Airtel Africa Posts $89m Loss After Tax as FX Crisis Bites

Airtel Africa Posts $89m Loss After Tax as FX Crisis Bites

Airtel Africa Plc recorded $89 million loss after tax due to pressures from currency fluctuation in its key markets. The large FX losses due to devaluation in Nigerian market and East Africa damaged the telecom company’s performance in the year ended March 31, 2024.

Details showed that the group revenue declined by 5.3% to $4,979 million in the period. The telecommunication company said its revenue growth was particularly impacted by significant currency devaluations in Nigeria, Malawi, Zambia and Kenya.

However, its mobile services revenue grew by 19.4% in constant currency, with voice revenue growth of 11.9% and data revenues growing 29.2%. In Nigeria, constant currency mobile services revenues increased by 25.8%, whilst East Africa saw 21.5% growth and Francophone Africa increased by 9.2%.

Mobile money revenue grew by 32.8% in constant currency, primarily driven by continued strong growth in East Africa. Total customer base grew by 9.0% to 152.7 million.

“We continue to bridge the digital divide with a 17.8% increase in data customers to 64.4 million and a 20.8% increase in data usage per customer”, management said in its earnings results.

Airtel stated that mobile money subscriber growth of 20.7% reflects its continued investment into distribution to drive increased financial inclusion across our markets.

According to details from the results, transaction value increase of 38.2% in constant currency with annual transaction value of over $112 billion in reported currency. It noted that the increased transactions across the ecosystem reflects the enhanced range of offerings and increased customer adoption.

The company emphasised that continued network investment to support an enhanced customer experience and drive increased 4G coverage.

Details from the report added that 95% of Airtel Africa sites now 4G operational, facilitating a 42.3% increase in 4G customers over the year.

EBITDA margins remained resilient at 48.8% despite the currency headwinds and inflationary pressure on our cost base. Constant currency EBITDA increased 21.3% with reported currency EBITDA declining 5.7% to $2,428 million.

It said Q4’24 EBITDA margins of 46.5% were impacted by the lower contribution of Nigeria following the Q4’24 naira devaluation and rising energy costs across a number of markets.

Loss after tax was $89m, primarily impacted by significant foreign exchange headwinds, resulting in a $549 million exceptional loss net of tax following the Nigerian naira devaluation in June 2023 and Q4’24, and the Malawian kwacha devaluation in November 2023.

Basic EPS of negative (4.4 cents) compares to 17.7 cents last year. EPS before exceptional items was 10.1 cents, a decline of 25.9%. Both EPS before exceptional items and basic EPS were primarily impacted by significant derivative and foreign exchange losses during the year.

Capex was broadly flat at $737 million and was below our guidance largely due to a deferral in data centre investments.

“In addition, we invested $152 million in licence renewal and spectrum acquisitions, including $127 million for the Nigerian 3G licence renewal”, the company said in its latest report.

Airtel said it has around $680 million of cash available at HoldCo, to be utilized to fully repay the remaining $550 million debt, falling due in May 2024.

The report revealed that  the Board has approved a share buyback programme of up to $100 million, over a period of up to 12 months.

“On 1 March 2024, we announced the commencement of the first tranche of this buyback up to a maximum of $50 million. During March 2024, the company purchased 7.4 million shares for a total consideration of $9 million.

“The Board has recommended a final dividend of 3.57 cents per share, making the total dividend for FY24 5.95 cents per share”, the management stated in the earnings report.

Speaking to the results, Olusegun Ogunsanya, Chief executive officer, said, “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.

“This strong revenue performance is a reflection not only of the opportunity that is inherent across our markets, but also the resilience of our affordable offerings despite the inflationary pressure many of our customers have experienced. Facilitating this growth has been, and will remain, fundamental to our performance.

“The investment in our distribution to catalyse growth, and the technology required to support this growth has been key. Furthermore, our rigorous approach to de-risking our balance sheet and our capital allocation priorities has materially reduced the risks that the currency devaluation has had on our business”.

He added that Key initiatives include the reduction of US dollar debt across the business and the accumulation of cash at the HoldCo level to fully cover the outstanding debt due.

“We will continue to focus on reducing our exposure to currency volatility. At the beginning of March, we launched our first buyback programme reflecting the strength of our financial position. The growth opportunity that exists across our markets remains compelling, and we are well positioned to deliver against this opportunity.

“We will continue to focus on margin improvement from the recent level as we progress through the year. I want to say a particular thank-you to our customers, partners, governments and regulators for their support and our employees for their unrelenting contribution to the business. Our purpose of transforming lives across Africa will continue to be our highest priority”, Airtel chief said. Central Bank of Nigeria Suspends Charges on Cash Deposits