BREAKING: Despite Robust Growth In Service Revenues, Airtel Loses $1.7 Billion Over Currency Devaluation In Nigeria And Malawi—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.
What the company is saying
In his statement, the CEO of Airtel highlights the effectiveness of the company’s strategic approach in mitigating the adverse effects of currency fluctuations and driving revenue growth.
“The consistent deployment of our ‘Win with’ strategy supported the acceleration in constant currency revenue growth over the recent quarters which has reduced the impact of currency headwinds faced across most of our markets. This strong revenue performance is a reflection not only of the opportunity that is inherent across our markets, but also the resilience of our affordable offerings despite the inflationary pressure many of our customers have experienced.”
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.
“Facilitating this growth has been, and will remain, fundamental to our performance. The investment in our distribution to catalyse growth, and the technology required to support this growth has been key,” he explained.
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.
“Furthermore, our rigorous approach to de-risking our balance sheet and our capital allocation priorities has materially reduced the risks that the currency devaluation has had on our business,” he affirmed.
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