Currency depreciation weigh on Airtel Africa, dragging revenue down 2.6% to $1.21bn

Onome Amuge

Airtel Africa reported a decline in group revenue by 2.6 percent year-on-year (YOY) to $1.21 billion in the second quarter of the fiscal year 2025, reversing the 9.7 percent YoY growth recorded in the first half of the fiscal year.

The revenue decline was primarily driven by currency depreciation, with Nigeria being particularly impacted, despite a 6.1 percent YoY increase in the company’s subscriber base to 156.60 million.

The impact of currency depreciation on Airtel Africa’s revenues was further reflected in the average revenue per user (ARPU), which dropped by 10.3 percent YoY to $2.60 in the second quarter of the fiscal year.

However, when evaluated on a constant currency basis, the company’s revenue grew 20.8 percent YoY in the second quarter, driven by strong growth in key markets such as Nigeria (37.9% YoY) and East Africa (18.5% YoY), as highlighted by analysts at Cordros Securities.

Despite strong growth in its subscriber base, Airtel Africa witnessed a decline in voice revenue by 11.6 percent YoY to $481 million in the second quarter of the fiscal year, representing 39.9 percent of total revenue.

This decline was primarily attributable to currency depreciation, which negated the positive impact of the company’s increased subscriber base.

On the other hand, data revenue grew moderately 1.4 percent YoY to $435 million in the second quarter, making up 35.8 percent of total revenue.

Nigeria, a crucial market for Airtel Africa, witnessed a decline in revenue by 33.2 percent YoY in the second quarter of the fiscal year, largely driven by the continued devaluation of the naira. This was reflected across all major revenue streams, with voice revenue declining by 39.7 percent YoY, data revenue by 28.6 percent YoY, and other revenue by 23.0 percent YoY.

Despite the challenges posed by currency depreciation, Airtel Africa’s total revenue in Nigeria grew by 37.9 percent in constant currency terms during the second quarter of the fiscal year.

The growth was driven by a combination of factors, including strong demand for data services and an increase in total subscriber base, which reached 48.70 million, despite the disconnection of a number of subscribers in compliance with directives issued by the Nigerian Communications Commission (NCC).

Outside of Nigeria, Airtel Africa also experienced growth in its data usage, as the company reported a 36.0 percent YoY increase in data usage per customer, reaching an average of 8.1GB per month.

This growth was fueled by a 6.2 percent increase in smartphone penetration, which encouraged more customers to explore data-intensive services.

Meanwhile, the company’s data subscriber base registered an 8.6 percent YoY growth, adding 2.00 million new subscribers in the second quarter of the fiscal year.

The East Africa region delivered impressive revenue growth for Airtel Africa, reporting an 8.6 percent YoY increase in revenue in reported currency. This growth was primarily driven by a 16.9 percent increase in data revenue and a 27.5 percent growth in other revenue segments.

In constant currency, the company’s revenue in East Africa soared by 18.5 percent YoY, underpinned by a 9.0 percent increase in subscriber base and a 28.4 percent growth in data usage per customer, reaching an average of 5.9GB.

Airtel Africa’s strong revenue growth in East Africa was underpinned by significant investments in network infrastructure, particularly in the expansion of 4G coverage.

Airtel Africa’s Francophone Africa region reported a moderate increase in revenue of 7.4 percent YoY in the second quarter of the fiscal year, building on a steady 5.2 percent YoY growth recorded in the first half of the year.

The company’s performance in the region was driven by a rise in voice and data revenue segments, which were partially offset by a decline in other revenue streams.

Despite inflationary pressures in key markets negatively impacting consumer spending, Airtel Africa’s Francophone Africa region witnessed a healthy increase in its total subscriber base by 9.0 percent YoY to 33.60 million.

Airtel Africa’s mobile money business continued to deliver solid growth, with revenue expanding by 13.5 percent YoY in the second quarter of the fiscal year. This contributed to the company’s overall revenue, making up 20.1 percent of total revenue.

The company’s mobile money service, Airtel Money, saw a significant expansion in its distribution network, adding 117,000 new agents in the first half of the year, which supported a 13.4 percent YoY increase in customer base, reaching 41.50 million by the end of the second quarter.

Airtel Africa’s total expenses rose by 3.0 percent YoY in the second quarter of the fiscal year, largely due to currency depreciation in key markets, particularly in Nigeria. This, in turn, led to a 334 basis point decline in EBITDA margin to 46.4 percent, as the company faced increased pressure on profitability across all its regions.

The telecom giant’s EBITDA margin erosion was widespread across all regions, with Nigeria recording the largest decline of 504 basis points to 49.4 percent, followed by East Africa (-232bps y/y to 47.9%), and Francophone Africa (-418bps y/y to 39.4%).

Airtel Africa’s finance costs spiked by 40.2 percent YoY in the second quarter of the fiscal year, largely due to exceptional derivative and foreign exchange losses amounting to $109.49 million.

As a result, Airtel Africa reported a 55.3 percent YoY decline in profit before tax (PBT) to $103.95 million in the second quarter, and a 65.0 percent YoY decline in profit after tax (PAT) to $48.44 million.

Meanwhile, Airtel Africa’s earnings per share (EPS) for the second quarter of the fiscal year dropped to $0.64, a decline from the previous year’s EPS of $3.08.

This decline was primarily driven by the derivative and foreign exchange losses of $109.49 million, incurred as a result of sustained currency depreciation in key markets during the quarter.

Cordros Securities identified the key factors that drove Airtel Africa’s performance in the second quarter of the fiscal year, highlighting the company’s commendable operational performance across several metrics, including customer growth, network expansion, and increased mobile money penetration.

However, the analysts underscored the detrimental impact of currency pressures, primarily in Nigeria, on the company’s top-line and bottom-line performance, resulting in revenue and profit declines for the quarter.

Cordros Securities expressed an optimistic outlook for Airtel Africa’s future earnings prospects, citing several growth drivers that are expected to fuel the company’s financial performance in the coming quarters.

The analysts predict that Airtel Africa’s profitability will be sustained by continued customer growth, effective cost management, a reduction in foreign exchange exposure, increased data capacity, and further expansion of the company’s mobile money business.