Airtel Africa Plc (AAFRF) Q3 2024 Earnings Call Transcript

Airtel Africa Plc (OTCPK:AAFRF) Q3 2024 Earnings Call Transcript February 1, 2024 7:00 AM ET

Company Participants

Olusegun Ogunsanya – MD, CEO & Director

Jaideep Paul – CFO & Director

Conference Call Participants

John Karidis – Deutsche Numis

Rohit Modi – Citi

Faisal Al Azmeh – Goldman Sachs

Jonathan Kennedy-Good – Prescient Securities

Madhvendra Singh – HSBC

Oluwaseun Arambada – FBNQuest

Cesar Tiron – Bank of America

Linet Muriungi – Absa Bank Kenya

Operator

Good day, ladies and gentlemen, and welcome to Airtel Africa’s 9 month ’24 Results. [Operator Instructions] Please note that this event is being recorded.

I will now hand the conference over to Segun Ogunsanya. Please go ahead, sir.

Olusegun Ogunsanya

Thank you for joining us on today’s call. And as always, joined by our CFO, Jaideep; and Deputy CFO and the Head of Investor Relations, Pier. We’re going to be asking you a question very shortly. But first, I’d like to provide a brief overview of the performance over the last 9 months.

We have reported a strong operating performance in constant currency with revenue growth of 20%, leading to reported revenues of $3.86 billion over the 9 month period. In Q3, third quarter, we saw constant currency revenue growth accelerate from 19% in Q2 to 21% in Q3, reflecting continued success in our strategy across all of our 3 regions. This strong top line performance, combined with further cost efficiencies, have driven EBITDA 21.9% in constant currency terms, leading to an industry-leading EBITDA margin of 49.4% for the group. Given the strength of this performance to date and according leverage, the board has approved a share buyback scheme of up to $100 million starting in early March 2024 over a 12-month period.

On a reported currency basis, our results have been impacted by the recent currency devaluation we’ve seen across a number of markets, particularly in Nigeria where following the sharp devaluation in June, there was a further 22.5% devaluation over the last quarter. And in Malawi, the currency devalued by 44% in November. This has led to a decline in reported revenues of 1.4% over the 9-month period, with EBITDA largely stable over the year. This backdrop has led to a restatement of U.S. dollar liabilities in our costs, resulting in a significant increase in our finance costs, which has impacted our EPS for the period.

The recent currency moves do not impact the strategy across our markets, which is maximizing the growth of our business in order to limit the impact of currency headwinds. We will continue to invest as our mission to transform lives by providing essential, reliable services at an affordable level becomes even more important.

Before discussing our performance across our 2 main reporting segments, I’d like to highlight our Q3 constant currency performance on a regional basis, including both mobile services and mobile money.

In Nigeria, we saw an acceleration of our growth to 24.7% in Q3, resulting in a 9-month growth of almost 23%. In East Africa, revenue growth of 25.3% was about 1 percentage point faster than the previous quarter. The Francophone Africa region also saw a similar acceleration in growth to 10.6%.

Now I’ll begin by focusing on the performance of the mobile services segment: our voice and data business. The strong demand for services across our footprint, combined with our focus on affordability and the current inflationary environment led to a 9.1 percentage increase in the customer base, which when combined with ARPU growth of 8.6%, resulted in constant currency revenue growth of 18.6%.

In Nigeria, constant currency mobile service revenue grew 22.7% over the 9-month period. And in East Africa, it grew by 21.2%. Francophone country was up 10.3%. Trends in voice remain very encouraging, with revenue growth over by 11% in constant currency. The very low levels of SIM penetration and increased minutes across our network continue to support [ evolved ] performance. The growth this quarter is further supported by 28.5% growth in data revenues as our focus remains on increasing and improving the network coverage and capacity to drive increased data adoption. We currently have over 34 million 4G customers across the 14 countries. It has increased by almost 45% over the year and only 23% of our total customers and 55% of our data customers are currently using 4G, giving us the confidence in sustained data growth going forward.

The mobile money business continue to see a very strong performance with a 3% constant currency revenue growth in Q3, which is an acceleration from the previous quarter, and it is the fastest-growing mobile money business in Africa. This strong growth was driven by continued customer growth of almost 20% and further enhancement of the mobile money ecosystem, driving transaction value almost 35% higher in constant currencies.

