Airtel Africa Plc (AAF) Earnings Call Transcript

Welcome to the Airtel Africa Half Year Results for the period ended 3rd of September 2026. Please note that the call will be recorded. [Operator Instructions]. I would now like to turn the call over to Sunil Talder. Please go ahead.

Thank you. Hello, everyone, and thank you all for joining us today. I have with me Kamal Dua, our CFO; and Alastair, our Head of Investor Relations. Let me give you some brief highlights over the first half of this year, and we'll let Camel run through the key financials before I spend time giving high-level perspective around our markets. The last 6 months have been very encouraging with a continuous focus on our strategy, enabling us to capture the significant opportunity across our markets. Despite ongoing geopolitical developments, the macroeconomic and currency environment remained relatively stable with demand in both the telecoms and financial services remaining intact, translating into a strong top line growth with constant currency revenue growth of almost 21%. The geopolitical developments, however, have impacted inflationary pressure on our cost base with fuel prices rising significantly over the last 6 months. These developments renewed our focus on initiatives to drive cost efficiencies to limit the impact, and I'm very pleased to see EBITDA margins remain above 50% over the period. As we highlighted earlier in the year, we also accelerated our CapEx plans to position us for the ability to capture the significant growth opportunity and these results reflect how this accelerated CapEx is supporting our business growth. Our strong cash generation and balance sheet provide us with significant flexibility. They allow us to continue investing in growth maintain disciplined capital allocation and deliver sustainable long-term value for shareholders. Finally, the period also marked the landmark milestone with the successful IPO of Airtel mine. The listing opens an exciting new chapter for the business, providing a strong platform to capture the significant growth opportunity in digital financial services across Africa. Following the IPO process, we have maintained our shareholding of around 78%, and we remain exposed to Airtel Money's continued growth and value creation. This slide brings together how the strategy is translating into tangible operational and financial outcomes. First, reflecting our strategic focus on the customer experience -- we'll continue to deepen our customer engagement. Our customer base grew by 11.6% to $194 million. And as digital adoption continues to gain traction, we now have more than 100 million smartphones on our network. Furthermore, Mobile Money customers grew by 22.4% to more than $60 million as financial inclusion continues to gather momentum across our footprint. Importantly, this is not simply a strategy of acquiring new customers. We have also taken specific steps to facilitate increased engagement with a wide array of services we provide. These initiatives underpin 18.9% constant currency growth in mobile services with data up 28%. In addition, mobile money revenues increased 25.8%, demonstrating the strength of demand for accessible digital financial services. A key point to note is that growth is profitable. EBITDA margins expanded 172 basis points to 50.3% notwithstanding higher fuel costs. In quarter 2 specifically, having absorbed the full inflationary pressure of fuel prices, our EBITDA margins increased to an all-time high of 50.4%. Finally, profitable growth enables continued investment and shareholder returns. We invested $657 million during the half, and we accelerated spend good to drive increased capacity and coverage while also investing in new services such as home broadband and data centers. During the period, we continued our buyback and both declared another 9.2% growth in our diet dividend. Together, these outcomes demonstrate the strength of our operating model and our ability to balance investment, financial resilience and shareholder value. Let me now spend a few minutes talking about each of the business segments and regional performance. Firstly, let's start by looking at mobile services, which continue to report very strong trends. Ultimately, the key driver of the results is the continued base growth with customers growing almost 12% and data customers increasing by 15%. Within the mix, smartphone penetration increased to 51.6% as we continue to see the durability of demand for data services. As customers migrate to smartphones, we see a step-up in data consumption as they increasingly engage with video, social media and other digital services. This is driven by increase in smartphone usage to over 13 GB per month. When combined with our focus on a more for more approach to pricing has translated into a 10.7% growth in ARPU and a 28% increase in data revenues. Together with continued growth in voice revenues, total revenues of our mobile services business increased 18.9% in constant currency. This illustrates the strength of our business modeling. We're expanding the customer base, enabling more customers to access smartphones, supporting greater usage through network investments and monetizing that demand. The mobile money business continues to further amplify our strong operating and financial performance the opportunity, the distribution reach and a scalable customer-centric platform gives us the ability to continue attracting new customers to the business, continued expansion and enhancement of the different services available on mobile money platform, AB supported by deep rooted partnerships and unlock new growth opportunities and drive the business to new levels. This, combined with continued innovation and the rollout of digital offerings has seen continued growth in the customer base and a further 37% growth in EPV with annualized TPV in quarter 2 of $275 billion. The result has been a strong 25.8% growth in revenues, which once again reflects the scale of the opportunity across our markets. We have continued to see strong operating momentum in Nigeria with accelerating customer growth to 15.1% and ARPUs rising 12.7% as we continue to focus on monetizing the substantial demand across the country. In constant currency, revenues increased 27%, reflecting these strong operating trends, but also reflects the accelerated CapEx deployment as we continue to capture a larger share of the opportunity across the country. EBITDA margins continue to increase on a year-over-year basis despite the twofold increase in fuel costs over the year. This reflects the enhanced focus on cost efficiencies while operating leverage arising from the strong top line development provides another source of margin support. In East Africa, our largest region, trends remain strong with constant currency revenue growth of over 18% despite the high base. In the last quarter, we have seen constant currency revenue growth accelerated to 18.6% as we continue to tap into the huge potential across the markets. Mobile money remains a key component of this performance, and we remain encouraged by the scale of growth and customer takeup of financial services. Once again, the strong subscriber growth and increased usage of our services, which has driven an increase in ARPUs has been foundation of this strong growth with EBITDA margins rising to 53.6% in the first 6 months. The performance in the Francophone region has also been very strong despite the tougher comparables. The turnaround in the performance over the last few years in the Francophone region has been driven by a focus on driving base level growth and a relentless focus on our strategy to unlock the opportunity. This turnaround has been across both the mobile services and Mobile Money business, but a particular shout out to the mobile money business that continues to grow at over 40% in constant currency. In constant currency, we saw revenue growth for the region of over 19%, while in quarter 2, we saw growth in excess of 20%, which is a key milestone and has helped EBITDA growth of around 19% in quarter 2 and stable EBITDA margins. Let me now hand over the call to Kamal to run through the financials in a bit more detail.

