Strong underlying performances by Nigerian telecommunications businesses listed on the stock exchange in the first quarter of 2024 were overshadowed by foreign exchange losses.
Strong underlying performances by Nigerian telecommunications businesses listed on the stock exchange in the first quarter of 2024 were overshadowed by foreign exchange losses.
Together, MTN Nigeria and Airtel Africa lost N511.27 billion, mostly as a result of the naira’s nearly 30% depreciation this year.
Compared to its Q1, 2023 profit after tax of N104.65 billion ($227 million), Airtel Africa’s Q1 loss after tax was N118.57 billion ($91 million).
Similarly, MTN Nigeria’s N108.43 billion profit after taxes for the same time last year is not the same as its N392.69 billion loss after taxes. Foreign exchange headwinds were the reason given by both corporations for these losses.
Airtel Africa’s foreign exchange loss for the full year ending March 2024 was $549 million, while MTN’s loss for the first quarter was N575.69 billion. Airtel attributed this loss to the devaluations of the naira in June 2023 and the kwacha in Malawi in November 2023.
Notwithstanding these setbacks, both businesses experienced remarkable sales growth in Q1 in constant currency terms (avoidance of exchange rate effects).
From N568.13 billion to a record high of N752.98 billion, MTN’s income was generated. Constant currency revenue for Airtel Nigeria increased from N250.32 billion to N346.59 billion (reported revenue decreased from $543 million to $266 million).
“Despite the difficult environment, Nigerian constant currency revenue growth accelerated to 34.2% in (the three months through March 2024),” according to Airtel.
The parent company of Airtel Nigeria, Airtel Africa, which operates in 14 countries, reported $1.12 billion in sales for the first quarter of 2023, a decrease from $1.34 billion in the same time the previous year. The impact of currency devaluation, particularly the depreciation of the naira, was reflected in the telco’s 16.6% overall reported revenue reduction.
But in terms of naira, Airtel Nigeria increased its earnings from both phone and data. Revenue from voice climbed from N120.78 billion ($262 million) to N161.57 billion ($124 million), while revenue from data increased from N106.03 billion ($230 million) to N151.15 billion ($116 million).
Additionally, MTN increased its data and voice revenues from N227.82 billion to N349.51 billion and N277.61 billion to N318.92 billion.
If not for notable currency devaluations in Malawi and Nigeria, Airtel Africa would have earned $460 million in profit after taxes in its whole year, which concluded in March 2024.
Meanwhile, if the naira hadn’t depreciated, MTN would have profited by N263.7 billion.
“The consistent deployment of our ‘Win with’ strategy supported the acceleration in constant currency revenue growth over the recent quarters, which has reduced the impact of currency headwinds faced across most of our markets,” stated Olusegun Ogunsanya, CEO of Airtel Africa.
During the telco’s Q1 announcement, Karl Toriola, the CEO of MTN Nigeria, stated, “These factors have caused significant difficulties for businesses operating in Nigeria, including MTN Nigeria, putting additional pressure on consumers, the cost of doing business, and further foreign exchange (forex) losses.”
The telcos’ persistent demands for higher call, data, and other service fees align with these financial losses. Higher prices are required due to rising inflation and currency devaluation, according to a recent statement from the Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON).
“The current price control mechanism, which is not aligned with economic realities, threatens the industry’s sustainability and can erode investors’ confidence,” they stated, referring to a completely liberalized and deregulated market.
The Nigerian Communications Commission was written to by ALTON in 2022 with the same requests for regulatory authority to hike charges by 40% due to rising diesel prices and economic difficulties. The pricing increase would have increased the SMS price cap from N4 to N5.61 and the floor price of calls from N6.4 to N8.95.