As previously noted, the strong top line performance, combined with the continued focus on cost efficiencies, supported EBITDA growth of 21.9% in constant currency terms, resulting in a 47 basis point expansion in our EBITDA margin to 49.94% in the 9-month period. This margin improvement was particularly pleasing, given the increased energy cost and FX pressures in the period. It is a reflection of our focus on cost optimization. And as I mentioned earlier, finance costs were materially impacted by the exceptional currency devaluations seen in Nigeria in June and more recently in Malawi in November, which resulted in a $330 million after-tax charge impacting our earnings per share. After adjusting for these losses, EPS before exceptional items came in at $0.071, down 35%, reflecting the many currency headwinds, which impacted FX losses and transition impact of the currency weakness in our operating results.

As many of you know, the naira continue to see further pressure in Q3, resulting in a $140 million FX loss after tax, which would not classify as an exceptional item in this quarter. If you adjust for the impact of this naira devaluation over the full 9-month period, EPS before exceptional items would have been $0.125.

Briefly, in terms of the balance sheet at the end of December, our leverage ratio has reduced to 1.3x, EBITDA from 1.5x despite the impact of currency on our EBITDA. Our net debt declined to under $3.3 billion from over $3.6 billion a year ago. One of our key priorities over the last few years has been the derisking of our balance sheet by reducing Holdco debt and reducing other dollar debt. At the end of December, we had $560 million of cash at the HoldCo. This will allow us to fully repay the $550 million Holdco debt that is due for repayment in May of 2024.

Our capital allocation policy remains unchanged. Our priority is to continue to invest in the business to ensure we future-proof operations for sustained growth and we therefore reiterate our previous quoted guidance of $800 million to $825 million for this financial year. The success of our balance sheet deleveraging has also enabled us to capitalize on other new opportunities such as our new data center business that we launched in December last year. Furthermore, we will continue to actually reduce our balance sheet FX exposure and continue to upstream cash from our various Holdco’s to support our shareholder return priorities.

As you have seen from our results, our focus has contributed to strong operational and financial performance, and we continue to demonstrate positive momentum on all of our key operating metrics. Our net time focus will remain on investing in our network and on further expanding our distribution infrastructure to be closer to our customers, at the same time, building new services for future growth.

Clearly, our reported results have been impacted by the currency devaluation across the number of markets mentioned, Nigeria, Malawi, Zambia, and Kenya. But let me give you 3 ways with which we aim to limit the impact that this has on our business. First, our priority is to maximize top line growth to offset potential currency weakness. This has achieved reinvestment into improved network coverage and capacity to drive very strong subscriber growth and facilitate increased usage. All of this is underpinned by an attractive customer proposition and user experience.

If you look at what we’ve done over the last 5 years, it will help provide some context. In constant currency, over the last 5 years, Q3 revenues have increased by more than 18% CAGR, and EBITDA by over 22% CAGR. Incorporating the latest currency movements, this has translated into reported currency 5-year CAGR of 9.6%, almost 10% in reported currency, and EBITDA of over 12%. I think this reflects the strength of the business model, despite the macro headwinds which we sometimes face.

Secondly, we look to limit the impact that FX has on our operational performance by minimizing foreign exchange-based costs. Once again, over the last 5 years, despite the currency headwinds, our Q3 reported EBITDA margins have expanded 5.7 percentage points, reflecting once again the success of our strategy.

And finally, we aim to reduce the amount of foreign exchange liabilities in our balance sheet. Currently, 40% of our market debt is in foreign currency. A year ago, it was 55%. However, excluding the Holdco bond which is due for repayment in May, our foreign exchange debt amounts to only 21% of total market debt.

It is this strategy that we believe differentiates us. Our approach to the market, the scale of the opportunity and the willingness to invest significant capital into the market to capture this opportunity has not changed. We are confident that this approach will continue to support our investment case and further enhance shareholder value.

In the light of this performance and, given the strength of our balance sheet, which is clear from the results we have published today, the board has approved the intention to launch a share buyback program of up to $100 million, beginning in early March over a 12-month period.

And with that, I’d now like to open the line for questions for which I’m going to be joined by Jaideep and Pier. Operator, I now hand over to you to facilitate the Q&A session. Thank you.

Question-and-Answer Session

Operator

Thank you very much, sir. [Operator Instructions] Our first question is from John Karidis of Deutsche Numis.