Thank you, Sunil. Good morning, and good afternoon to all of you. Let me start with the key financial highlights. This slide provides a clear summary of the group's very strong performance in the first half of the financial year. We are pleased to report continued revenue and EBITDA growth of more than 20% in constant currency, together with EBITDA margin expansion of over 1 percentage point. This was achieved despite elevated fuel costs arising from the geopolitical factors, the resilience of our margin reflects the benefit of scale, strong underlying commercial momentum and our continued focus on operational efficiency. In reported currency, revenue increased by 28.2% to $3.8 billion, while EBITDA grew by almost 33% to $1.92 billion. The stronger growth in reported currency was supported by the currency appreciation, specifically in Nigeria and Zambia. During the period, we deliberately front-loaded the capital investment to stand network capacity and position the business to capture the significant growth opportunities across our markets. Despite this higher level of investment, cash generation remains strong. We sustained healthy free cash flow while maintaining a comfortable lease adjusted leverage ratio of 0.5x, highlighting the resilience of our balance sheet and financial position. Pre-exceptional EPS increased to $0.117 from $0.03 in the prior year. After adjusting for higher foreign exchange gain recorded last year, underlying EPS rose from $0.06 to $0.118 demonstrating the continued strength of our core operating performance. Finally, our strong free cash flow generation and robust capital structure have enabled us to continue delivering shareholder return. During the period, we returned almost $110 million through share buybacks. The Board has also declared an interim dividend of $0.031 per share, an increase of 9.2% over the last year which is in line with our current dividend policy. Now turning on to revenue. The group maintained strong and broad-based growth momentum with revenue increasing by 28.8% in constant currency. In reported currency, growth was even stronger at 28.2%, benefiting from the appreciation of Nigerian Naira and Ramin quarter. Importantly, this growth was delivered across our 4 service segments. In constant currency, voice revenue increased by 7.1%, data by 28% and mobile money by 25.8%. This demonstrates both the continued strength of demand across our markets and the value of our diversified revenue streams. The opportunity across our footprint remain significant through disciplined execution and continued investment in network capacity digital services and customer experience, we are well positioned to sustain this momentum across our regions and business segments. Turning on to EBITDA. The strength of our revenue performance Together with disciplined cost management delivered 32.8% EBITDA growth in reported currency to $1.92 billion and 23.5% growth in constant currency. We delivered this performance despite significant cost headwinds, particularly elevated fuel price across our markets. Against this backdrop, EBITDA margin expanded by 144 basis points year-on-year and by a further 35 basis points sequentially, reaching a record 50.4% in quarter 2. This demonstrates the strength of our operating model, the benefit of scale and our disciplined approach to cost management. The ongoing macroeconomic condition may continue to influence our margin outlook However, our focus remains clear to sustain the profitable growth and protect the resilience of our margin. Moving to now the finance cost. The year-on-year movement was largely influenced by significant lower foreign exchange and derivative gains if we compare this with the prior period. Adjusting for these effects and one-off exceptional items, the increase was primarily driven by $47 million of additional lease liability interest, reflecting our continued network investment and addition of approximately 200 sites during the period. Encouragingly, our funding strategy continues to deliver benefits with our cost of debt declining by around 230 basis points year-on-year, supported by active debt portfolio management and lower interest rate across several of our markets. Coming to [indiscernible] before exceptional item was up over 41% to USD 117 in current period as compared to $0.083 in the prior period. Excluding the foreign exchange gains in both periods, the underlying EPS grew from USD 0.069 to USD 0.118 driven by strong operational performance across the business. Moving now to the normalized free cash flow. This slide presents a bridge between EBITDA to normalized free cash flow for the first half of the year. The business generated free cash flow of $280 million compared with $368 million in the prior period despite a $357 million increase in CapEx payout. Our CapEx payout in the current year was $713 million, which includes payment for 900 band license renewal in Nigeria and 5G spectrum acquisition in Kenya compared with $356 million spent in the prior period. In addition to CapEx, the major cash outflow included income tax payment of $317 million cash interest of $430 million and other payment related to lease obligation and dividend paid to our minority shareholders. Now this slide explains why we are confident in stepping up investment across the business. As you can see on the left, -- the incremental constant currency revenue generated over the last 12 months has continued to increase as the business has scaled, reaching approximately at $1.3 billion. This demonstrates our ability to constantly and consistently translate investment into meaningful revenue growth across an increasingly larger business. Again, in backdrop, we have significantly increased capital investment with CapEx rising to $657 million from $318 million in the prior period. This reflects our confidence in the opportunity ahead, supported by strong execution, sustained demand and attractive return on invested capital. The majority of this investment remain focused on strengthening our core network through expanded coverage, additional capacity, fiber deployment and 5G rollouts. At the same time, as we have reiterated earlier, we continue to invest in emerging growth opportunities, including home broadband and data centers. Now this is not simply about investing more capital, it is about allocating capital to areas where we see pool demand, attractive returns and significant long-term growth potential. The continued growth in incremental revenue gives us confidence that we are investing from a position of our strength. Moving to the next slide. Our decision to accelerate investment is also underpinned by the strength of our balance sheet, with more than 95% of our debt in local currency and leverage continued its downward trajectory. Our capital structure remained very robust at around 0.5x lease adjusted leverage, we have significant financial flexibility to invest behind the long-term growth opportunities across our markets, while continuing to deliver attractive return to our shareholders. It should be that our capital allocation priority remains unchanged. First, our key priority is always to continue investing in the business, capturing the significant growth opportunities across our market, as I've just outlined. Second, we remain committed to maintain a sustainable and robust capital structure with leverage at around 0.5x to remain very comfortably positioned. And third, we continue to return cash to the shareholders through our progressive dividend policies and share buybacks. We have been very consistent in this approach, and this is reflected once again in the Board's decision to declare an interim dividend of $0.031 per share, an increase of 9.2% year-on-year. So our capital allocation framework remained clear and consistent, which is invest for growth maintain balance sheet strength and deliver consistent return to the shareholders. With this, let me now hand over back to Sunil, please. Thank you.

