Airtel Africa reports USD151 million net loss in Q1 despite significant revenue growth

The business reported a loss after taxes of USD 151 million, principally because of a significant foreign currency loss of USD 471 million that was included in finance costs before taxes and then USD 317 million after taxes.

Telecommunications Service Provider Airtel Africa, reported a net loss of USD 151 million for the first quarter (April-June) of FY24 on Thursday, despite a 10% increase in revenue. In the same quarter the year before, there was a profit of USD178 million.The business generated a net profit of USD 227 million in the three months that ended Q1 FY24.

The financial figures for the period ending June 2023 have been released by Airtel Africa. The company demonstrated strong operating performance with significant revenue growth and improved EBITDA margins despite dealing with foreign exchange headwinds in Nigeria, according to the report.

The depreciation of the Nigerian Naira in June had an impact on Airtel's African businesses, which also struggled with rising finance expenses.

The business reported a loss after taxes of USD 151 million, principally because of a significant foreign currency loss of USD 471 million that was included in finance costs before taxes and then USD 317 million after taxes. This foreign exchange problem's effects were classified as a non-operating extraordinary item.

The company in its statement said, "The annualised impact of the devaluation in Nigeria incurred in June 2023, assuming no further devaluation for the remainder of the year, is expected to be between $850m and $900m on annualised revenues and between $450m and $500m on annualised Ebitda. The vast majority of this impact is anticipated to materialise in Q2’24 and the rest of the fiscal year. "

Airtel Africa's revenue for the most recent quarter increased from Q1 FY23's USD 1.25 billion to USD 1.3 billion, a 9.6% year-over-year increase. The Ebitda, which increased by 11.1% to USD 682 million, was recorded.

Key Performance Indicators (KPIs) showed that Airtel was still growing and expanding regionally. Due to the growing use of mobile internet and mobile money services, the total customer base expanded by 8.8% to 143.1 million. Notably, there were 56.8 million data clients, up 22.0 percent, and 34.3 million mobile money customers, up 24.3 percent.

Segun Ogunsanya, Airtel Africa CEO, commented, "This quarter saw the announcement of changes to the FX market in Nigeria resulting in significant Naira devaluation. We view this reform as a positive development for the medium and long-term evolution of our business in Nigeria, our largest market."

Average Revenue Per User (ARPU) for the business climbed significantly (11.1%) in constant currency due to higher usage of voice, data, and mobile money services. Revenue for the group mobile service category increased by 19.1 percent in constant currency, driven by significant increases in voice revenue of 11.9 percent and data revenue of 29.8 percent. Revenue from mobile money also increased significantly, by an astounding 31.2 percent in constant currency.

According to Airtel Africa, their capital allocation strategy is still centred on fostering future growth. In order to continue making strategic investments, the company kept its capital expenditure (Capex) at $140 million, unchanged from the prior period.

Airtel Africa also considerably decreased its external debt at HoldCo, leaving a $550 million balance that is due in May 2024. At the end of the quarter, the holding firms had $505 million in cash on hand.Despite spending more than $500 million on spectrum and renewing its 2100 MHz spectrum licence in Nigeria over the reporting period, the company's leverage remained constant at 1.3x as of June 2023.

The business claimed to have released its Annual Report and Accounts 2022–2023 that highlighted achievements in terms of sustainability objectives and contributions to the Sustainable Development Goals (SDGs) of the United Nations.

In addition, the corporation wanted to reach net-zero emissions by 2050 and a near-term goal of a 62 percent decrease in Scope 1 and 2 emissions intensity by 2032.