly when setting the executive
directors’ remuneration policy
• Through the committee chair, engages with shareholders
on remuneration-related matters
Main activities in 2019/20
During the financial year, the committee:
• Agreed the committee’s terms of reference
• Formulated our first directors’ remuneration policy as a listed
company
• Implemented and made awards under our new share plans
• Determined the level of bonus payments for this financial year
• Drafted our first directors’ remuneration report as a listed company
Review of directors’ remuneration policy and
shareholder consultation
In 2019, we thoroughly reviewed the remuneration arrangements for
our directors which had been put into place before the IPO. Our aim
was to make sure that our new policy incentivises our management
team to deliver longer-term shareholder value and reflects the latest
UK Corporate Governance Code requirements and UK good
practice. To this end, we are proposing a number of changes.
Proposed changes
• Introducing an annual bonus deferral
• Requiring a minimum shareholding for executive directors
• Simplifying the LTIP structure to include only performance shares
and restricted stock units (RSUs)
• Introducing three-year performance periods for all LTIP measures
• Introducing a new TSR peer group comprising the constituents
of the MSCI Emerging Markets Communication Services Index
and retaining net revenue and EBITDA
• Implementing a two-year post-vesting holding period on the LTIP
We have consulted on the proposed policy with our largest
shareholders who have indicated their support.
Engaging with employees
The report on page 79 sets out some of the activities undertaken
during the year and explains our work on diversity and employee
engagement. Going forward, together we will work to ensure that
employees are appropriately represented in the boardroom and
when making Remuneration Committee decisions.
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Governance report – Corporate governance
Directors’ remuneration report continued
PART 1
Performance and remuneration
for 2019/20
Business performance context
To recap on the performance as described in the strategic report (see
pages 1 to 64), this year Airtel Africa delivered a strong performance,
with double-digit revenue and Underlying EBITDA growth.
• Annual bonuses depend primarily on financial measures, with 35%
linked to non-financial measures covering Airtel Money expansion,
talent development and compliance in 2019/20 (reducing to 20%
for 2020/21). Bonuses related to 2019/20 reflect our pre-IPO
practices and are payable in cash. From 2020/21, any bonus paid
of more than 100% of annual base salary will be deferred into
Airtel Africa plc shares for two years.
• Raghunath Mandava, our CEO, received a bonus of 60% of
maximum. This recognises Airtel Africa’s overall financial
performance as well as his individual performance against personal
objectives set at the start of the year. In assessing the annual bonus
outturn the committee has exercised its discretion by taking account
of the unanticipated regulatory changes in Nigeria which saw the
removal of the Unstructured Supplementary Service Data (USSD)
charges. These negatively impacted revenue in Airtel Money from
October 2019 onward by approximately $3.71m. You can see bonus
performance outcomes against targets in our remuneration report.
• The committee reviewed the formulaic outcomes against the bonus
and LTIP targets and decided that these were a fair reflection of the
overall performance achieved for shareholders.
Variable pay
Due to the exceptional global circumstances around COVID-19, we will
review targets and metrics within the guidelines of our policy by no
later than the end of the second quarter of the financial year.
Maximum bonus opportunity will be capped at 200% of base
salary. The 2020/21 target bonus will be set at 75% of base salary.
Any bonus of more than 100% of salary will be deferred into shares
for two years.
For 2020/21, LTIP grants for the CEO will consist of performance
shares with a face value of 90% of salary and restricted stock units
(RSUs) with a face value of 40% of salary. The mix of performance
shares and RSUs reflects practices in the markets in which executive
directors are located, as well as the challenges involved in setting
robust performance targets given the locations of our operations.
We strongly support the principle that pay should be tied to performance.
We will continue to set robust and challenging performance targets for
both the bonus and the performance shares component of the LTIP, with
vesting of restricted stock units (RSUs) dependent on the satisfaction of
a financial underpin. It is intended that three performance conditions, as
in 2019/20, will apply to the performance shares – relative TSR (20%),
Underlying EBITDA (40%) and revenue (40%), with each being
measured over three years. The underpin applying to the grant of RSUs
will require a positive operating free cash flow over the three financial
years ending with the year before the RSUs vest.