Thanks, Kamal. I would like to spend the next few minutes explaining why we remain so positive about the outlook for Airtel Africa. Our confidence is grounded in 3 things: the exceptional structural growth opportunity across our markets, the strength of our established mobile services and mobile money platforms and our proven ability to invest and execute at scale. Together, these give us a clear pathway to sustain industry-related industry-leading growth over the long term. We begin from a position of considerable scale. We operate across 14 markets with a combined population of 679 million people. Our networks cover more than 82% of that population. And today, we serve 194 million customers. Alongside the telecoms business, we have built an extensive mobile money distribution network with more than 2.5 million transacting agents and annualized TPV of $275 billion. This combination of scale, reach and distribution is difficult to replicate. Importantly, it also means that growth does not depend on one product or one market. We can capture rising demand across voice, data, mobile money and increasingly enterprise and digital infrastructure. The foundations of this opportunity are structural and long term. The population across our footprint is expected to increase by an approximately $87 million by 2030. With a $64 million increase in the addressable population at the same time, the GDP per capita on a purchasing power basis is expected to grow at a compounded annual growth rate of about 4.6%. This is also an exceptionally young population with a median age of around of 18 and one that is becoming increasingly urbanized. These factors reinforce one another. Population growth expands our addressable markets, economic growth supports greater spending on digital services and a young increasingly urban population activates the adoption of digital services, both in terms of data and financial services. Connectivity remains our core growth engine, but penetration and usage across our markets are still relatively early stages. Unique impetration is substantially below the levels seen in other regions. Smartphone penetration is expected to increase from around 60% to 82% by 2030, while data traffic is expected to grow by approximately 2.6x over the same time frame. Within our existing customer base, we also have a significant conversion opportunity. We currently have around 71 million 4G and 5G data customers compared with a total customer base of approximately $194 million. Our growth opportunity, therefore, comes from several sources, adding customers as the population grows, converting feature phone users to smartphones, increasing data adoption and supporting greater usage as customers become more digitally engaged. Our focused network investments is designed to ensure that we have the coverage and capacity to ensure that demand has -- the demand as it develops. We are also extending our capabilities into adjacent markets where penetration remains extremely low and where our existing infrastructure gives us a natural advantage. Home broadband penetration across our footprint is currently around 3%, despite more than 30 million households having the affordability to access these services. We can address this opportunity through a combination of 4G and 5G fixed wireless access and fiber-to-home, selecting the most appropriate and economic solution for each location. The data center opportunity is similarly compelling Africa currently has less than 1 megawatt of hosting capacity per million people, substantially below other regions. With more than 83,000 kilometers of fiber an extensive network footprint and established customer relationships. We are uniquely positioned to support the next phase of digital infrastructure development across our markets. These businesses can broaden our sources of growth by highlighting the value of our core network. Sustaining growth requires continued investment, but it also requires us to deploy that capital with precision. We are using satellite geolocation technology to map and analyze our 9.4 million square kilometer footprint at a 1 square kilometer resolution. This goes gives us a granular insight into network availability, utilization and performance, allowing us to direct investments towards the areas of greatest demand and potential return. We're also using targeted partnerships to complement our terrestrial network where traditional deployment has its challenges. Our collaboration with Starling is 1 example of how adjacent technologies can extend reach and enhance customer experience. Let me briefly touch upon this. As I know, this remains a highly debated topic. I think the traditional telecom operators are well positioned to compete against a more widespread satellite offering. Firstly, distribution. This is a key competitive advantage for the telecom business. Large parts of the population remain cash based. While telcos already have extensive Asian networks and payment infrastructure to facilitate