Airtel Africa has expressed its support for the recent changes announced by the Central Bank of Nigeria (CBN) regarding the operations in the Nigerian Foreign Exchange (FX) Market. The CBN’s decision includes the abolishment of segmentation, with all segments now collapsing into the Investors and Exporters (I&E) window, and the reintroduction of the ‘Willing Buyer, Willing Seller’ model at the I&E window. These changes have led to the appreciation of the US dollar against the naira in the I&E window and are viewed by Airtel Africa as a positive step towards a more stable Nigerian FX market.
In its recent financial results for the year 2022/23, Airtel Africa disclosed a currency devaluation sensitivity analysis. It revealed that a 1% devaluation in the Nigerian naira would negatively impact revenues by $22 million, EBITDA by $12 million, and finance costs (excluding derivatives) by $7 million on a 12-month basis. Furthermore, a 1% devaluation in the Nigerian naira would have an approximate negative impact of $1.5 million on the Group’s derivative instruments.
For the 12 months ended March 31, 2023, Airtel Africa used a weighted average exchange rate of approximately 440 NGN/USD in its profit and loss statement, while the rate used for the balance sheet as of March 31, 2023, was 461.4 NGN/USD. Airtel Africa does not anticipate a material impact on the EBITDA margin due to the minimal USD component of operating costs within its Nigerian business.
The market’s expectation is that the new foreign currency policy and the subsequent realignment of multiple market exchange rates will enhance US dollar liquidity and alleviate the challenges faced in accessing US dollars in recent years.
Airtel Nigeria, which is Airtel Africa’s largest market, offers significant growth potential driven by an underpenetrated market, population growth, and strong demand for digital and financial services. In the financial year 2022/23, Airtel Nigeria witnessed a 9% increase in its customer base, with 27.6% growth in 4G data customers. This, along with continued expansion in average revenue per user (ARPU), contributed to a constant currency growth of 20.3% in revenues and 11.1% in EBITDA for the Nigerian market. Airtel Africa’s consistent performance in Nigeria is evident in its five-year compound annual growth rate (CAGR) of 23.9% in revenue and 29.5% in EBITDA in constant currency.
Airtel Africa remains committed to investing in Nigeria to capitalize on the country’s growth potential. The company’s ongoing investments aim to foster growth, drive digitalization nationwide, facilitate economic progress, and transform lives across Nigeria.
