Airtel Africa profit hit by currency devaluation in Nigeria, others

Airtel Africa Plc saw its after-tax profit drop in the financial year ended March 31, 2020 partly on the back of currency devaluation in Nigeria and three other countries.

The telecommunications firm grew its profit before tax to $598m from $348m a year ago, but profit after tax fell to $408m from $426m.

It said its operating profit grew by 22.8 percent to $901m and increased by 25.4 percent in constant currency.

Its revenue increased by 11.2 per cent to $3.42bn driven by 5.2 per cent growth in voice revenue, 39 per cent increase in data revenue and 37.2 per cent growth in mobile money revenue.

The firm’s financial results released on Wednesday showed that net finance costs increased by $18m, “driven by higher other finance costs which more than offset reduced interest costs of $64m as a result of lower debt.”

It said, “The increase in other finance costs was primarily driven by higher impact of devaluation on foreign exchange denominated liabilities largely driven by $75m increase in Q4 as a result of the devaluation of Nigerian naira, Kenyan and Ugandan shilling, and Zambian kwacha.” 

Airtel noted that the global economic slowdown, combined with lower oil and commodity prices, had resulted in currencies devaluing across our markets, including the Nigerian naira, Kenyan shilling, Ugandan shilling and Zambian kwacha.

It said, “By far our largest exposure is in Nigeria, which represents 40 percent of our revenue and 49 percent of underlying EBITDA (earnings before interests, taxes, depreciation and amortisation).

“We estimate that one percent of Nigerian naira devaluation will have a negative $13m impact on revenues, $8m on underlying EBITDA and $6m on finance costs. 

The Chief Executive Officer, Airtel Africa, Raghunath Mandava, expressed optimism that the firm would continue to benefit from population growth and the need for increased connectivity and financial inclusion in Nigeria and other markets.

He said, “These are a strong set of results, which delivered against our aspirations set out at the time of the IPO, with performance sequentially improving during the year.

“We have also continued to invest in future growth opportunities as we expanded our distribution, modernised and expanded our network with 65 per cent of sites now on 4G, acquired new spectrum in Nigeria, Tanzania, Malawi and Chad, and entered into strategic partnerships in our mobile money business.”