cash-based payment mechanisms. Secondly is economics. Relative to other markets globally, the ARPUs of our customers across Africa remain amongst the lowest global and affordability remains a constraint. Although the cost of satellite deployments are falling, they remain relatively high and fixed in hard currency. Thirdly, physics, capacity is constrained in dense urban environments, where the majority of revenue is generated and dose networks remain considerably more efficient with these more built-up areas. And finally, regulation and spectrum, finite spectrum availability and the considerable decade-long engagement with regulators and policymakers provide the industry with a natural advantage. As a result, we continue to see low earth orbit satellite technology as a complementary to our infrastructure rather than a substitute to it. It is for this reason, we have partnered with Starlink to enhance the customer proposition across our markets. We continue to look forward to developing our partnership further. Mobile money represents our second major long-term growth engine, only around 36% of annuals across footprint have bank accounts compared with approximately 95% in developed markets. This highlights the scale of financial inclusion opportunity across Africa. The experience of more mature mobile money markets also demonstrates how much further the ecosystem can develop. Transaction values related to GDP in Kenya are more than 3x the broader sub-Saharan African level. Within our own base, mobile money customers have increased from around 20% of total customers in September '21, to approximately 31% in September 2026. Yet this still leaves substantial room to increase penetration. Growth will come not only from adding customers, but also from deepening usage through more payments, merchant services and financial service use cases. As smartphone and app adoption increase we should also benefit from improved customer experience and stronger unit economics. We therefore see a long runway for both customer growth and greater wallet adoption. The successful IPO of Airtel has provided an external valuation reference and greater transparency around the value of the business. Crucially, however, Airtel Africa shareholders remain very much leveraged to this to its future growth story. Airtel Africa retains a 77.85% interest in money. As a result, our shareholders continue to have substantial economic participation in its future earnings, cash flow and value creation. The operating relationship also remains unchanged. Airtel Money continues to benefit from the telecoms platforms distribution, customer access and shared services with transactions conducted at an length and subject to strict corporate governance. This listing has, therefore, not removed at Airtel money from Airtel Africa investment case. Instead, it has created greater visibility over the value of our retained interest while preserving the strategic alignment and operating advantages that support to growth. Bringing all of this together, Airtel Africa continues to benefit from 2 powerful and complementary growth engines. Mobile services have delivered a 5-year revenue compounded annual growth rate of 18.4%, supported by connectivity, smartphone adoption and rising data consumption. Mobile money has grown even faster, delivering a 5-year revenue CAGR of 28.8% as customers adopt more payments and financial services. Together, these businesses have supported group revenue CAGR of 20.1% and and EBITDA CAGR of 22.3% over the period. The higher rate of EBITDA growth also demonstrates the operating leverage available as we scale. We remain positive because the structural opportunity is significant. The penetration runway remains long and our strategy has already demonstrated its ability to convert that opportunity into sustained growth. We will continue investing with discipline, expanding our networks and digital ecosystems and building new sources of growth. That combination gives us confidence that Airtel Africa can continue to deliver industry-leading growth and create long-term value for shareholders. And as finally, as you have seen from our results, our strategic focus has consistently driven positive momentum across the business and reflects our strong track record in execution. Key to delivering value to our stakeholders is to drive continued growth across our base. Our focus will remain on investing in our network and on further expanding our distribution to be closer to our customers, while at the same time, looking at new opportunities for growth. Our focus is not simply on sustaining growth but on delivering profitable growth as we have demonstrated over the last 6 months. Importantly, we will not prioritize short-term cost efficiencies at the expense of future growth, and we'll continue to invest to capture the significant opportunities across our markets. And with that, I would like to thank you all for your attention today and would now like to open the floor for questions.

