Airtel Africa revenue suffers under currency devaluations

Airtel Africa's customer base across the continent grew by 6.1% over the past year, to 156.6 million, but the group's revenue for the first six months of the financial year was down almost 10% on the back of currency devaluations in four key markets.

That's according to the pan-African operator's interim results for the six-months to September 30, 2024, which were published on Friday.

The telco operates in 14 countries in Africa, primarily in East Africa and Central and West Africa.

Airtel Africa saw data customers grow by 10.4% year-over-year (YoY) to 66 million while data usage per customer increased by 30.9% to 6.6 GB.

The group's smartphone penetration rose 5.3% YoY to reach 42.9% of its base. 

Airtel now has 41.5 million mobile money subscribers, up 13.4% YoY, which it said reflects its "continued investment into distribution to support increased financial inclusion across our markets."

Mobile money transaction value increased by 30.1% over the half year, in constant currency terms, with an annualized transaction value of $128 billion.

Average revenue per user (ARPU) grew 13.5% for data users while mobile money ARPU increased by 10.9% in constant currency terms. This supported overall ARPU growth of 11.1% YoY, in constant currency terms.

Financial performance impacted by currency devaluations

Currency devaluations, particularly in Nigeria, impacted the group's revenue which was down 9.7% to $2.37 billion for the half year. If currency had remained constant revenue would have grown by 19.9% when compared to the same half the previous year.

"The gap between constant currency and reported currency revenue growth was due to the average currency devaluations between the periods, mainly in the Nigerian naira, the Malawian kwacha, the Zambian kwacha, and the Tanzanian shilling partially offset by an appreciation in the Kenya shilling," the telco said in its results statement.  

This also impacted operating profit, which fell by 20.3% to $706 million.

Airtel Africa reported a similar revenue dip in its full year results for the year ended March 31, 2024, also due to currency devaluations.

For the six months to September 2024, Airtel Africa's reported mobile services revenue also declined 12.6%, to $2 billion, but grew by 18.4% if calculated in constant currency.

Mobile money revenue grew by 11.9% in reported currency. In constant currency, mobile money revenue grew by 28.8%, driven by revenue growth in East Africa of 31.4% and Francophone Africa of 20.2%.

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 earnings before interest, taxes, depreciation and amortization (EBITDA) margins to 45.8% from 49.6% in the first half.

Constant currency EBITDA increased 13.5% whilst reported currency EBITDA declined by 16.5% to $1.09 billion for the six months.

Profit after tax of $79 million was impacted by a $151 million exceptional derivative and foreign exchange losses (net of tax), arising from the further depreciation in the Nigerian naira during the period.

"The scale of the opportunity across our markets remains substantial. A young and fast-growing population, combined with low levels of SIM and banking penetration on one hand, and increasing smartphone and digital payment adoption across our existing base on the other, provides a unique opportunity to leverage our extensive infrastructure for sustained growth in Sub-Saharan Africa," said Airtel Africa CEO Sunil Taldar.

"We have already seen strong progress, with an acceleration in constant currency revenue growth over the last quarter as demand for our services remains strong, reflected in the 48% growth in data volumes over the first half of the year, despite the challenging backdrop in some of our markets," he added.

Airtel Africa CEO Sunil Taldar. (Source: Airtel Africa)

Capital expenditure (capex) for the year was $316 million, 1.3% higher than the prior period. Airtel said its capex guidance for the full year remains between $725 million and $750 million as it continues to invest for future growth.

"Customer experience remains core to our strategy with sustained network investment during the period. Data capacity across our network has increased by 20% with the rollout of over 2,800 sites and around 3,500 kms of fibre," the group said.

Over the year it also significantly reduced its foreign currency debt exposure, having paid down $809 million of foreign currency debt.

The board declared an interim dividend of 2.6 US cents per share, an increase of 9% YoY.

In January 2024, Airtel Africa announced the retirement of CEO Segun Ogunsanya and the appointment of Sunil Taldar as the new CEO. Taldar joined Airtel Africa in October 2023 as director of transformation and assumed the role of CEO on July 1, 2024.