John Numis

Firstly, I wanted to thank Pier for all the help and advice he’s given and wish him the best for the future. Secondly, I’d like to make a request, please, that we were going to have a roundtable discussion after the Q2 results. This couldn’t happen, unfortunately. Maybe you can consider doing it now. And then 2 questions. Firstly, on the data center business, it would be really nice to get some sort of basic information about how many data centers do you have or do you plan to have, where are they, when will the next one open, please. So that’s on the data center business.

And then on the mobile money business, specifically in Nigeria, I understand that when customers deposit money into Airtel Money, you have to pay agents and they earn commission. So as people deposit money, you are actually having a startup loss. Is this — how significant is this, please? And how significant has it been? And of course, the [ $6 ] million question is, when are you likely to start monetizing mobile money in Nigeria?

Olusegun Ogunsanya

I’m sure Pier is thankful for your kind words, so I’ll let him relay it to you on that. On the roundtable event, my Investor Relations team would get back to you as to when we’re going to have the roundtable.

Let me take your data center question first. We got about 48 captive data centers across our portfolio. Those are being used by adjacent business for normal businesses. What we’re talking about are telco-agnostic data centers. We put in 2, one in Nigeria, Lagos, a second one in Nairobi, Kenya. The one in Nigeria is about 36 megawatt and the one in Nairobi is going to be about 7 megawatt. So between the 2 data centers, we’re looking at a capacity of over 40 megawatt. Very early days, we’re going to break ground in Nigeria in the next couple of weeks, and the one in Kenya would follow soon. Construction takes about 2 years. So we’re looking at them coming into operation probably sometime next year or ’26. That’s why it is 2 data centers.

Beyond these 2 data centers, which are going to be telco-agnostic, we’ve got a number of cable landing stations that we’re also going to have smaller data centers. These are the ones we have in Tanzania, we’re also looking at 1 in DRC, 1 in Gabon. But the big data centers that are going to be commercially operated are the ones in Nigeria, massive one, that is 637 megawatt. The smaller one in Nairobi, that is going to be 7 megawatt. Those are the key stars in our portfolio.

We did talk about the mobile money business, like I’ve said to you few quarters ago, the focus of our business in Nigeria is to just create a good base for a viable business. And the base is going to stand on 2 key pillars. One pillar is a very respectable customer base, which we keep building. And the second is agent network, not only agents, agents with cash and float that can service the market. We started this journey a few quarters ago. We continue to build on the infrastructure required to make this possible and I’m very happy with the progress we’ve made.

Unfortunately, a few months ago, in December, we got a new direction from the Central Bank that all customer require different levels of verification. That will [cause] back a number of customers. But we’re working on this to comply with all the requirements of CPA. And our focus remains on 2 things: expanding the customer base, expanding the agent base, agent float and cash balances. Those are the 2 clear priorities we’re going to continue to focus on before we start thinking of monetization.

And in terms of us paying money to agents, when they cash in, that’s actually a feature of the mobile money business in most part of Africa anyway. Where the agents are providing the services, they’re like mobile ATMs, so they collect money and once they do that, we need to pay them. We collect money from the customers when they cash out. So that’s the model of mobile money business in most parts of the world, especially in Africa.

Operator

The next question is from Rohit Modi of Citi.

Rohit Modi

Segun, I believe you will be there next quarter, but good luck for your future role. It’s a couple of questions from my side. Firstly, if you could give us more color around the situation in Nigeria right now in terms of getting cash out, what rates you are getting, how easy it is now, or how difficult it is now compared to past. Secondly, on your liquidity position, you do have a refinancing coming, you do have a redemption coming, and you do have cash which you have highlighted. But just trying to understand, given most of your CapEx is in USD, would that mean that you do need a refinancing in future? And what kind of interest cost do you expect we should put in our models for following future years? Thirdly, in Nigeria, in terms of the price increase situation, are you still negotiating with the regulator, just as being follow-up or this is something which will not happen, looks unlikely in near future?

Olusegun Ogunsanya

I’m going to just answer them randomly. Let me start with the liquidity position and I’m sure Jaideep will come in and offer more light to this. We do have the $560 million cash in a bank to repay the Holdco debt which is due for payment in May. So that is done. We have enough money to pay each day if we choose to. We’re going to pay [indiscernible] towards the end of summer in May. So that is settled. And Jaideep will come in at the end to just talk about that with my liquidity in general.

In terms of the pricing in Nigeria. Pricing in Nigeria is regulated. You need leave of the regulator before you take price off. But like I’ve said numerous times, our model is quite different. We don’t use price to drive the revenue accretion. We use customer addition and usage growth, all of our activities are geared towards — on building more and more customers, given the very low level of SIM penetration in our countries. This is not different in Nigeria as well.

