Airtel Africa’s half-year revenue falls to $2.37bn on weak naira

Airtel Africa’s revenue fell to $2.37 billion from March to September due to currency devaluation in Nigeria.

While the company’s revenue in constant currency increased by 19.9 percent in the period, reported currency revenues fell by 9.7 percent, reflecting a weak naira. The telco disclosed this in its financial statement for its half-year ended 30 September 2024.

It noted that a substantial increase in fuel prices across its markets and Nigeria’s lower contribution to its group revenue after the naira devaluation contributed to a decline in EBITDA margins to 45.8 percent from 49.6 percent in H1’24. The telco highlighted that its profit after tax of $79 million was impacted by $151 million of exceptional derivative and foreign exchange losses (net of tax) “arising from the further depreciation in the Nigerian naira during the period.”

“Airtel Africa’s strong operational performance, driven by customer growth, expanded network coverage, and increased mobile money penetration, was significantly impacted by sustained currency pressures, particularly in Nigeria, resulting in declines in both revenue and profit for the quarter,” said analysts at Cordros Securities.

The telco’s customer base increased by 6.1 percent to 156.6 million, and data usage per customer increased by 30.9 percent to 6.6 GBs. Smartphone penetration increased 5.3 percent to 42.9 percent.

“A young and fast-growing population, combined with low levels of SIM and banking penetration on one hand and increasing smartphone and digital payment adoption across our existing base on the other, provides a unique opportunity to leverage our extensive infrastructure for sustained growth in Sub-Saharan Africa,” stated Sunil Taldar, chief executive officer of Airtel Africa.

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Despite a 35.6 percent growth in revenue in constant currency in Nigeria, reported revenues declined by 44.3 percent to $489 million due to the devaluation of the naira.

A Central Bank of Nigeria (CBN) unification of the foreign exchange market in 2023 has tumbled the naira from N471/$ before the move to N1,601.20 by October 24, 2024.

This led to losses in the telecoms sector, with Airtel Africa and MTN Nigeria losing N1.29 trillion in foreign exchange losses. In 2023, MTN posted its first loss since its 2019 listing on the Nigerian stock exchange, N137 billion, and declared a loss after tax of N519.1 billion for H1 2024.

If not for currency devaluations in Nigeria and Malawi, Airtel Africa would have made $460 million in profit after tax in its full year, which ended in March 2024.

Despite these losses, analysts expect Airtel to make a full recovery. “Looking ahead, we are optimistic about Airtel Africa’s earnings outlook, as we expect the company to maintain profitability due to continued customer growth, effective cost management, lower FX exposure, enhanced data capacity, and further expansion in mobile money penetration. Our estimates are under review,” added Cordros Securities.