Airtel Africa's data and mobile money penetration are set to almost double in the next four to five years, feel analysts.
Airtel is Africa's second-largest telecom operator, with 100 million mobile subscribers as of June 2019, and has a leading position in most of its markets.
Goldman Sachs forecasts a 9 per cent revenue compound annual growth rate (CAGR) over FY19 to FY24, driven by 18 per cent data CAGR and 30 per cent CAGR in the Airtel Money business.
The brokerage said that a combination of an under-penetrated telecom market, a young addressable population, and rising smartphone affordability, along with low data penetration, would drive growth opportunities for Airtel Africa. Data and mobile money segments are expected to contribute 52 per cent and 37 per cent of total subscribers, respectively, in FY24, from 30 per cent and 15 per cent in FY19.
Data subscribers for Airtel Africa have grown by 33 per cent during FY17 to FY19 (CAGR). Around 21 per cent of Airtel Africa's subscribers are on 4G, 43 per cent use a 3G network, while 36 per cent use a 2G network. The average revenue per user (ARPU) for 4G customers is $6, while for 3G and 2G subscribers it is $2.1 and $0.6, respectively. The operator continues to invest in the 4G network, having added nearly 1,500 sites; more than half its sites are now 4G.
As for the mobile money business, analysts feel that most of the operating countries of Airtel Africa are underbanked. The company has a distribution network of more than 240,000 money agents. Airtel is preparing for the launch of the Mobile Money business in Nigeria.
At the moment, Airtel Africa ranks number 1 or 2 in 12 of the 14 countries in which it operates.
Bharti Airtel's African arm, however, posted a 12.2 per cent dip in its net profit in the June quarter to $132.2 million even as its revenues were up 6.9 per cent year on year driven by growth in Nigeria and East Africa. This is at a time when the company is readying 4G spectrum to roll out wireless home broadband services in select nations.
This was Airtel Africa's first results announcement after the $750-million initial public offering in June.
"Voice revenue, our largest product, was up three per cent driven largely by the nine per cent growth in our customer base, now touching 100 million customers. Data revenue, the highest contributor to growth, rose 36 per cent. This led to 79 per cent growth in data usage. Mobile Money revenue, our fastest-growing business, increased by 42 per cent as we expanded our distribution reach," Raghunath Mandava, CEO of Airtel Africa, had said after the results.