• Airtel Africa suffered 9.7% revenue loss in half-year 2024 due to currency depreciation
• The telco’s mobile money and customer base increased by 18.4% and 6.1%, respectively within the period
• Naira devaluation has impacted businesses in Nigeria leading to the exit of many multinationals

Airtel Africa’s reported currency revenue declined by 9.7 per cent to $2.37 billion in the half-year (H1) that ended September 30, 2024, due to currency devaluation in Nigeria, Malawi, Zambia and Tanzania.

According to the telecommunications company’s half-year financial statement published on Friday, October 25, its revenue in constant currency increased by 19.9 per cent in the period, while operating profit fell by 20.3 per cent to $706 million within the period.

The telco noted that skyrocketing fuel prices across its markets and Nigeria’s lower contribution to its group revenue after the naira devaluation contributed to a decline in earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to 45.8 per cent from 49.6 per cent in H1 2024.

Airtel Africa’s Constant currency EBITDA increased by 13.5 per cent while reported currency EBITDA dropped by 16.5 per cent to $1.09 billion within the six months.

It further noted that its profit after tax of $79 million was impacted by $151 million of exceptional derivative and foreign exchange losses (net of tax) “arising from the further depreciation in the Nigerian naira during the period.”

The company said, “The gap between constant currency and reported currency revenue growth was due to the average currency devaluations between the periods, mainly in the Nigerian naira, Malawian kwacha, the Zambian kwacha and the Tanzanian shilling partially offset by an appreciation in the Kenya shilling.”

The half-year revenue decline follows a similar pattern as the telco’s revenue dipped by 5.3 per cent to $4.98 billion due to currency devaluation for its full year ended March 31, 2024.

According to Airtel Africa’s Chief Executive Officer, Sunil Taldar, “The scale of the opportunity across our markets remains substantial. A young and fast-growing population, combined with low levels of SIM and banking penetration on one hand and increasing smartphone and digital payment adoption across our existing base on the other, provides a unique opportunity to leverage our extensive infrastructure for sustained growth in Sub-Saharan Africa.

“We have already seen strong progress, with an acceleration in constant currency revenue growth over the last quarter as demand for our services remains strong, reflected in the 48 per cent growth in data volumes over the first half of the year, despite the challenging backdrop in some of our markets.”

Telco’s mobile services grew by 18.4% but revenue declined by 12.6%

Within the half-year period, Airtel Africa reported growth in mobile services by 18.4 per cent if calculated in constant currency but the revenue from the services suffered a 12.6 per cent decline to $2 billion.

The telco’s mobile money revenue grew by 11.9 per cent in reported currency while constant currency saw mobile money grow by 28.8 per cent on the back of growth in East Africa of 31.4 per cent and Francophone Africa of 20.2 per cent.

By value, mobile money transactions grew by 30.1 per cent in constant currency terms in the six months. On an annual basis, mobile money transaction value increased to $128 billion.

The company’s mobile money subscribers increased to 41.5 per cent within the period, which is an increase of 13.4 per cent year-on-year. This, the telco said, reflects its “continued investment into distribution to support increased financial inclusion across our market.”

Airtel Africa’s customer base increase didn’t translate into higher revenue

In the first six months of its financial year, Airtel Africa’s customer base across the continent surged by 6.1 per cent to 156.6 million, but this growth didn’t translate into higher revenue following impact of currency devaluations.

The telco, with a presence in 14 African countries primarily in East, Central and West Africa, recorded a data customer growth of 10.4 per cent year-on-year to 66 million, while data usage per customer increased by 30.9 per cent to 6.6GB.

The company’s smartphone penetration increased by 5.3 per cent to reach 42.9 per cent of its base.

The telco’s average revenue per user (ARPU) increased by 13.5 per cent for data users while ARPU for mobile money increased by 10.9 per cent in constant currency terms. The increase in ARPU from both data and mobile money pushed the overall ARPU by 11.1 per cent year-on-year in constant currency terms.

The company said, “Customer experience remains core to our strategy with sustained network investment during the period. Data capacity across our network has increased by 20 per cent with the rollout of over 2,800 sites and around 3,500 kms of fibre.”

Naira devaluation has impacted the operations of businesses

Since the floating of the naira in June 2023, which allowed market forces to determine the currency’s value on a willing-buyer-willing-seller model, the currency has been on a downward trend, depreciating by 40 per cent in the first half (H1) of 2024 and judged the worst-performing currency in H1 2024. The depreciation has continued as the currency lost 43 per cent of its value and is one of the worst-performing currencies on the African continent, according to the latest Africa’s Pulse report by the World Bank.

The currency has seen exponential increases, jumping from the N769.25/$ it traded on June 30, 2023, at the Investors and Exporters (I&E) window to N1,660.49/$ as of October 17, 2024. On the other hand, at the parallel market, the currency moved from N770/$ in June 2023 to N1,700$1 as of October 14, 2024.

The devaluation of the naira is also responsible for the exit of many multinationals from Nigeria with 10 companies leaving the country in the last two years.

“If tariff doesn’t increase, we will shut down,” MTN CEO Toriola warns

Meanwhile, TheRadar reported that the Chief Executive Officer of MTN Nigeria, Karl Toriola, has warned of the company’s impending shutdown if the telecommunication tariff is not increased.

Toriola made this statement on Monday, October 21, during a visit to MTN’s facilities by Fellows of the Media Innovation Programme in Ibeju-Lekki, Lagos State.