Non-executive directors’ fees
Non-executive directors’ fees will remain unchanged in 2020/21.
• LTIPs granted in 2019 are subject to relative TSR measured over
Proposed changes to directors’ remuneration policy
a three-year period ending in 2022 and net revenue and Underlying
EBITDA measured over three consecutive annual periods.
• As a result of Airtel Africa’s strong net revenue and underlying
EBITDA growth in 2019/20, the conditions related to performance
against these metrics during the year were partly achieved. Details
are provided later in this report.
• IPO share options with a face value of 300% of salary were granted
to the CEO shortly before our listing to create a mutual interest with
IPO investors in the performance of our shares. Similar share options
with a lower face value were also granted to other senior executives.
These options will vest in three equal tranches in June 2020, 2021
and 2022 subject to continued employment.
• Replacement stock awards were granted shortly after our listing
to replace the incentive arrangements used before the IPO.
These consisted of awards over shares with an aggregate value
of $515,078 for the CEO and are subject to conditions based
on Airtel Africa’s performance over two years.
Applying our policy in 2020/21
Salary
Due to the exceptional global circumstances around COVID-19 and
its impact, the timing and level of increase will be reviewed by no later
than the end of the second quarter of the financial year. The current
salary for Raghunath Mandava is therefore the same as in 2019/20
at $825,000.
Benefits
No pension is payable to the CEO. Taxation equalisation benefits and
other benefits, including car and expatriate living allowances, will be
provided on the same basis as to other employees.
Annual bonus
While the 2019 bonus is payable entirely in cash, annual bonus deferral
has been introduced from 2020, with any bonus of more than 100%
of base salary deferred into shares for two years.
The maximum bonus opportunity is set at 200% of base salary.
Long-term incentive plan (LTIP)
Performance for future grants of long-term incentives will be measured
over a three-year period, with a compulsory two-year post-vesting
holding period.
In 2020, we will continue with a balanced approach to long-term
incentives. The LTIP will be delivered up to 100% of salary in
performance shares and 50% of salary in RSUs. The use of RSUs
reflects the difficulty with setting targets in some of our markets,
combined with our strong desire for continuity below Board level, and
talent retention.
Share ownership requirements (SORs)
SORs have been introduced at 250% of base salary for all executive
directors, who will have to achieve the SOR requirement over a
five-year period.
The Committee is aware of investor guidance in relation to post-
employment share ownership. It considers that, in light of the
Company’s unusual circumstances, with senior executives located in
Africa where additional requirements on the holding of shares are not
market practice, that the operation of bonus deferral and post-vesting
holding requirements currently provide sufficient alignment after
employment has ended. However, it will continue to keep this aspect
of the policy under review.
Dividend equivalents
Any dividend equivalents delivered on the deferred bonus or under the
LTIP will be in shares and will only vest to the extent the award vests.
102 Airtel Africa plc Annual Report and Accounts 2020
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PART 2
Directors’ remuneration policy
This policy applies to our directors. It has been developed taking into
account the principles of the UK Corporate Governance Code and
the views of our major shareholders. Shareholders will be asked to
approve this policy in a binding shareholder vote at our first AGM
on Wednesday 24 June 2020.
Our proposed policy is intended to attract, motivate and retain
high-calibre directors, to promote the long-term success of Airtel
Africa, and to be in line with good practice and the interests of our
shareholders.
Key principles of our remuneration policy
• Proportionality: remuneration packages should be set at competitive
levels to ensure our ability to attract and retain premium talent.
• Clarity, simplicity and alignment to culture: the structure of these
packages and, in particular, the design of performance-based
remuneration schemes, should be aligned with stakeholders’
interests, be easy to explain, and support our business strategy
and objectives.