[Operator Instructions] Our next question comes from Mollie Witcombe with Goldman Sachs.

I have 2, please. Firstly, on Nigeria and trends. Maybe it would be good to talk a little bit more about growth trends. How would you describe the competitive environment at the moment in Nigeria? Obviously, the data customers, the data customer adds have dropped a little bit quarter-on-quarter, the ARPU as well. So just a little bit of color on how you're seeing the competitive environment would be great. And secondly, just on CapEx, looking at Slide 17 that you showed us with the free cash flow, and you talked a lot during the presentation about the balance sheet flexibility that you have but you've reiterated your CapEx guide. So I guess my question is, why are you not looking to maybe invest a little bit more in terms of CapEx? I'm sure that the IRR on solar has probably improved on the mobile sites with the increase in petrol prices you're probably coming on just a little bit of pressure on equipment costs. So just maybe a little bit of color of how you're thinking about CapEx going into the rest of the year and why you're not looking to invest more at this stage, that would be great.

Thank you very much for those questions. Let me first address the question that you asked on Nigeria. On Nigeria, we continue to remain very positive on our growth prospects of Nigeria and also -- if you look at our underlying performance in Nigeria continues to remain very strong, which is demonstrated in our very solid base growth that we've seen in Nigeria, which is circa 15%, 15%-plus. A very strong increase in penetration of smartphone customers. which is also leading to a very aggressive and a very healthy increase or improvement in our data consumption. So demand for our services in Nigeria continues to remain very, very strong. In terms of -- we've seen slight slowdown in the data ARPU growth because as we recruit more customers, we offer more for more, and that pricing in the short term before the consumption goes up. A very strong increase in data customers as data customers come in at the lower end of the consumption and also ARPU. And higher-end customers as they consume more, they move to their revenue per GB continues to slide as our pricing is -- the pricing principle is more for more. We see in the short term some amount slowdown in the ARPU excavation. From a competitive environment point of view, Nigeria continues to remain a very competitive market. But we haven't seen any material change in competitive intensity. The pricing continues to be rational and we are not seeing evidence of a price war -- and therefore, at this point in time, there are no areas of concern from a competitive intensity or a price war in Nigeria. Our relative growth, if you ask me is -- it reflects very strong execution in Nigeria, continued data demand and the benefits that we are accruing out of significantly stepped up network investments. So that's on Nigeria. Your second question is on CapEx. So if you look at CapEx in the first half, our CapEx has gone up to -- it's almost doubled over the first half of last year. So $657 million versus circa $318 million of last year. So CapEx investment has significantly stepped up. We are also encouraged by the results that we are getting from our capital investment wherever we've invested. We continue to invest in expanding coverage, adding capacity, newer areas of growth. Having said that, our CapEx guidance for this year continues to remain at $1.1 billion. As I said, our we are currently very satisfied with the results that we are getting out of our CapEx investments, and we remain open to possibilities.

