The second-biggest telecom operator in Nigeria, Airtel Africa, has revealed severe financial losses as a result of currency devaluations in a number of its major markets, most notably Malawi and Nigeria.
For the fiscal year that ends on March 31, 2024, these losses amounted to an astounding $1.7 billion in derivative and foreign exchange losses.
Airtel’s reported currency financials portray a different picture, although the company’s substantial rise in service revenues, when measured in constant currency, increased by 20.9% overall and 23.1% in the fourth quarter.
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The fall in the value of the Naira contributed $770 million of the $1,259 million in futures and foreign exchange losses that caused the finance expenses to jump to $1,703 million.
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.
Businesses declare Finance costs reached $1,703 million due to $1,259 million in derivatives and foreign exchange revaluations, $770 million of which was related to the Naira devaluation.
Airtel Africa Reveals Strategy
Airtel’s CEO, Olusegun Ogunsanya, stressed in his statement how well the company’s “strategic approach” reduces the adverse effects of exchange rate changes and boosts revenue.
Focusing upon the organisation’s operational goals, the CEO highlighted the vital function of investments in technology and transportation in promoting expansion, in addition to an intentional emphasis on financial restraint.
When discussing financial strategies, he emphasised the importance of mitigating risks related to currency devaluation. To achieve this, the company has implemented several measures, including reducing US dollar debt to minimise exposure to exchange rate fluctuations, maintaining sufficient cash reserves to cover outstanding debts, and ensuring financial stability and flexibility.
These proactive steps aim to protect the company’s financial health and minimise potential losses resulting from currency devaluation.
Encouraging this development has been and will continue to be essential to our output. He clarified, “The technology needed to support this development and the investment in our distribution that encourages growth have been vital.
Additionally, he stated, “Our strict approach has materially reduced the risks that the currency devaluation has had on our business to de-risking our balance sheet and our capital management objectives.”
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Airtel’s Key operational aspects
Airtel Africa reported a loss of $89 million due to foreign exchange losses of $770 million despite a 20.9% growth in service revenues in constant currency. Mobile services and mobile money segments performed well, with a 29.2% surge in data revenues and a 32.8% rise in mobile money revenues. Airtel Nigeria saw a 25.8% growth in constant currency growth driven by data demand, but reported revenues dropped 29.4% due to Naira depreciation. Operational solid performance maintained a 48.8% EBITDA margin.