Airtel Africa, Nigeria’s second-largest telecom company, has faced significant financial challenges due to currency devaluations in key markets such as Nigeria and Malawi.
The fiscal year ending March 31, 2024, saw the company incur substantial derivative and foreign exchange losses amounting to $1.7 billion.
Despite reporting robust growth in service revenues when measured in constant currency, with a notable overall increase of 20.9% and accelerating to 23.1% in the fourth quarter, Airtel’s financial performance in reported currency was adversely affected.
The company experienced a decline in group revenue by 5.3% to $4,979 million and a 5.7% drop in EBITDA to $2,428 million, primarily due to the drastic devaluation of the Nigerian Naira and Malawian Kwacha against the US dollar.
The Nigerian Naira depreciated significantly from 461 to 1,303 per US dollar during the year, leading to substantial revenue and EBITDA losses for Airtel.
Finance costs soared to $1,703 million, largely driven by losses from derivatives and foreign exchange revaluations, with a significant portion attributable to the Naira’s devaluation.
In response to these challenges, Airtel’s CEO, Olusegun Ogunsanya, emphasized the effectiveness of the company’s strategic approach in mitigating currency fluctuations and driving revenue growth.
He highlighted the success of the “Win with” strategy and underscored investments in distribution and technology as key drivers of growth.
Ogunsanya also outlined financial strategies aimed at minimizing risks associated with currency devaluation, including reducing US dollar debt and maintaining adequate cash reserves.
He reiterated the company’s commitment to financial prudence and its focus on de-risking the balance sheet to mitigate the impact of currency fluctuations on business operations.
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