• Predictability and risk: a significant proportion of the remuneration
of executive directors should be performance-based. The
performance-based element of remuneration should be
appropriately balanced between the achievement of short-term
and longer-term objectives and not reward poor performance or
encourage inappropriate risk-taking.
• Reflect the diversity of our business: the structure of the package,
in particular benefits, should reflect local practices and employment
conditions in the countries in which executive directors are based.
Executive directors’ remuneration policy table
Purpose and link
to strategy
How we assess performance
Base salary
To recruit and reward
executive directors of
a suitable calibre for
the role and duties
required
Reviewed annually by the committee, taking account of Group and
individual performance, changes in responsibility and levels of increase
for the broader employee population.
Reference is also made to market levels in companies of similar size
and complexity.
The committee considers the impact of any base salary increase
on the total remuneration package.
Salaries (and other elements of the remuneration package) may be
paid in different currencies as appropriate to reflect the geographic
location.
Benefits
To provide market
competitive benefits
Benefits for existing directors include a number of cash benefits,
reflecting an expatriate package in a Kenyan environment. Future
executive director appointments may be provided with an equivalent
package reflecting their country of residence.
Expatriate benefits include a housing allowance, education allowance
and home leave tickets. Car allowances, life and medical insurance are
also provided.
Existing directors do not receive pension benefits.
We may also equalise for double taxation between the UK and Kenya
if required.
Maximum opportunity
There is no prescribed
maximum salary or
annual increase.
However, increases will
generally be guided
by increases for the
broader employee
population. Increases
above this level may
be made in specific
situations to recognise
development in the
role, changes in
responsibility, material
changes to the
business or exceptional
company performance.
Maximum values
are determined by
reference to market
practice, avoiding
paying more than
is necessary.
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PART 2
Bonus plan
Purpose and link
to strategy
To give an incentive
and reward for
annual performance
achievements.
To also provide
sustained alignment
with shareholders
through a
component deferred
in shares
Long-term
incentive plan
(LTIP)
To provide an
incentive and reward
for the delivery of the
company’s strategic
objectives and
provide further
alignment with
shareholders
through the use
of shares
Maximum opportunity
The policy maximum
annual bonus is 200%
of base salary.
The committee will use
its discretion within the
maximum policy limits
to consider the target
bonus opportunity
taking account of
market development
opportunities, specific
events and role
expansion. For
2020/21, the CEO’s
target bonus
opportunity will be set
at 75% of his base
salary.
Dividend or dividend
equivalents may be
earned on the deferred
bonus component.
The maximum annual
grant limit is 200% of
base salary (face value
of shares at grant),
of which normally
not more than 50%
of annual salary may
be granted as RSUs
to any individual in
a single year.
PSP awards with a face
value of 100% of salary
and RSUs with a face
value of 50% of salary
will normally be
awarded.
25% of the PSP award
is available for
threshold performance,
rising on a straight-line
scale to 100% of the
grant for performance
at the ‘stretch’ level.
How we assess performance
Awards are based on annual performance against a scorecard of
metrics aligned with our strategy, KPIs and other yearly goals. Financial
measures have the highest weighting. Performance against strategic
financial and non-financial objectives may also be measured, but will
not normally account for more than 20% of the total.
The policy gives the committee the authority to select suitable
performance metrics aligned to our strategy and shareholders’
interests, and to assess the performance outcome.
Any award in excess of the annual base salary is normally delivered
in deferred shares for a further two years. Any dividend equivalents
accruing on shares between the date when the awards were granted
and when they vest will normally be delivered in shares.
Malus and clawback provisions apply to both the cash and share-based
element of awards for a period of two years from the date of payment
(cash) or date of release (shares) if there is:
• Misstatement of the company’s accounts
• An error in calculating performance
• Gross misconduct resulting in dismissal
• Material failure in risk management
• Reputational damage
Awards may comprise performance shares (PSP) or restricted stock
units (RSUs). Individuals are considered each year for an award
of shares that normally vest after three years to the extent that
performance conditions are met and in line with the terms of the
plan approved by shareholders.
