Airtel Africa Faces Profits Plunge of 99% Due to Currency Devaluation in Nigeria and Malawi
Airtel Africa, a prominent telecommunications firm operating in 14 African countries, disclosed a staggering 99% decline in profits for the previous year, attributing the downturn to currency devaluation in key markets such as Nigeria, Malawi, Zambia, and Kenya.
The substantial devaluations of Nigeria's Naira and the Malawian Kwacha exerted pressure on Airtel Africa's profit margins, resulting in a meager $2 million in profits for the year. The devaluation of the Naira alone accounted for a significant $301 million loss. Excluding these adverse effects, the profit before tax for the nine months ending on December 31, 2023, would have stood at $840 million.
Airtel Africa's recorded profit of $2 million starkly contrasts with the $523 million profit achieved in the corresponding nine months of December 2022. This disappointing performance also translated into a 1.4% reduction in Airtel's revenue, dropping from $3.9 million to $3.8 million over the past year.
Despite these challenges, the Group Chief Executive Officer, Olusegun Ogunsanya, remains resolute in the face of adversity. Ogunsanya affirmed, "Whilst further currency devaluation, particularly in Nigeria, has weighed on our reported financial performance, it will not affect the execution of our growth plans." He emphasized the company's commitment to capital allocation priorities, intending to fully repay HoldCo debt due in May 2024 and ensuring the ongoing success of their balance sheet de-risking strategy. Ogunsanya also highlighted investments in new ventures, such as the recently launched data center business, Nxtra by Airtel. The board intends to initiate a share buy-back program, commencing in early March 2024, with a budget of up to $100 million over 12 months.
Airtel Africa's financial statement additionally reported positive aspects, with group mobile services revenue witnessing an 18.6% growth. This growth was fueled by an 11.2% increase in voice revenue and a robust 28.5% surge in data revenue. Mobile money revenue also displayed an impressive 31.8% growth in constant currency. The company's total customer base expanded by 9.1%, reaching 151.2 million, driven by the rising popularity of mobile data and mobile money services. This surge led to a 22.4% increase in data customers, totaling 62.7 million, and a 19.5% rise in mobile money customers, reaching 34.3 million.