The second thing we do is to put a lot of — that we position out there that will drive usage. We continue to expand our 4G infrastructure, we continue to expand our normal 2G coverage. Those are the things we do to drive usage. We continue to expand our distribution infrastructure. Of course, if pricing comes, it’s a sweetener, but we continue to engage the regulator on appropriate pricing, given the level of penetration in Nigeria. Is it a must have? No. Is it nice to have? Yes. And we’re going to continue to work with the regulator to make sure this happens.

So once again, if you look at our performance in Nigeria, we’ve grown about 25% in the last quarter. For the 9 months, it’s about 22%, 23% for the 9 months up to December. It shows that the strategy is working, which is basically leveraging customer addition, leveraging usage to drive revenue accretion. That’s a lot more sustainable than price inflation.

And what was the third question? Jaideep, you want to come in and talk about liquidity management before I now come back on the issue of Nigeria, which — this is — I’m not an economist, but we just have too many issues we’re dealing with in Nigeria, we’re dealing with inflation, we’re dealing with the devaluation, we’re dealing with different outlook for GDP growth in the country. These are multiple challenges facing the country at the same time. But I believe that the government is looking at all these issues as well. We will continue to drive our business in a way that is delivering value to customers and to shareholders. We’re not going to shy away from investing in largest country in Africa in terms of population, 220 million people. The demographics are quite good, many young people, still relatively low SIM card penetration.

So despite those challenges around inflation, challenges around devaluation, challenges around low GDP growth, I still firmly believe that Nigeria is still a very attractive market to be in, long-term. Short-term, there will be temporary challenges. For long-term, we don’t have any doubts that we’re going to remain a big player in Nigeria for a very, very long time.

Jaideep, you want to just talk about liquidity management in terms of — I’m not sure what the gentleman wants.

Jaideep Paul

Thanks, Segun. So to answer your first question, we would not require any refinancing for paying the Holdco debt, that bond, because as Segun mentioned that — and you have seen in our financials, that we have $560 million and we continue to upstream even in this subsequent period. That was on 31 December. So we have sufficient cash to take care of the bond repayment, number one. Number two, we have been able to upstream almost $530-plus million during the last 9 months, not only from Nigeria, of course, Nigeria volume has come down because of the scarcity, but across various geography. We are blessed to have 14 countries or diverse geographies from where we can continue to upstream money. And that’s what we continue to do.

From Nigeria specifically, we have been able to upstream almost about slightly short of $100 million. And this time, we have utilized this $100 million to pay off our vendor to reduce our dollar debt. So we have been using that cash to reduce our dollar liabilities in the balance sheet. And overall, I can tell you that we have taken a program for de-dollarization of the debt for last about 1 year or so. And consistently, we have been able to reduce the dollar exposure in many countries. Currently, if you look at other than the Holdco $550 million which will be paid off in May, other than that, whatever debt you are seeing at Opco level, roughly about 79% of that is in local currency. We have been able to de-dollarize it from a lower than 50% level now to about almost touching 80% level. Of course, that’s why you have seen the interest cost has gone up a bit. But then the risk of devaluation, et cetera, for managing the Opco level debt has gone away.

So now the earning is in local currency, debt is in local currency. There is no mismatch anymore, except that 20%. And out of that 20%, a large part is actually sitting in Nigeria, which we had to take, as we mentioned in the past, that we have to take that debt to survive the situation which we are going through for last couple of years. And now we’ve started repaying those debt. So broadly, that’s the way and we continue to do the upstreaming and that’s what — one of the reason you have seen that board has approved the buyback of shares up to $100 million since we have that confidence. So we continue to do the upstream from all countries, wherever possible, we’ll continue to do that.

Operator

The next question is from Faisal Al Azmeh of Goldman Sachs.

Faisal Al Azmeh

Just starting off with your comment on margins, obviously, you’ve been effectively working on enhancing margins and kind of partly to offset the current currency environment. As we think about the room that remains in terms of how much more you can do on the margins front, how should we think about next year and the year after? Do you feel that you’ve maxed out what you can do or there’s more potential? And that is obviously excluding any pricing impact. So that’s my first question. And then my second question just relates to 5G. Maybe if you can just give us a bit of an update. We know that you’ve mentioned in the past that it’s still kind of a small part of what the countries have in mind. Has that changed at all?