PSP awards are made subject to continued employment and the
satisfaction of stretching performance conditions normally measured
over three years set by the committee before each grant.
For PSP awards to be made in 2020 it is intended that the metrics
will comprise relative TSR against the MSCI Emerging Markets
Communication Services Index (20%), net revenue (40%) and
Underlying EBITDA (40%). The committee will have discretion to
change the metrics and weighting from year to year. Major
shareholders will normally be consulted before any significant changes.
Awards of RSUs depend on continued employment and a financial
underpin set by the committee prior to each grant. Awards granted
in 2020 will require positive operating free cash flow over three
financial years.
The LTIP vesting outcome can be reduced, if necessary, to reflect
the underlying or general performance of Airtel Africa.
A two-year post-vesting holding period also normally applies for
LTIP awards that vest (net of tax) after the adoption of this policy.
Any dividend equivalents will normally be delivered at the end of
the vesting period in shares based on the proportion of the award
that vests.
Malus and clawback provisions apply to awards made for three years
from the date on which the award vests when there has been:
• A misstatement of the company’s accounts
• An error in calculating performance
• Gross misconduct resulting in dismissal
• Material failure in risk management
• Reputational damage
Share ownership
policy
To further align the
interests of executive
directors with those
of shareholders
Executive directors are required to build up and retain shares worth
250% of base salary within five years of being appointed to the Board.
Not applicable
Post-vesting holding periods and bonus deferral continue to apply
post-employment to create continued alignment with shareholders
after employment at Airtel Africa has come to an end.
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PART 2
Discretion in operating the incentive plans
To make sure these plans are operated and administered efficiently,
the committee has discretion in relation to a number of areas.
Consistent with market practice, these include (but are not limited to):
The committee has the right to amend or substitute any performance
conditions if something occurs that would mean the condition would
not achieve its original purpose. Any amended condition would not
be materially less difficult to satisfy in the circumstances.
• Selecting the participants
• The timing of grant and/or payment
• The size of grants and/or payments (within the limits set out in the
policy table)
• The extent of vesting based on the assessment of performance
• Determining a ‘good leaver’ and, where relevant, the extent of
vesting for share-based plans
• Treatment in exceptional circumstances such as a change of control,
when the committee would act in the best interests of our business
and its shareholders
• Making the adjustments required in certain circumstances (such as
rights issues, corporate restructuring, variation of capital and special
dividends)
• The form of settlement of awards in accordance with the discretions
set out in the plan rules
• The annual review of performance measures, weightings and
targets for the discretionary incentive plans from year to year
Choice of performance measures and approach to
target setting
Targets for each year’s annual incentive and long-term incentive award
are determined by the committee, taking a range of factors into
account. These include the annual budget, the relevant three-year
strategic plan, analysts’ consensus factors, wider economic facts and
affordability for the business.
Bonus plan
The annual bonus is based on performance against a stretching
combination of financial and non-financial performance measures
aligned with our KPIs and operational goals for the year. As such, they
typically include measures of revenue, profitability and cash flow, which
reflect our focus on profitable growth, cash generation and satisfying
our debt and other capital commitments. Executive directors and
members of our senior management team are also assessed on
personal objectives, as agreed by the committee at the start of each
year. The committee reviews and adapts the objectives as appropriate
to reflect the priorities for the business in the year ahead. As noted in
the introduction, the metrics and proposed weightings will be reviewed
no later than the second quarter to ensure they are still appropriate in
light of COVID-19.
