Airtel Africa Expresses Optimism on Nigeria's Foreign Exchange Changes

Airtel Africa Plc has expressed optimism regarding the recent changes in Nigeria's foreign exchange market, stating that these modifications will alleviate the challenges faced in accessing US dollars over the past few years. The telecommunications and mobile money services provider conveyed this information through a regulatory notice submitted to the Nigerian Exchange Limited, which was obtained by Investingport.

Increased US Dollar Liquidity

Airtel Africa emphasized that the market expects the new foreign currency policy and the subsequent realignment of various market exchange rates to enhance US dollar liquidity. The Central Bank of Nigeria (CBN) has announced the elimination of segmentation in the Nigerian Foreign Exchange (FX) Market, consolidating all segments into the Investors and Exporters (I&E) window. Additionally, the reintroduction of the 'Willing Buyer, Willing Seller' model at the I&E window has been implemented. Airtel Africa welcomes these changes, considering them as positive steps towards a more stable Nigerian FX market.

Currency Devaluation Sensitivity and Financial Impact

In a statement signed by Simon O'Hara, Group Company Secretary, Airtel Africa disclosed a currency devaluation sensitivity analysis based on the recent financial results for the 2022/23 fiscal year. The analysis revealed that a 1% devaluation in the Nigerian naira would have adverse effects amounting to $22 million on revenues, $12 million on EBITDA, and $7 million on finance costs (excluding derivatives) over a 12-month period.

 Moreover, a 1% devaluation would result in an approximate negative impact of $1.5 million on derivative instruments held by the Group. The profit and loss statement for the 12 months ended March 31, 2023, utilized a weighted average exchange rate of around 440 NGN/USD, while the balance sheet as of March 31, 2023, employed a rate of 461.4 NGN/USD. Airtel Africa does not anticipate a significant impact on the EBITDA margin since the USD component of operating costs within the Nigerian business is minimal.

Unlocking Growth Potential in Airtel Nigeria

Airtel Nigeria represents the largest market for Airtel Africa, offering substantial growth potential fueled by an underpenetrated market, population growth, and strong demand for digital and financial services. The company's recently reported results for the 2022/23 fiscal year indicated a 9% increase in the customer base, with a notable 27.6% rise in 4G data customers.

This, coupled with ongoing ARPU expansion, drove a Nigerian constant currency growth of 20.3% in revenues and 11.1% in EBITDA. Airtel Africa's consistent strong performance is demonstrated by a five-year CAGR revenue and EBITDA growth of 23.9% and 29.5% in constant currency, respectively. The Group continues to invest in Nigeria to seize the growth opportunities available, facilitating digitalization across the country, supporting economic progress, and transforming lives throughout Nigeria.