MTN Nigeria Communications Plc and Airtel Africa have taken decisive steps to reduce their foreign currency debt, repaying a combined $1.2 billion in 2024 to alleviate foreign exchange (FX) pressures and steer their operations back to profitability. This move comes in response to significant FX losses incurred in 2023, which were exacerbated by the sharp depreciation of the Nigerian naira.
The Central Bank of Nigeria’s (CBN) decision to unify the country’s foreign exchange market in June 2023 triggered a dramatic devaluation of the naira, which fell from 471/$ to 1,043.09/$ by December 28, 2023, and further to 1,512.3/$ by March 7, 2025.
This currency volatility led to substantial financial challenges for both telecom giants, with MTN Nigeria reporting its first post-tax loss of N137 billion since its 2019 listing on the Nigerian Stock Exchange. Similarly, Airtel Africa, which serves 50.9 million subscribers in Nigeria, recorded a post-tax loss of $89 million for the fiscal year ending March 2024, primarily due to FX-related headwinds in Nigeria and Malawi.
To mitigate further losses, both companies have aggressively reduced their foreign currency liabilities. MTN Nigeria cut its outstanding dollar-denominated letters of credit (LC) obligations from $416.6 million at the end of 2023 to $20.8 million by the close of 2024. Airtel Africa, on the other hand, repaid $739 million in foreign currency debt over the same period, significantly lowering its exposure to FX risks. Both firms view this debt reduction as a critical step toward strengthening their financial stability.
Olusegun Ogunsanya, former CEO of Airtel Africa, emphasized the importance of minimizing currency volatility risks, stating, “We will continue to focus on reducing our exposure to currency volatility. Although this reduction resulted in realized foreign exchange losses, it has substantially strengthened our financial position and lowered the financial risks associated with the depreciation of the naira.”
Despite these efforts, the debt reduction came at a cost. MTN Nigeria, while achieving record revenue of N3.36 trillion in 2024, reported a post-tax loss of N400.44 billion due to FX losses from the revaluation of foreign currency obligations. The company noted that it would have recorded a post-tax profit of N247.3 billion without these FX losses. Airtel Africa, meanwhile, saw a 5.78% decline in revenue to $3.64 billion for the nine months ending December 2024, down from $3.86 billion in the previous year. However, its post-tax profit surged by 12,300% to $248 million, up from $2 million.
Both companies are increasingly shifting toward local currency debt to reduce their reliance on foreign currency borrowings.
Airtel Africa now holds 92% of its debt (excluding lease liabilities) in local currency, up from 79% a year ago. Sunil Taldar, CEO of Airtel Africa, highlighted the improved capital structure, stating, “Our capital structure remains robust, with just 8% of OpCo debt in foreign currency—a substantial improvement over the last year.”
Similarly, MTN Nigeria has restructured its loan portfolio, with 72% now denominated in naira and 28% in dollars, compared to 56% naira and 44% dollars in 2023. The company’s total net debt decreased by 29% to N591 billion by the end of 2024.
To support local operations, MTN Nigeria raised N190 billion under its N250 billion Commercial Paper Issuance Programme. Modupe Kadri, MTN Nigeria’s Chief Financial Officer (CFO), revealed that the company reduced its overall FX exposure from $1 billion in December 2023 to approximately $300 million by the end of 2024.
Renegotiation of Tower Lease Contracts and Cost Optimization
In addition to debt restructuring, both telecom operators have renegotiated tower lease agreements with infrastructure providers such as IHS, INT Towers Limited, and ATC Nigeria to curb FX and energy-related costs. MTN Nigeria’s renegotiation with IHS alone resulted in operational savings of N113.8 billion. The companies are also adopting more localized solutions to minimize FX exposure and improve operational margins.
Karl Toriola, CEO of MTN Nigeria, emphasized the importance of cost optimization and localization initiatives, stating, “We will focus on cost savings through our expenditure resiliency program and implement localization initiatives to further reduce foreign exchange exposure and operating expenditure. These efforts will help us maintain our competitive edge, drive service revenue growth, support margin recovery, and restore our capital position.”
Path to Profitability
With the recent regulatory approval for a 50% increase in telecom tariffs, industry experts believe that this, combined with ongoing efforts to reduce FX debt and optimize costs, will position the sector for a return to profitability.
The aggressive debt reduction strategies and operational adjustments by MTN Nigeria and Airtel Africa underscore their commitment to navigating Nigeria’s challenging economic environment and achieving long-term financial resilience