2020 metrics and rationale
Weighting
Metric
Why chosen
Net revenue
Key indicator of our growth, market penetration and
customer retention
Underlying
EBITDA
80%
Measure of our profitability and cash-generating ability from
year to year
How targets are set
Set each year by the committee taking
account of prevailing market conditions
and progress towards strategic goals
Set each year by the committee taking
account of prevailing market conditions
and progress towards strategic goals
Operating free
cash flow (OFCF)
Non-financial
20%
Measure of the underlying profitability from our operations,
as well as our ability to service debt and other capital
commitments
Set each year by the committee taking
account of prevailing market conditions
and progress towards strategic goals
Indicator of the performance of the organisation in key
non-financial areas. For 2020, the non-financial measures
relate to people and regulatory objectives
Set each year by the committee based on
the priorities and responsibilities of each
role
We set a sliding scale of targets for each financial measure to encourage continuous improvement and to stretch performance. The policy gives
the committee the authority to select suitable performance metrics, aligned to our strategy and shareholder interests.
Long-term incentive plan (LTIP)
The performance conditions for the LTIP in 2020/21 are based on
financial growth and total shareholder return (TSR). We set a sliding
scale of challenging performance targets for each measure – for more
on these targets, see page 105. The committee reviews the choice of
performance measures and the appropriateness of the performance
targets and TSR peer group before each PSP grant.
While different performance measures and/or weightings may be
applied for future awards, the committee will consult with major
shareholders before making any significant changes.
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Directors’ remuneration report continued
PART 2
2020 metrics and rationale
Weighting
Metric
Why chosen
TSR, relative to a
peer group of
competitors
20%
Measures the total returns to our shareholders, providing
close alignment with shareholder interests
How targets are set
The committee sets the performance
requirements for each grant. For grants
in 2020, we intend to use a peer group
of international emerging market
communication services organisations
(MSCI Emerging Markets Communication
Services Index constituents).
The committee sets threshold and stretch
levels aligned to our strategic targets.
Net revenue
Underlying
EBITDA
40%
40%
A key indicator of long-term growth achieved in the market
A key indicator of long-term growth in profitability from
operations
The committee sets threshold and stretch
levels aligned to our strategic targets.
Service contracts for new executive directors and
policy on loss of office
Contracts for new executive directors will normally include up to six
months’ notice by either party. If the contract is brought to an end by
the company other than for ‘cause’ as specified in the contract, the
executive director would be eligible for payment of the base salary and
benefits relating to the unexpired portion of the notice period. We may
choose to continue providing some benefits instead of paying a cash
sum representing their cost.
We would try to mitigate the termination payment by, for example,
making payments in instalments that can be reduced or ended if
the former director wants to begin alternative employment during
the payment period. We will pay any statutory entitlements or sums
to settle or compromise claims in connection with a termination
(including, at the discretion of the committee, reimbursement for
legal advice and provision of outplacement services) as necessary.
Good leavers may receive an annual bonus related to the period they
have served. This would be payable following the relevant year end,
subject to the normal conditions for the bonus and normally paid in
cash.
Share-based awards held by good leavers will typically vest according
to the normal schedule, and are subject to performance conditions
and usually pro-rated.
On a change of control of Airtel Africa, outstanding awards will
normally vest early to the extent that the performance conditions have
been satisfied. Awards would normally be reduced pro-rata to reflect
the time between the grant date and the date of the corporate event.
If there is a demerger, special dividend or other event the committee
thinks may affect the current or future value of shares, they may
decide that awards will vest on the same basis as on a change of
control. If there is an internal corporate reorganisation, awards will
be replaced by equivalent new awards over shares in a new holding
company, unless the committee decides that awards should vest
on the same basis as on a change of control.
Legacy arrangements
Airtel Africa has the authority to honour any commitments entered
into with current or former directors before this policy is approved or
before their appointment to the Board. Details of any payments to
former directors will be set out in our remuneration report for the
relevant year.
Executive directors’ existing service contracts
Our executive directors have entered into agreements with an
indefinite term that may be terminated by either party on three
months’ written notice. At the committee’s discretion, we may make a
payment in lieu of notice – this is calculated relative to base salary and
benefits only, paid on a phased basis and subject to mitigation.
