Airtel Africa Faces 99% Profit Decline Amid Currency Devaluation in Key African Markets

Airtel Africa Faces 99% Profit Decline Amid Currency Devaluation in Key African Markets

Airtel Africa Suffers 99% Profit Decline Amid Currency Devaluation:

Telecommunications giant Airtel Africa, operating in 14 African countries, has reported a staggering 99% decline in profits for the last year.

The primary culprit behind this financial downturn is the currency devaluation experienced in significant markets, including Nigeria, Malawi, Zambia, and Kenya.

Impact of Currency Devaluations on Airtel Africa’s Margins:

The substantial devaluations of Nigeria’s Naira and the Malawian Kwacha severely impacted Airtel Africa’s profit margins, resulting in a meager $2 million profit for the year.

Specifically, the Naira’s devaluation alone cost Airtel a substantial $301 million. Excluding these currency-related impacts, the profit before tax for the nine months ending December 2023 would have been a considerably higher $840 million.

Revenue Drop and Financial Strain:

The $2 million profit marks a stark contrast to the $523 million profit recorded in the same period of the previous year.

This financial setback also had a ripple effect on Airtel’s overall revenue, witnessing a 1.4% decrease from $3.9 million to $3.8 million year-on-year.

Airtel Africa’s Response and Growth Plans:

Despite the challenging financial results, Airtel Africa’s Group Chief Executive Officer, Olusegun Ogunsanya, remains undeterred.

He emphasized that the currency devaluation, particularly in Nigeria, would not impede the execution of their growth plans.

The company aims to prioritize capital allocation, ensuring the full repayment of HoldCo debt due in May 2024, and continuing their balance sheet de-risking strategy.

The launch of the new data center business, Nxtra by Airtel, in December 2023, and an upcoming share buy-back program of up to $100 million, starting in March 2024 over 12 months, are part of Airtel’s strategic initiatives.

Positive Indicators in Mobile Services Revenue and Customer Base Growth:

The financial statement also highlighted positive indicators, including an 18.6% growth in group mobile services revenue.

This growth was propelled by an 11.2% increase in voice revenue and a robust 28.5% growth in data revenue.

Mobile money revenue experienced a notable surge of 31.8% in constant currency.

Airtel Africa reported a 9.1% increase in its total customer base, reaching 151.2 million, driven by the rising adoption of mobile data and mobile money services.

Notably, there was a 22.4% increase in data customers, totaling 62.7 million, and a 19.5% rise in mobile money customers, reaching 34.3 million.

Business News

TDPel Media

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