Olusegun Ogunsanya

Let me start with the margin because you know, as a policy, we don’t give guidance on future EBITDA, but we’ve got a very clear strategy around the margins. And that is for every $1 that we add to the top line, at least minimum $0.50 should go towards the bottom line. We’ve met that requirement quarter after quarter. And how do we do this? By just having a very strong focus on OpEx control, by looking at all of our processes and redesigning those processes to ensure that this flow-through is maintained.

The other thing we do is to continue to grow the top line anyway and we’ve — quarter after quarter, we expand our top line by very high double-digit. That has supported our drive to increasing EBITDA. I must confess, the last couple of quarters we’ve seen major headwinds coming from fuel in a number of countries, Nigeria specifically, few countries in East Africa. We also continue to see the impact of devaluation affecting our operating margin. But despite this, we maintain an expanded EBITDA slightly this quarter. Going forward, I would talk about maintaining EBITDA. I’ll talk about resilient EBITDA and the opportunity for further expansion. I’m not able to talk about it for now. All I can say is like we would continue to maintain EBITDA. Currently, as I speak now, we’re probably one of the most profitable telco in Africa at 49.4%.

And another thing is, we continue to work on, one, with our telco partners, we’re looking for ways of converting one of our cost driver, which is diesel. We’re looking at installing more solar panels, more lithium batteries, more grid connection. We’re looking at converting some of our recharges from physical recharges into digital recharges through banks, through our mobile money. We’re working at transmission infrastructure to reroute some transmission paths to more efficient path. All these opportunities continue to evolve and we continue to exploit them. But I’m very conscious of the ongoing challenges around diesel, ongoing challenges around devaluation, but we would do whatever it takes to maintain our EBITDA at the current margins.

Your second question around 5G. We bought the spectrum a couple of years ago. We spent $280 million roughly to buy 5G spectrum in Nigeria. And across many countries, we do have the spectrum. We have launched 5G in Nigeria. We’ve launched 5G in Zambia. We’ve launched 5G in Kenya. We’ve launched 5G in Tanzania. These are very early days. And one clear opportunity I see for 5G is in home broadband. You know the fiber infrastructure in Africa is very little. And 1 clear pillar for driving penetration of home broadband is using the wireless. And that is one clear use case for 5G.

In terms of mobility, I still believe that the opportunities for rapid expansion of 5G mobility is still limited in the short term. Medium and long-term, yes, we’re going to see expansion of the devices. Devices are still very expensive in Africa and devices drive usage. When you don’t have the affordable devices, it’s going to be difficult for people to really consume 5G. But we are going to pursue 5G as a driver of home broadband by having routers and MiFis that are able to consume 5G for fixed broadband and usage.

So that’s where we are. We’ve deployed a number of sites in 4 countries, most of them in Nigeria, some in Zambia, some in Tanzania. We’ve seen some [indiscernible] of usage, but the clear use case for now will be on home broadband.

Operator

The next question is from Jonathan Kennedy-Good of Prescient Securities.

Jonathan Kennedy-Good

May I ask what percentage of your Nigerian OpEx is dollar-based? And then furthermore, in terms of the derivatives that you have to hedge your exposure in Nigeria, what proportion of those derivatives hedge OpEx versus balance sheet items? And then finally, just on your cash flow statement, I saw that there was a massive investments or, call it, investment with banks of $850 million. Is that related to margin for these derivatives or is it another item?

Olusegun Ogunsanya

Okay. Let me take the OpEx first and Jaideep would come in on the derivatives and the cash flow question. In terms of OpEx, like we’ve done in many other calls, we’ve moved away from a foreign currency operating expense to mainly local currency. And in Nigeria, the percentage of expenses that are denominated in foreign currency is about 7% or less. We’ve done this over the last couple of years. So to a large extent, our operating expenses are more or less from FX fluctuation, given that we’ve got less than 7% of OpEx being denominated in foreign currency.

In terms of the derivatives, Jaideep, do you want to comment on this?

Jaideep Paul

Yes. So we have a standard hedging policy, which we apply, that is applicable for both OpEx and CapEx, though not necessarily that’s — these derivatives are sometimes deliverable, delivered, not delivered. But we do take the hedging in terms of both OpEx and CapEx, if it is dollar denominated. And that we consistently apply.