Entitlement to both annual bonus and LTIP awards will typically lapse
on cessation, although in good leaver circumstances we may pay a
pro-rata bonus for the period worked. LTIP awards may vest at the
normal vesting date subject to the performance conditions and are
normally pro-rated for time.
If a director commits an act of gross misconduct or similar, he or she
may be dismissed without notice and without further payment or
compensation, except for sums accrued up to the leaving date.
Name of director
Raghunath Mandava
Date of service
contract
Unexpired
term
13 June
2019
Rolling
contract
Approach to remuneration for new executive directors
The remuneration package for a newly appointed executive director
will be set in line with the remuneration policy in force at the time.
Variable remuneration will be determined in the same way as for
existing executive directors, and is subject to the maximum limits
on variable pay referred to in the policy table on page 108.
The committee may also buy out any remuneration and contract
features that an executive director may be giving up in order to join
Airtel. Such buyouts would take into account the nature of awards
forfeited and would reflect (as far as possible) performance conditions,
the value foregone and the time over which they would have vested or
been paid. Where shares are used, these awards may be made under
the terms of the LTIP or under a separate arrangement, as permitted
under the UK Listing Rules.
The committee may agree that we will meet certain relocation, legal,
tax equalisation and other incidental expenses as appropriate.
For an internal appointment, any legacy pay elements related to the
prior role are allowed to pay out according to their terms.
106 Airtel Africa plc Annual Report and Accounts 2020
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PART 2
Remuneration scenarios at different performance levels
These charts illustrate the total potential remuneration for the CEO at three performance levels.
Remuneration scenarios ($000)
$2,371
31%
26%
43%
$1,010
100%
$3,320
32%
$3,856
42%
37%
32%
30%
26%
Minimum
Target
Maximum
Maximum +
50% share
price growth
Chief executive officer
Fixed pay
Annual bonus
Long-term incentives
Remuneration policy for non-executive directors
Element
Purpose and link to strategy
Operation
1 Assumptions:
Minimum = fixed pay only (salary + benefits + pension)
On-target = 50% vesting of maximum bonus and 55% for PSP awards
and 100% for RSUs
Maximum = 100% vesting of maximum bonus and LTIP awards
Salary levels (on which other elements of the package are calculated)
are based on those applying on 1 April 2020.
2 Benefit values for the CEO exclude the costs of business travel and
accommodation.
3 To reflect the impact of a share price increase between award and vesting,
the LTIP value in the maximum column has been increased by 50% in the
share price growth column.
Maximum opportunity
Non-executive
Board chair fees
To attract and retain high-calibre
chairs who have the necessary
experience and skills. To provide
fees which take account of the
time commitment and
responsibilities of the role.
Other non-
executive fees
To attract and retain high-calibre
non-executive directors, with the
necessary experience and skills.
To provide fees which take
account of the time commitment
and responsibilities of the role.
The chair receives an annual fee, plus a fee
for chairing the Nominations Committee.
The committee reviews the chair’s fees
periodically.
We may also pay fees reflecting additional
time commitments or time required to travel
to Board meetings.
In addition, to assist with the performance of
his duties whilst in the UK, the chair has the
use of a car and driver with the company
settling any tax due.
Non-executive directors are paid a basic fee.
We may also pay additional fees to reflect
extra responsibilities or time commitments,
for example, for Board committee chairs,
senior independent directors or designated
non-executive directors, or time required to
travel to Board meetings.
While there is no maximum fee level,
we set fees by reference to market data
for companies of similar size and
complexity.
Non-executive directors’ fees are
reviewed periodically by the chair
and executive directors.
While there is not a maximum fee level,
fees are set by reference to market
data for companies of similar size and
complexity to Airtel Africa.
We may reimburse the reasonable expenses of directors that relate
to their duties on behalf of Airtel Africa (including tax if applicable).
We may also provide advice and assistance with directors’ tax returns
where these are affected by the duties they undertake on our behalf.
