Naira devaluation,foreign exchange loss trims Airtel’s profit after tax to $151m

By Onome Amuge.

Airtel Africa posted a 20.4 per cent revenue growth to $1.4 billion in the first-quarter of 2023, but profits were rocked by a foreign exchange loss marked by the devaluation of the Nigerian naira by the Nigerian government in June which plunged its profit after tax  to $151 million against $178 million generated a year earlier.

Airtel Africa, which operates in 14 African countries, including Nigeria,saw its operating profit  rise year-on-year to $462m from $425m,but noted that, “Profit after tax was negative ($151m) driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in the month of June 2023.” It also classified the impact as a non-operating exceptional item.

The telecommunication giant, however, noted that while each segment’s reported currency revenue growth was impacted by currency devaluation, they all delivered double-digit constant currency revenue growth.

This is as mobile service revenue appreciated by 19.1 per cent at constant currency, driven by voice revenue growth of 11.9 per cent and data revenue growth of 29.8 per cent, while mobile money revenue rose 31.2 per cent.

The company’s financial statement showed that Airtel Nigeria subscribers reduced their spending on calls, as voice revenue plumetted to $254 million between April to June 2023, slightly below the $259 million spent in the same period last year.

In contrast, the data revenue jumped to $228 million in the review period, rising $18 million above the $210 million t generated from Nigerian internet in the corresponding period of 2022.

The company also noted that total revenue in Africa rose by 9.6 per cent based on reported currency change, as it closed the period at $1.37 billion, against $1.25 billion generated in the second quarter last year.

Further breakdown of Airtel Africa’s financial performance showed that the company generated $621 million from voice services, surpassing the $610 million reported in the same period the year before.

The telco disclosed that data services raked-in $486 million within the quarter ended June, up from $418 million grossed in the second quarter in 2022.

Analysing the financial report, and giving its trading update, Olusegun Ogunsanya, the chief executive officer of Airtel Africa, pointed out that despite the firm’s strong operating performance, results have been impacted by foreign exchange headwinds.

Ogunsanya pointed out that the quarter saw the announcement of the change to the FX market in Nigeria which resulted in a significant naira devaluation.

The Airtel CEO  welcomed the reform as very positive for the medium and long-term development of the telcos business in Nigeria, which he identified as Africa’s largest market.

He noted that Nigeria offers significant untapped growth potential, underpinned by highly attractive fundamentals. This, he said,  has supported and sustained a strong operating performance which has seen a five-year revenue and EBITDA compound annual growth rate of 23.5 per cent and 27.3 per cent in constant currency, respectively.