In terms of your second question on the cash flow, that $840 million, what you are referring to, is the trust balance. It’s a trust account balance. This is the customers money which is kept in the trust account for Airtel Money. So it’s not — that’s why it is a restricted cash. It’s not available for us. But it is part of the cash flow as per the standard that we need to disclose as a part of the cash flow document. But that’s relating to the Airtel Money trust account.

Jonathan Kennedy-Good

And I presume that — yes, okay. So there was a significant inflow of mobile money deposits, I would assume. And which markets were driving that?

Jaideep Paul

Sorry? Mobile money, what?

Jonathan Kennedy-Good

I presume there was a significant inflow of mobile money deposits then, or am I incorrect?

Jaideep Paul

See, almost all the markets of mobile money, you can see the transaction volume growth which has been reported. So there is a significant jump in the transaction volume over the last one year. And that transaction volume is an indicative factor that how much additional cash is coming in the trust accounts. So both are linked.

Operator

The next question is Madhvendra Singh from HSBC.

Madhvendra Singh

A couple of questions from my side and one clarification also. So the first question is on your revenue growth profile. So another quarter where voice growth has really surprised positively, while data growth kind of remains in the similar territory. So if you could explain what is driving this resurgence in voice growth. Is there any specific commercial offers, campaigns which you’re running on the voice side? Are you setting up more towers? Are you expanding your coverage? So just want to understand this voice growth.

Second question is around your CapEx plan. I understand it is a bit too early, but given how naira rate is evolving, if you could talk whether you would take the new naira rates into account for your future CapEx plans. Are you going to be focusing on the CapEx to sales ratios, maintaining that at certain levels? If you could talk about that, that will be great. And finally, if you could just talk about what’s going on in the FX market in Nigeria right now and whether you have done — participated in any FX transactions recently, like any extremes recently at the new rates which are flagging in the market right now, like NGN 1,400 and so on. And what would be your rate of — is that the rate you will be translating the earnings for the period going forward if this rate stays around this level? Is that the relevant rate we are looking at?

Olusegun Ogunsanya

Let me start with the question on voice. In my opening remarks, I did mention the very low unique SIM card penetration in Africa and most of our territory is still very low. And if you combine it with the low levels of voice consumption, let me give you some figures, on the average, the voice consumption is about 290 minutes per month for every person — there is like 290 minutes in our footprint in Africa. In India, comparatively, it’s about 600 minutes, more than twice. That shows the many opportunity available for a lot more people to talk a lot more in Africa. So if you combine these two metrics, the very low level of unique SIM card penetration, the very low level of voice minutes consumption, that explains why we continue to grow voice quarter after quarter.

And on top of this, we continue to expand our distribution infrastructure, our reach into rural areas, our more efficient distribution in urban areas to really drive penetration of our SIM cards., availability of recharges through digital means, through mobile money. These are clear drivers that bring a lot more people to the franchise. And that’s why you see — going to continue to see increase in voice revenue quarter after quarter, year after year in our footprint in Africa. And we’re very bullish about capturing this growth by continuing to invest in capacity in our territories. On the average, we roll out almost 3,000 sites every year to drive additional coverage in many parts of our footprint.

Nigeria, which is one of the largest markets in Africa, we’ve done only 82% coverage. That shows the opportunity available to bring a lot more people into the digital world [indiscernible] our coverage. And the first thing you do is to talk on the phone. So we’re very bullish about capturing this growth. We’re going to continue to invest in our territories. We’re going to continue to invest in Nigeria despite the FX challenges.

Jaideep will give you more color on the CapEx plan. Our CapEx intensity will remain around 14% to 15%. That’s what we’ve done. We’ve given guidance of between $800 million and $825 million for this year. We’ll stay within that guidance. We’re not in a position to share what the future CapEx plan would be, therefore now we say very clear that this year we’ll be between $800 million and $825 million [indiscernible] for the full year.

For the FX market in Nigeria, it’s a difficult thing to predict or to really — it’s constantly evolving. Last week was a different market. Two days ago, it was something different, yesterday was something different as well. So you really need a crystal ball to be able to predict what FX would be on a particular day. One thing I can say, we comply with our regulations. We don’t go out of any regulations and we just run our business within the rules of the game.

Yes, it’s been slightly more difficult assessing foreign exchange despite the price in the country. We continue to work with our banks, we continue to look for ways of assessing the FX required. And one thing we’ve said is like this illiquidity will not affect our investment appetite for Nigeria. We’re still going to find ways of importing the right equipment to expand the network, to offer Nigerians the opportunity to be part of the digital world.

Jaideep, anything you want to add on the CapEx piece?

