Airtel Africa, Nigeria’s second largest telecoms company has reported significant financial setbacks due to currency devaluations in several of its key markets, notably Nigeria and Malawi, resulting in a staggering $1.7 billion in derivative and foreign exchange losses for the fiscal year ending March 31, 2024.
Despite robust growth in service revenues when measured in constant currency, with a reported increase of 20.9% overall and accelerating to 23.1% in the fourth quarter, Airtel’s financials in reported currency tell a different story.
The company witnessed a decline in group revenue by 5.3% to $4,979 million, and a 5.7% drop in EBITDA to $2,428 million. These figures primarily reflect the severe impact of the Nigerian Naira and Malawian Kwacha’s devaluation against the US dollar.
The Nigerian Naira devalued drastically from 461 to 1,303 per US dollar during the year, deeply affecting Airtel’s financial outcomes. The devaluation led to a loss of $1,042 million in reported revenue and a $554 million decrease in EBITDA for the company.
Finance costs soared to $1,703 million, significantly influenced by $1,259 million in losses from derivatives and foreign exchange revaluations, of which $770 million was due to the Naira’s devaluation.
In his statement, the CEO of Airtel, Olusegun Ogunsanya, highlighted the effectiveness of the company’s “strategic approach” in mitigating the adverse effects of currency fluctuations and driving revenue growth.
Further elaborating on the company’s operational focus, the CEO noted the critical role of investments in distribution and technology in facilitating growth, alongside a strategic emphasis on financial prudence.
Addressing financial strategies, he pointed out efforts to minimize risks associated with currency devaluation, including reducing US dollar debt and maintaining sufficient cash reserves to cover outstanding debts.
Airtel’s fiscal year 2024 results in Nigeria revealed a sharp divide between operational success and currency challenges.
In constant currency terms, the company reported a robust 25.8% growth in revenues, accelerating to 34.1% in the fourth quarter, driven largely by increased data demand.
However, the significant depreciation of the Nigerian Naira led to a 29.4% drop in reported revenues, totaling $1,503 million.