Naira depreciation cuts Airtel’s revenue by 16.1% as share buyback continues

The persistent naira devaluation, among other challenges, has further dragged the growth of Airtel Africa, with the telecommunications firm reporting a revenue decline of 16.1 per cent ($1.16 billion) in the second quarter of 2024.

But the firm’s constant revenue grew by 19 per cent driven by 33.4 per cent growth in Nigeria and 22.3 per cent growth in East Africa, respectively.

In its financial report for the period ended June 2024, Airtel, which grew its total customer base by 8.6 per cent to 155.4 million, noted that a substantial increase in fuel prices across its markets and the lower contribution of Nigeria to the group after the naira devaluation contributed to a decline in EBITDA margins to 45.3 per cent from 49.5 per cent in Q1’24 and 46.5 per cent in Q4’24.

Airtel’s profit after tax of $31 million was impacted by $80 million of exceptional derivative and foreign exchange losses (net of tax), arising from the further depreciation in the Nigerian naira during the quarter.

According to the firm, the translation impact of currency devaluation on reported currency results was the primary driver of EPS before exceptional items declined from 3.9 cents in the prior period to 2.3 cents. It stressed that basic EPS of 0.2 cents compares to negative (4.5 cents) in the prior period, predominantly reflecting the $471 million of exceptional derivative and foreign exchange losses in the prior period, compared to $122 million in the current period.

On its operations, Airtel said data customer penetration continues to rise, driving a 13.4 per cent increase in data customers to 64.4 million, adding that data usage per customer increased by 25.1 per cent to 6.2 GBs, with smartphone penetration increasing 4.7 per cent to reach 41.7 per cent.

The firm reported a mobile money subscriber growth of 14.9 per cent, which it claimed reflected its continued investment into distribution to support increased financial inclusion across our markets.

Airtel said transaction value increased by 28.7 per cent in constant currency with annualised transaction value of $120 billion in reported currency. It reported ARPU growth of 9.6 per cent and mobile money ARPU growth of 8.8 per cent in constant currency continued to support overall ARPU’s which increased 9.3 per cent YoY.
It stressed that customer experience remained core to our strategy with sustained network investment driving increased capacity and coverage.

According to the financial report, data capacity across its network increased by 33 per cent with the rollout of almost 3,000 sites and over 5,600 km of fibre.

In terms of capital allocation, Airtel said capex at $147 million was 4.9 per cent higher compared to the prior period. It stressed that capex guidance for the full year remains between $725 million and $750 million as it continues to invest for future growth.

Airtel said in line with its plan: “We now have zero HoldCo debt following the full repayment of the $550 million bond in May 2024. In total, 86 per cent of our market debt is now in local currency, having paid down $828m of foreign currency debt over the last year.

“Leverage of 1.6x on 30 June 2024 compares to 1.3x in the prior period. Of the 0.3x increase, 0.2x was due to the decrease in reported currency EBITDA, with the balance due to an increase in lease liabilities. The $100 million share buyback continues, with 21m shares purchased for a consideration of $29 million as of the end of June 2024.”

Commenting on the trading update, the Chief executive officer, Airtel Africa, Sunil Taldar, said: “The continued revenue growth momentum once again reflects the resilient demand for our services, with sustained growth in our customer base and usage. Our superior execution enables us to capture these opportunities, whilst retaining our reputation as a cost leader across the industry.

“Having visited most of our OpCos since I joined Airtel Africa, I am encouraged by the scale of the opportunity available across our markets in both the GSM and mobile money business. A key priority for us is to look for new opportunities to further grow our business, especially in the enterprise, fibre and data centre businesses across our footprint in Africa.

“We will build on the strong foundation established over many years to deliver on these new business opportunities. Most importantly, our emphasis is on significantly improving customer experience by simplifying customer journeys and providing best-in-class network experience to our customers, whilst remaining focused on driving efficiencies across the business.

“We have initiated a comprehensive cost optimisation programme across the Group. We have already seen success in this project, with savings arising in network and distribution costs, and continued opportunities as contract renegotiations continue. We expect sustainable savings to continue as the year progresses.