Our next question will come from Rohit Midi with Citi.

Congratulations on your net of results. A couple of questions from my side, please. Firstly, a follow-up from Mollie's question around Nigeria performance. And I understand the data, the data data revenue growth has been much lower than what you did on traffic. But this is kind of first quarter, where you see this kind of step down in revenue per GB. I mean, if you compare with last quarter where revenue per GB was kind of stable, but this is the quarter where you see step down? And also, you see there's a step-down in the service revenue growth from the last quarter. So just trying to understand how you see the trajectory from here for following 2 quarters? I mean do you see the kind of step down -- further step down in revenue growth in Nigeria? Second question is basically on the upstream cash upstreaming if you can give any color there, particularly in Nigeria, I believe you had losses on your balance sheet until end of last year. Can you give us kind of timeline when you expect you might turn positive in Nigeria on balance sheet and where you can start upstreaming cash from there? And then overall upstreaming position from different markets, are you seeing any kind of constraints in terms of getting cash out given resin movement in FX that we have seen. And then third question is basically on the oil. Obviously, the oil prices have remained elevated during the first half. So -- and kind of mitigated part of it from the efficiencies. But do you see more efficient more kind of potential for further efficiencies that can mitigate further pressure on margins from oil in the second half Yes. SP1 So thank you very much. And let me first address the question that you asked on Nigeria. If you look at our Y-o-Y data growth continues to remain healthy at -- we've also seen improvement in our ARPU growth in Nigeria at about 16% or so. Having said that, when you talk about your sequential, so there are 2, 3 reasons here, which is what I would like to explain. First is -- in Nigeria, we had -- and this was a conversation in the last quarter. Our airtime loan services, there was some disruption in the last quarter. While we had reinstated our loan partners, this -- the recovery took slightly longer than expected, and that has impacted the overall Nigeria performance at one level. At a note that the another reason is -- last year, when we took the price adjustment, the second quarter saw the full impact of pricing in Nigeria in the second quarter of last year. And we are now lapping over that price impact, which is the reason why you're seeing, for example, Y-o-Y growth slowing slightly. Having said that, if you look at the underlying metrics, which is what I was talking about, -- our investments that we have made in Nigeria, they have led to a very strong exploration in base growth. Nigeria has not seen a 15% base growth for many quarters in the past. Our acceleration in smartphone customers is also leading to a very strong -- a very aggressive increase in data consumption. Data consumption is also supported by the response that we are getting in Nigeria where we've made investments in the home broadband category, and that's also giving us benefits in Nigeria. We are -- we have also stepped up investments in Nigeria on B2B side of the business, and we remain very positive about the prospects of that. While it is at a very small base, even on our ethane money performance in Nigeria has stepped up. So we remain at an overall level very positive about our growth prospects in Nigeria, and we continue to invest in Nigeria. The overall environment in Nigeria also remains continued for growth. So net-net, while we don't give any future guidance, but Nigeria, we remain very, very confident about our growth prospects in Nigeria.

Yes. So I'll take your next 2 questions. On the Nigeria upstreaming, this calendar year, most likely, we will turn a retained earning positive for Nigeria. -- after this massive devaluation, which we have seen it in Nigeria 3 years back, we have turned into RE negative. And most likely, if the macroeconomic situation of currencies remain stable, we should from next year onwards should start rebating the dividend from that area. So that's your answer to a question on Nigeria repatriation or upstreaming status. On the oil prices, as Sunil has said in his presentation that we have absorbed almost all of the increased elevated oil prices in the quarter 2 financials. I have reiterated somewhere 2 quarters back that the impact of the oil price is roughly 2% to 2.5% on Nigeria market -- sorry, on overall EBITDA margin. And currently, as we speak, I think the geoeconomic status is still not stable. The oil prices are still going up, but we don't see any material impact, which will be coming on to our financials, if the oil price continues to where they are today.