If either the remuneration policy or implementation resolutions receive
a significant proportion of votes against, the committee will work with
shareholders to understand the reasons behind these votes and the
concerns they have.
All non-executive directors have letters of appointment for an initial
period of three years. In keeping with best practice, non-executive
directors are subject to annual re-election each year at our AGM.
The chair’s appointment may be terminated by either party with six
months’ notice, and the appointments of the other non-executive
directors may be terminated by either party with one month’s notice.
Either appointment can also be terminated at any time if the director
is removed by resolution at an AGM or pursuant to the Articles.
Directors’ letters of appointment are available for inspection during
normal business hours at our registered office and also at our
yearly AGM.
All directors have been appointed for a fixed term ending on the date
of our 2022 AGM.
Shareholder context
The committee considers the views of shareholders when reviewing
the remuneration of executive directors and other senior executives
and consults directly with major shareholders about any material
changes to policy.
Broader employee context
The committee considers executive remuneration in the context of
our wider employee population. The remuneration policy for executive
directors is more weighted towards variable pay than for other
employees to make a greater part of their pay conditional on the
successful delivery of business strategy. Our aim is to create a clear link
between the value created for shareholders and the remuneration
received by our executive directors.
Given the diverse spread of geographical locations in which Airtel
Africa operates, employees are not directly consulted on the directors’
remuneration. However, employees will have the opportunity to
express their views on remuneration arrangements through employee
surveys and other forms of engagement, and these will be shared with
senior management and the Board as appropriate.
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Directors’ remuneration report continued
PART 3
Annual Report on Remuneration
This report has been prepared by the committee and approved by our Board. As stipulated in the relevant UK regulations, Deloitte LLP have
independently audited these items:
• Executive directors’ and non-executive directors’ remuneration and associated footnotes on page 113
• The table of share awards granted to executive directors and associated footnotes on page 109
• The statement of directors’ shareholdings and share interests on page 111
2019/20 remuneration of directors (audited)
The table sets out the total remuneration for the executive directors for the year ended March 2020. This comprises the total remuneration
received over the full year from April 2019 to March 2020, including remuneration received from the Group prior to Admission and the
incorporation of the Company on 12 July 2018.
All amounts are in $’000
Raghunath Mandava
Base
salary1
$817
$765
Benefits1
$184
$186
Pension
contribution2
–
–
Annual
bonus
$678
$546
LTIP
Other4
Total
fixed
$3923
$554
$1,252
$349
$1,001
$951
Total
variable
$1,070
$1,100
Total
$3,323
$2,400
2019/20
2018/19
Notes
1 Benefits include expatriate benefits ($’000), including: housing allowance of $68, education allowance of $30, car allowance of $58 and home travel allowance of $20.
2 The existing executive directors do not participate in pension arrangements.
3 In accordance with the regulations, the 2019/20 LTIP value has been estimated based on the average price of Airtel Africa’s shares in the period between 1 January 2020
to 31 March 2020. This will be restated based on the actual value at vesting in June 2020 in the 2020/21 accounts.
4 Other relates to the payment of the exceptional turnaround bonus of $1m and the one-off deferred cash plan of up to $375,000, both of which were put in place prior to the
IPO and disclosed in the Prospectus. Two-thirds of the deferred cash plan was dependent on performance conditions; which were Relative TSR over one year (30% of this
element), 2019/20 Net revenue (35%) and Underlying EBITDA (35%) against the targets shown on page 111; and one-third was dependent only on service conditions.
Annual bonus
Airtel Africa has continued to deliver strong performance during the year, with double-digit revenue growth in both reported and constant
currency and double-digit underlying EBITDA growth in constant currency. This growth continues to be broad-based across our voice, data and
Airtel Money divisions.
Our customer numbers increased by 11.9% this year, contributing to an increase in voice revenue. We’re also increasingly seeing the success of
the rollout of our modernised 4G networks, with a more than 39% increase in data revenues for the year. Alongside this, our focus on increasing
the application of our mobile money services through international partnerships while growing our distribution footprint has driven the expansion
of Airtel Money. It’s in this context that we have set our incentive awards.
