Decline in Airtel Africa's Profit by 112% due to currency depreciation, despite an increase in subscribers
Airtel Africa Weathers Currency Storm, Reports Growth and Resilience
In the face of significant currency devaluations in several African countries, Airtel Africa has demonstrated remarkable operational and financial resilience. The telecommunications giant reported a 36.0% growth in mobile money revenue across East Africa, and a 22.3% growth in Francophone Africa, despite the challenges posed by currency fluctuations.
The revenue decline, however, was attributed to the devaluation of currencies in Nigeria, Malawi, Zambia, and Kenya. The Nigerian naira's nearly 70% depreciation against the US dollar over two years exerted a tangible negative impact on profits and increased net debt to $5.3 billion partly due to currency-related losses.
To navigate these challenging waters, Airtel Africa has employed strategic financial management approaches. Capital structure management through share buyback programs has been initiated to enhance shareholder value and improve financial stability. In markets like Nigeria, tariff hikes have been implemented to improve average revenue per user (ARPU) and offset some negative impacts from inflation and currency depreciation.
Cost efficiency strategies have also been emphasized, expanding EBITDA margins substantially and supporting profitability in a challenging macroeconomic environment. Operating in constant currency reflects efforts to insulate financial performance from FX swings, likely through local currency revenue generation balanced against dollar-denominated debt and expenses.
Despite the profitability challenges, Airtel Africa's customer base grew by 9%, reaching 152.7 million. The number of data customers increased to 64.4 million. However, the company recorded an $89 million loss after tax, a 111.9% increase from a $750 million profit in the previous year.
Airtel Africa's mobile money revenue grew by 32.8% in constant currency, while voice revenue growth was 11.9%, and data revenue growth was a robust 29.2%. Despite a 5.3% revenue dip to $4.9 billion for the year ended March 31, 2024, the company is actively working on reducing its US dollar debt burden.
The profits plunged by almost 99% in the last quarter, recording $2 million in profits compared to $523 million in 2022, due to currency devaluation. Despite these setbacks, Airtel Africa is accumulating cash reserves at the holding company level to cover outstanding obligations, demonstrating its commitment to weathering the storm and emerging stronger.
In conclusion, Airtel Africa's strategic mix of financial engineering, pricing strategies, and operational resilience helps mitigate currency devaluation risks in the markets it operates, positioning the company well for future growth and success.
References: 1. Airtel Africa Q4 Results 2024 2. Airtel Africa Annual Report 2025 3. Airtel Africa Revises Tariffs in Nigeria 4. Airtel Africa Focuses on Cost Efficiency
- Airtel Africa, in response to the challenges posed by currency fluctuations, has implemented tariff hikes on mobile services in certain markets, aiming to boost average revenue per user (ARPU) and offset the negative impacts from inflation and depreciation.
- To bolster financial stability, Airtel Africa initiated capital structure management, such as share buyback programs, and has been emphasizing cost efficiency strategies, including expanding EBITDA margins, to navigate the tough macroeconomic conditions and insulate its financial performance from currency swings.
