Despite a 19.9 percent increase in revenue when measured in constant currency, the reported revenue in local currency decreased by 9.7 percent, reflecting the challenges posed by a weakened naira. This information was revealed in the company's financial report for the half-year ending September 30, 2024.
The report indicated that rising fuel prices across its markets and a reduced contribution from Nigeria following the naira's devaluation led to a drop in EBITDA margins, which fell to 45.8 percent from 49.6 percent in the first half of 2024. The company also noted that its profit after tax of $79 million was adversely affected by $151 million in exceptional derivative and foreign exchange losses (net of tax) due to the further depreciation of the naira during this period.
Analysts at Cordros Securities commented, "Airtel Africa's robust operational performance, fueled by customer growth, enhanced network coverage, and greater mobile money adoption, faced significant challenges from ongoing currency pressures, particularly in Nigeria, leading to declines in both revenue and profit for the quarter."
The company’s customer base grew by 6.1 percent to reach 156.6 million, while data usage per customer surged by 30.9 percent to an average of 6.6 GBs. Additionally, smartphone penetration rose by 5.3 percent to 42.9 percent.
Sunil Taldar, CEO of Airtel Africa, remarked, "The combination of a young and rapidly growing population, low levels of SIM and banking penetration, and increasing adoption of smartphones and digital payments presents a unique opportunity to utilize our extensive infrastructure for sustained growth in Sub-Saharan Africa."
Despite experiencing a 35.6 percent increase in revenue when adjusted for constant currency in Nigeria, reported revenues fell by 44.3 percent to $489 million, primarily due to the naira's devaluation.
The Central Bank of Nigeria (CBN) implemented a unification of the foreign exchange market in 2023, which caused the naira to plummet from N471/$ prior to the change to N1,601.20 by October 24, 2024.
This situation resulted in significant losses within the telecommunications sector, with Airtel Africa and MTN Nigeria incurring N1.29 trillion in foreign exchange losses. In 2023, MTN recorded its first loss since its 2019 debut on the Nigerian stock exchange, amounting to N137 billion, and reported a loss after tax of N519.1 billion for the first half of 2024.
Had it not been for the currency devaluations in Nigeria and Malawi, Airtel Africa would have achieved a profit after tax of $460 million for its fiscal year ending in March 2024.
Despite these setbacks, analysts remain hopeful for Airtel's recovery. "Looking forward, we are optimistic about Airtel Africa’s earnings potential, as we anticipate the company will sustain profitability through ongoing customer growth, effective cost management, reduced foreign exchange exposure, improved data capacity, and further advancements in mobile money services. Our projections are currently under review," stated Cordros Securities.