Profit Slumps as Airtel Africa Lost $70m to Naira Devaluation
Airtel Africa Plc’s pre-tax profit slumps 7.3% in nine months result for the financial year 2022 despite healthy growth in its customer base and revenue, according to a regulatory filing on the Nigerian Exchange.
The telecom company account shows a $70 million FX loss due to the naira devaluation in the period, other Africa markets’ currencies depreciation also added to the losses. Also, a review of Airtel Africa’s unaudited financial statement for the nine months of 2022 results shows that topline growth was overtaken by rising expenses and net finance costs.
Consequent to some adjustments, the telecom operators’ earnings per share slumped 5.8% in 2022 Africa’s focus telecom operator reported that its profit before tax in the nine months to December 31 fell by 7.3% to USD801 million from USD864 million in the comparable year in 2021.
The telecom company’s revenue increased by 12% to USD3.91 billion in 2022 from USD3.49 billion 12-month earlier, while earnings before interest, tax, depreciation and amortisation increased by 13% to USD1.92 billion from USD1.70 billion. However, expenses jumped by 11.7% to USD2.00 billion from USD1.80 billion, while its net finance costs spiked 78% to USD519 million from USD291 million.
“Net finance costs increased by $228 million largely due to higher foreign exchange and derivative losses of $184 million mainly comprised of a $40 million loss on derivatives and higher foreign exchange losses arose from the restatement of balance sheet liabilities (a loss of $70m on devaluation of the Nigerian Naira, and other devaluation losses of $53m mainly arising from the Malawian Kwacha, Ugandan and Kenyan shilling)”, Airtel said in a note.
The Telco operator noted that some voice customers were barred in Nigeria during the last period and that “the loss of tower sharing revenues following the sale of towers in Tanzania, Madagascar and Malawi in the second half of 2022” had a negative impact on revenue as well.
MarketForces Africa reported that Airtel sold its telecommunications tower company in Malawi to Helios Tower for USD54.7 million in March last year. Airtel’s financial year ends on March 31. Its unaudited statement showed that its customer base grew by 13% in the nine months to 47.8 million from 42.4 million customers, driven by mobile data and mobile money services.
It noted that annualised transaction value grew by 37% to almost USD100 billion in the third quarter of the financial year 2023.
Speaking about the result, Segun Ogunsanya, chief executive officer, said “Providing affordable, innovative and essential services to customers in our 14 markets with unparalleled network quality and customer service is integral to our ambition of transforming lives across Africa”.
According to Ogunsanya, these strong results are a testament to this strategy despite the current macroeconomic and geopolitical uncertainties. “The execution of our six-pillar strategy continues to provide the foundation for growth, driving 10% customer growth, supported by 14% growth in data customers and over 22% growth in mobile money customers”, Airtel Chief added.
He noted that higher usage across voice, data and money, have contributed to further ARPU growth of over 7%, resulting in 18% revenue growth in the quarter as penetration across each segment continues to increase.
“I am particularly excited by the performance of our mobile money business, with annualized transaction value reaching nearly $100bn, as we continue to drive financial inclusion in the continent.
“Despite the inflationary pressures across our markets, the strong revenue performance in the first nine months of the year, combined with a continued focus on cost optimisation, contributed to EBITDA growth of over 17% in constant currency, with stable EBITDA margins.
“Our strong operating performance, combined with a continued focus on our capital allocation priorities has facilitated the de-risking of our balance sheet with the early repayment of $450m HoldCo debt in July this year.
“We will continue to invest in expanding our network and evolving our service offerings to further deepen both financial and digital inclusion across our markets. We have especially focused on enhancing our spectrum footprint across all our markets.
“Over the last nine months we have spent almost $490m on 4G and 5G spectrum across key markets to improve network capacity and quality, future-proof the company for continued growth opportunities and facilitate economic progress in all our markets.
“I am particularly pleased with these results which demonstrate the opportunities these markets offer, our ability to deliver against these opportunities and the contribution we make to local communities and economies across our footprint.
“For the remainder of the financial year, we continue to anticipate sustained growth in the business with continued EBITDA margin resilience”, Ogunsanya said. # Profit Slumps as Airtel Africa Lost $70m to Naira Devaluation