2019/20 bonus outcomes (audited)
Weighted total
Outcomes (weighted % of maximum)
Raghunath Mandava (weighted % of maximum)
Bonus performance measures
Net revenue
25%
23%
Underlying
EBITDA
25%
13%
OFCF
15%
6%
Personal
35%
Total
100%
18%
60%
Financial objectives
Financial performance was assessed against the underlying net revenue, underlying EBITDA and OFCF ranges set for 2019/20.
All amounts are in $million
Net revenue
EBITDA
OFCF
All targets and achievements are in AOP constant currency as at 1 March 2019
Weighting
(%)
25%
25%
15%
Threshold
(30%)
$2,815.1
$1,464.9
$669.9
Target (50%)
$2,887.3
$1,533.1
$738.1
Maximum
(100%)
$2,959.5
$1,605.3
$810.3
Actual
$2,947.4
$1,537.4
$706.9
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PART 3
Personal objectives
Raghunath Mandava
Airtel Money amounts are in $million
Weighting (%)
Target
Performance achieved
Expand Airtel Money to new
geographies and products
10%
Threshold: $319.4
Target: $327.6
$319.4
Outcome (weighted
% of maximum)
3%1
Build teams for running Airtel Money,
Home Broadband & Enterprise
Compliance score
Post-IPO listed company compliance
Maximum: $335.8
10% Build teams to run and grow new
line of businesses: Airtel Money,
Home Broadband and Enterprise
Threshold: 55
5%
Target: 58
Maximum: 61
10% Fulfill necessary compliance and
stabilisation post-IPO
Eight new hires at GM level
and 17 new hires at a senior
manager and below level
65.8
Post-IPO activities
are on track
5%
5%
5%
All targets and achievements are in AOP constant currency as at 1 March 2019
1 On 23 October, 2019, the Nigerian Communications Commission withdrew the USSD charge which negatively impacted Airtel Money turnover by $3.71m. The actual
outturn for Airtel Money revenue was $317.8m, $1.6m below the threshold for this measure. The committee has used its discretion to partially adjust the outturn for the
impact of the withdrawal of the USSD charge in its final assessment of the CEO’s bonus award.
Annual bonus awarded
Name
Raghunath Mandava
Awarded
in cash
$678,000
Awarded
in shares
Total
–
$678,000
Long-term incentive plan (LTIP) (audited)
LTIP awards granted in 2019/20
As disclosed in our June 2019 prospectus, the CEO was granted LTIP awards on admission as set out below.
Type of award
(% weighting of
maximum award)
Maximum number
of shares
Raghunath Mandava
PSP – Financial (1/3)
297,618
Face value1
$300,000
Face value
as a % of salary
Threshold
vesting
End of performance
period
36%
25%
Revenue and
EBITDA:
31 March 2020,
31 March 2021
and 31 March
2022
TSR element
3 July 2022
n/a
PSP – TSR (1/3)
297,620
$300,000
RSU (1/3)
297,619
$300,000
36%
36%
25%
100%
1 Face value is computed using initial offer price of $1.008 (£0.8)
The performance conditions are based on three performance measures – TSR (50%), Underlying EBITDA (25%) and Revenue growth (25%). We
measure relative TSR over a three-year performance period and the other two measures over a rolling one-year period. This combination of
measures helps to align the operation of the LTIP with shareholders’ interests and our business strategy.
© 2020 Friend Studio Ltd
File name: RemunerationXreport_v103
Modification Date: 21 May 2020 9:09 am
Airtel Africa plc Annual Report and Accounts 2020
109
Governance report – Corporate governance
Directors’ remuneration report continued
PART 3
Targets applying to the performance share plan (PSP) awards
All amounts are in
$million
Metric
Weighting on
total PSP
Performance period
Below threshold
(0%)
Relative TSR
50%
3 years ending 3 July 2022
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