Jaideep Paul

No, Segun, I don’t have to add anything on the CapEx side. Only thing is that we will probably be able to give a guidance as we complete the full year and go for the full year announcement. At that time, we will give the guidance for the next year for CapEx.

On the last question of forex and translating rate, et cetera, we always use the NAFEX rate as our translation rate. So it’s like a daily restatement of the book based on the applicable rate of that date. Right? So as we progress to quarter 4, and if this rate, what is there NGN 1,400-plus, which is there in the NAFEX window, if that is still continuing at that rate, so every day it gets restated at that particular rate. If it changes, then we’ll apply that changes for those days. So for us, every — all our business cases, all our books, everything is getting recalculated based on the applicable rate all the time. So I hope that answers your question.

Operator

The next question is from Oluwaseun Arambada of FBNQuest.

Oluwaseun Arambada

Some of my questions have been asked partly, but the first one still on your deleveraging strategy. I know you said earlier that you’re not looking at a situation where you refinance, so I guess that means you’re paying down the USD debt outrightly. But I’m also thinking, given your plans for over the next 12 months, over the next 12 months, you intend to do a share buyback [Audio Gap].

Jaideep Paul

Sorry, we could not hear the question.

Olusegun Ogunsanya

I think we lost him.

Oluwaseun Arambada

Hello, can you hear me?

Olusegun Ogunsanya

Okay.

Oluwaseun Arambada

Okay, sorry, you lost me. So I was speaking about your deleveraging strategy. I know you said earlier that you’re not looking at a situation where you refinance, that you’ll be paying down your Holdco U.S. debt outrightly, but considering the plans that you have for the next 12 months, thereabouts, you plan on doing a share buyback. And I know you’re also ever committed to investing in your network infrastructure and investments generally. So I’m just concerned about how [Audio Gap]

Olusegun Ogunsanya

I guess I’ll probably answer this if you can hear me. If you can see from the results we have announced today and from the ones we announced in the past, we have a very strong ability to generate cash and upstream the cash to the Holdco. Jaideep just mentioned $530 million we upstreamed in the 9 months ended December. So our ability to generate and to upstream cash is not significantly impacted by what is happening in Nigeria. That’s number 1. Number 2, over the last number of quarters too, we’ve improved our leverage to 1.3x from almost 2-point-something few years ago. That is significant improvement. So I really don’t see any major headwind to pay down the debt, which we have the cash to pay almost now, and also returning some money to shareholders in the form of this share buyback.

At the same time, we still reiterate our dividend policy that we described many times, that we continue to grow dividend single to — single-digit — mid to high single-digit. Those are the things we’re going to continue to do without having significant impact on our borrowing capacity.

Operator

The next question is from Cesar Tiron of Bank of America.

Cesar Tiron

Sorry, if they’ve been asked already. I have 2 questions. Can you please talk about your efforts to get those price increases and where do you stand with your discussions with the regulator? And then can you please clarify the exact cash impact of the derivative losses which you’ve recorded in the P&L?

Olusegun Ogunsanya

On the derivative issue, Jaideep is going to stick to it. For the pricing increase, like I said earlier, we need to engage with the regulator about what price to take, when to take it, voice and data, but it’s not really an imperative for us. You’ve seen in our Nigerian results as well. We’ve grown voice revenue, we’ve grown data revenue. We’ve done this basically by driving 2 things: customer numbers and consumption, letting them consume more megabytes, consume more minutes and hopefully we let them use their mobile wallet for financial activities. That’s what is completely within our control. As a sweetener, we continue to engage the regulator for appropriate pricing, given the level of inflation, given devaluation in the country. Don’t know when this would fully resolve. Therefore now we continue to run the business by just driving consumption, by onboarding more customers, by expanding the network, by making sure we have the right distribution infrastructure to onboard customer more efficiently. Those are the things that are completely within our control. But as a sweetener, we’re still talking to the regulator for the right pricing in Nigeria.

Jaideep Paul

On the second question, on the cash impact on derivative loss. So firstly, let’s understand how we do it. So, derivative instrument — outstanding derivative instruments are always marked to market. So every month, every quarter, we restate that liability based on the mark-to-market. But that’s not a cash loss, that’s a provision which we create in the books. Now, at the time of unwinding of those derivative instrument, whatever is the applicable rate at which it will be unwinded, that will be the actual difference between the derivative booking and the loss. So if I have restated the derivative, let’s hypothetically say at, let’s say, up to this, originally it was booked and now it has come down by, let’s say, it has dropped by NGN 400 naira or NGN 500, that then will be the cash impact when we unwind the derivative instrument on the due date. And that is the real cash impact, but not necessary that whatever we are providing, that will be the cash impact because it can improve also in the subsequent month. So it is not settled every month or daily or quarterly basis.