Your next question comes from Madhvendra Singh from HSBC.

Can you get confirm you can hear me okay?

Yes.

Just a couple of follow-ups. In Nigeria, ARPUs are still lower than East Africa, even -- so do you think that's a fair state of affair given how big Nigerian economy is and the history of Nigeria as well. So basically, are you happy with this ARPU? And do you think this can get higher than East Africa at all? And do you have any time lines in mind if you could share there? And then the second question is on the dividend policy. -- given that your earnings growth actually have been quite strong, cash flows are very healthy, very strong. Balance sheet is also very strong. So do you think that dividend guidance is conservative, just really limiting it to mid- to high single-digit growth while rest of the business is growing so strongly. So that's the second question. And then the final one is on your comment on the Starling partnership. I just want to understand the extent of it. Will this include D2D device side as well? Or is this mostly the backhaul base?

On the Starlink you're asking?

Yes.

Okay. So let me first try and address your question on Nigeria ARPU. The first is Nigeria ARPU at an overall level is lower than East Africa that you pointed out. The big difference also is on the heat on the money side of the business. And from a East Africa point of view, money business contributes to the incremental ARPU for Africa -- for East Africa. Having said that, there is a slight gap that we have between East Africa and Nigeria. Nigeria has a significantly large smartphone penetration and which is at about 56%, 57% of the total base. And that is is also significant base also sits at the lower end of the market. That's where the gap and the ARPU is. But at the same time, this is what allows us and offers us an opportunity to continue to push for consumption and grow the business over a longer period of time. The sheer size of the population. So if you look at a $230 million plus population, is actually where the larger opportunity, yes. And it's relative to overall economic situation in Nigeria. We continue to drive consumption and penetration, which is a big opportunity right now. And as consumption grows over a period of time, we'll continue to also see gain in ARPU. So 2 things really. The first is at a consol level, the gap is the money ARPU between East Africa and Nigeria. And the slight difference that we have in the data is primarily on addressing a large population, and we continue to drive penetration and consumption. And this gives us a significantly bigger opportunity to continue to drive overall data revenue. The other question that you had is on Starlink. So Starlink, what we have is a there are 3 parts to the Starlink partnership that we have with Starlink, this agreement that we signed -- the first is on back on. The second is enterprise. And third is the direct-to-device services. We use Starlink very effectively in a few markets for backhauling. It is improving our ability to reach out to far-off areas where deploying fiber is very difficult or is not economically viable, and it's bringing down significantly of cost of backhauling. The second partnership is on enterprise connectivity. We have started offering enterprise connectivity to our customers across markets wherever we have the regulatory approvals to sell and offer enterprise connectivity. The third is we have launched direct-to-device services in DRC and in Uganda, and it's very early. We've just about launch, and we are still seeing response. And once we have a better read of our services that we have offered, we will share more information and data on that. But our overall, all these 3 is currently in play at this point in time, the agreement that we had to start.

On dividend, sorry?

Yes. So our capital allocation policy remains same. And as far as the policy on the dividend, it's been concerned, I think we need to look at it not from a dividend point of view, but the total return on shareholders what we are providing. We are a growth stock and eventually needing a lot of investment as is been underlined as part of our investment strategy and the investor presentation. So we -- at this stage, we remain consistent with the dividend policy of mid- to high single-digit growth. And other part and other revenues through which we are returning the shareholder money in is the buybacks. And as is a great broad stock, we have seen the incremental capital investment, what we are doing it, what sort of result is generating and it's been reflected in a CAGR share price increase over the last few years. So I think that's what we've been looking at.

Understood. Just one follow-up on the direct-to-device thing. If you could confirm the services under Airtel brand or it is under stalling brand?

So it is Airtel because the customer relationship is managed by us. The customer experience is managed by us and end-to-end service is managed by us. The customer continues -- while the customer is on the directional network, the customer continues to remain to see Airtel. It's only when the customer moves to outside the peripheral coverage. -- the customer sees Airtel and StarLink on the phone screen. But it continues to remain under Airtel brand. The entire relationship is managed by us, experience is managed by us.