Airtel Africa, Nigeria’s second-largest telecoms operator, recently announced substantial financial setbacks due to currency depreciation in important markets such as Nigeria and Malawi.
For the fiscal year that ended on March 31, 2024, these currency changes caused derivative and foreign exchange losses totaling an astounding $1.7 billion.
Although Airtel’s service revenues have grown significantly in constant currency, the company’s reported financials present a different picture. Group revenue for the company dropped by 5.3% to $4,979 million, while EBITDA dropped by 5.7% to $2,428 million.
These numbers mostly show the negative effects of the devaluations of the Malawian Kwacha and the Nigerian Naira relative to the US dollar.Â
Throughout the year, the value of the Nigerian Naira plummeted from 461 to 1,303 per US dollar, significantly impacting Airtel’s financial results. The company’s reported revenue decreased by $1,042 million and its EBITDA decreased by $554 million as a result of the devaluation.
The devaluation of the Naira contributed $770 million of the $1,259 million in derivatives and foreign exchange losses that caused the finance expenses to jump to $1,703 million.
CEO’s Response
Olusegun Ogunsanya, the CEO of Airtel, emphasized in his statement the company’s strategic commitment to reducing currency volatility and promoting revenue development. In order to reduce the risks related to currency devaluation, he underlined investments in distribution, technology, and financial prudence as crucial pillars of their operational strategy.
Operational Highlights
Airtel claimed strong performance in the mobile money and mobile services categories despite currency concerns. Revenue from mobile services increased by 19.4% in constant currency due to a spike in voice and data fees. Revenues in the mobile money industry increased significantly, especially in East Africa.
Fiscal Year Overview
If not for the extraordinary losses resulting from foreign exchange adjustments, Airtel would have reported $744 million in earnings before taxes. Airtel, however, suffered a $89 million after-tax loss in addition to these losses, or a pre-tax loss of $63 million.
Airtel Nigeria Performance
The results of Airtel’s fiscal year 2024 in Nigeria showed a mix of operational success and foreign exchange issues. Although there was strong revenue increase in constant currency terms, reported revenues decreased as a result of the notable depreciation of the Nigerian Naira. Notwithstanding these difficulties with currency, Airtel Nigeria continued to operate well.
Future Outlook
Airtel expects the continued currency volatility to have an effect on its financial performance going forward. Still, the business is concentrated on taking calculated risks to lessen the impact of currency devaluations and maintain growth in the face of unfavorable economic circumstances.
To sum up, Airtel’s financial results highlight the difficulties of doing business in exchange-rate-volatile regions, requiring proactive approaches to overcome obstacles and maintain expansion in the face of uncertain economic conditions.
