GCR Affirms Airtel Nigeria AAA/A1+ Ratings, Outlook Stable
GCR Ratings has affirmed Airtel Networks Limited’s national scale long- and short-term issuer ratings of AAA (NG) and A1+ (NG) respectively, adding that the outlook on the ratings remains stable.
According to GCR, the ratings affirmation of Airtel Networks Limited is anchored on its strong earnings and cash flows, as well as the ongoing strategic support from its parent, Airtel Africa Plc.
Ratings analysts said the company’s elevated debt level – including lease liabilities – has resulted in weak leverage metrics and a moderated financial profile.
However, GCR Ratings analysts indicated they have factored in strong group support into the ratings, given its importance and the strong operational integration within Airtel Africa.
“Airtel Nigeria is the second largest telecommunications corporate in Nigeria, serving about 33% of the nation’s mobile subscribers as of July 2025.
“Despite the heightened competition within the sector, the company’s expansive infrastructure and spectrum holdings have underpinned a strong market position, particularly with regards to customer acquisition, cost efficiency, and leading earnings margin.
“We have noted the increased efforts to grow its mobile money services and build a data centre to meet customer demands for cloud and AI services, which should strengthen its business profile when completed.
“Our assessment of the earnings profile is supported by the sustained revenue growth and defensive margin over the years despite the challenging operating conditions in Nigeria”, GCR stated.
In 2024, Airtel Nigeria’s revenue grew 35%, driven by an increasing subscriber base, rising demand for digital services, and its growing infrastructure.
Following an upward tariff adjustment, effective February 2025, a stronger growth was recorded in the first half of 2025, according to the rating note.
Ratings analysts said the company’s ongoing cost optimisation initiatives across network sites has underpinned margin enhancement, with EBITDA margin registering at 51.8% in 1H 2025.
“We expect the revenue growth trajectory to be sustained over the outlook period, and margin to remain firmer into 2026, given the essential nature of the company’s services, coupled with the potential benefits of higher economies of scale in view of its business expansion2.
During the financial year to 31 December 2024, Airtel Nigeria renewed tower lease contracts with ATC and I.H.S. for extended period of 12 years, strengthening its expansive infrastructure and benefiting from a more favourable proportion that is linked to foreign currency.
However, the lease extension, in addition to the devaluation of naira during the review period resulted in about NGN2.3 trillion increase in lease commitments, according to ratings note.
Airtel Nigeria Limited also secured additional bank loans and executed more lease agreements during the six-month period to June 2025 to support its expansion drive.
As a result, gross debt spiked to NGN3.64 trillion in 2024, and further to NGN3.97 trillion as of 1H 2025, from NGN1.05 trillion in 2023.
As earnings and cash flows did not grow in tandem with debt, leverage metrics deteriorated to very weak levels.
Airtel Nigeria’s net debt to EBITDA weakened 5.0x in 2024 but improved slightly to around 3.8x in 1H 2025 versus 1.8x in 2023, and operating cash flow coverage (OCF) of debt deteriorated to below 5%. It was above 50% prior to 2023.
The lease-adjusted net debt to EBITDA metric remained at a healthy level of 0.7x in 1H 2025. Interest cover contracted below 2.0x, due to the higher interest rate environment and the jump in debt level.
“The 1H 2025 results show a sign of recovery, and we expect an improvement in the leverage metrics over the outlook period as the lease liabilities unwind, with sustained strong earnings and cash flows”.
GCR said the company’s capital structure remained modest due to net losses since 2023, arising from the significant devaluation of the Naira and the resultant foreign exchange losses, which completely eroded equity.
However, given the recent appreciation and stabilisation of the Naira, ratings analysts said they expect the company to report net profit by 2025.
GCR cited that the ongoing de-dollarisation efforts further bode positively and have contributed to reduce the proportion of foreign currency exposure with respect to bank loans and lease commitments to 13% and 45% respectively.
This should also strengthen profitability going forward and provides protection against any substantial adverse exchange movements.
The liquidity assessment is a rating positive, with an estimated liquidity coverage of 1.24x over the 18-month period to December 2026, primarily supported by external funding sources.
Airtel Nigeria has access to committed facilities of over NGN580 billion from a range of banks through its relationships with Airtel Africa to support its liquidity needs.
“We have applied a 25% haircut to these facilities because some of them are also available to other members of Airtel Africa group”, GCR said.
Ratings analysts said while the company has historically reported strong operating cash flows, its cash holdings have been modest, and the two sources can only cater for the maturing debt obligations.
GRC stated that a more favourable consideration could follow the company’s ability to bolster cash balances, with less reliance on external debt for capital spending.
“We have factored in strong group support from Airtel Africa into Airtel Nigeria’s ratings. This is primarily because there is a high level strategic and operational integration within Airtel Africa group”.
“Airtel Nigeria is a wholly owned subsidiary of Airtel Africa, which is also a 63% indirect subsidiary of Bharti Airtel Limited (the ultimate parent).
The latter is one of the leading telecommunications companies globally by subscriber base, and Airtel Africa plc is a leading provider of telecommunications with operations in 14 countries in sub-Saharan Africa, being the first or second largest operator in all markets.
Despite the decline in the company’s contribution to the group’s reported currency earnings due to currency devaluation, ratings analysts said they believe that Airtel Nigeria remains core to the group’s strategic goals, being the fastest growing subsidiary across Airtel Africa’s territories.
GCR said the stable outlook reflects its expectation that Airtel Africa will continue to support the company. Ratings analysts also expect Airtel Nigeria to continue to maintain a strong business profile, underpinning strong earnings and cash flows over the outlook period.
“In addition, we do not expect material changes to the operating environment and competitive position,” the rating note stated. #Wema Bank Completes N50 Billion Private Placement