Operator

Our last question is from Linet Muriungi of Absa Bank Kenya.

Linet Muriungi

I’d appreciate a bit more color on CapEx. So the CapEx spend as at Q3 was about 60%, 63% of the targeted. Could you please share why CapEx spend is sort of trailing behind and is there a catalyst that would influence the aggressive [Technical Difficulty] in Q4? And thanks for sharing the targeted CapEx sales ratio at the group level, but could you please give us a breakdown per region?

Olusegun Ogunsanya

Jaideep, you want to handle this?

Jaideep Paul

Yes. The first question was CapEx spend is high in Q3, Q4. See, that’s — historically also, if you look around, Q3, Q4 will be the higher one because of the ordering cycle, then receipt of material. And it’s a long gestation period we have between just placing the order and getting the material and getting it deployed. Because keep in mind that some of our countries are landlocked and you have to take it through road infrastructure, some of the material passing 2, 3 countries and then reach at the destination. So it takes longer period of time for the delivery and installation of the equipment.

So generally, we’ll see quarter 3 and quarter 4 will be always, CapEx-wise, on a higher side, and quarter 1 and 2 will be relatively lower, number 1. Number 2, your second question was region-wise CapEx, is it?

Linet Muriungi

Yes, please.

Jaideep Paul

Okay, so region-wise CapEx, we have already given in our trading update. If you see the Nigeria CapEx, for 9 month, we have spent $178 million. East Africa, we spend almost same amount, $177 million. And for Franco Africa, we spend about $109 million. That’s total of $464 million, which we spent on the mobile service. And mobile money CapEx is about $17 million. That is primarily spent on the platform infrastructure and so on and so forth, and cybersecurity and related items.

Linet Muriungi

Sorry, just to confirm, should we expect the allocation per region, or perhaps the CapEx to sales ratio to change, especially in light of the FX headwinds that are being experienced in particular markets?

Jaideep Paul

See, our CapEx spend is not based on really a percentage of that region or that. It is all based on — we spend CapEx based on our revenue growth projection and the potential where we have. So that’s the way we allocate CapEx to each of the country and each of the region. So it’s very difficult for me to say what will be the share of allocation or if there is any change. So if a country has the potential to grow revenue, we’ll put CapEx there, and there, actually, we generally do not consider the devaluation or forex sensitivity because — and that’s the reason Segun has already mentioned that in Nigeria, in spite of such a sharp devaluation, we continue to hold our investment and continue to invest in Nigeria. Because, don’t forget that Nigeria, in a constant currency, is growing at 24%.

Quarter 3 growth was 24%, which is a very, very good growth. Same is for some of the other countries. So CapEx is allocated based on where we have the opportunity, where we have need, and where we need to build our infrastructure and network for future.

Olusegun Ogunsanya

And also, just to be very clear, devaluation is not a permanent feature of any of our countries. It happens over 1 or 2 years and the currency stabilizes. But you need to invest in them at the right time, otherwise you’re going to be caught far behind. So if you own investment, because you are waiting for currency to recover, you’re going to be far, far behind the curve. That is where we don’t want to be. So we know that these are very tough times in Nigeria, tough times in Malawi, a few other countries, but our philosophy remains unchanged. We’re investing behind growth. The growth will return. And if you average some of these changes, we’re talking about our 5-year, which is why I gave you the 5-year CAGR. The 5-year CAGR for revenue growth is more or less at 10%. The 5-year CAGR for EBITDA is also about 10%.

So if you remove all those highs and lows, on a straight line curve, we see doing well in most of the countries, despite one-off devaluations that really create a busyness in the investment profile of some companies.

Operator

Ladies and gentlemen. That is all that we have time for questions and I would like to hand back to Segun for some closing remarks.

Olusegun Ogunsanya

Yes, I’d just like to thank all of you for joining us, today’s call. I look forward to speaking to all of you again, hopefully towards — sometime May, June, when we discuss our full year results with all of you. Thank you. Have a good day.

Operator

Thank you very much, sir. Ladies and gentlemen, that then concludes today’s event. And you may now disconnect your lines.