Investors of Airtel Africa Plc, one of the major telecommunications companies quoted on the Nigerian Exchange Group Plc (NGX), recorded a loss of about N140 billion at the end of yesterday’s trading session.
This was despite growth in third-quarter revenue according to the telco’s latest earnings report seen by Nairametrics.
Checks by Nairametrics showed that the telecom stock dropped by 2.83% to close at N1,275 per share from N1,312 which was the opening figure at the beginning of trading.
The market sentiment for the telecom firm has been very low amidst buy-interests and sell-offs as bears dominated proceedings during the period under review due to a build-up to the 2023 general election, interest rate hike and rising inflation.
Mr David Adonri, the Executive Vice Chairman of Hicap Securities Limited, told Ratecaptain that the stock price is very high and currently adjusting to the current bearish reality of the market.
Further checks revealed that Airtel Africa closed its last trading day (Thursday, October 27 2022) at N1,275 per share and N4.791 trillion in market capitalisation on the Nigerian Exchange (NGX) as against N1,312 per share and N4.931 trillion in market capitalisation when the day’s trading activities begun, hence has earned a loss of N140 billion or 2.83%.
Q3’2022 financial highlights
Airtel Africa Plc released its half-year financial report for the period ending 30th September 2022.
The report showed that revenue growth in reported currency was 12.9% at $2,565, as 16.9% constant currency revenue growth was partially offset by currency devaluation. Meanwhile, in Q2, constant currency revenue growth accelerated to 18.5% driven by ARPU growth of 8.9%.
According to the company’s report, revenue growth in the half was impacted again by the effect of some voice customers being barred in Nigeria and the loss of tower-sharing revenues following the recent sales of towers in Tanzania, Madagascar and Malawi. It stated that growth for the half would have been around 20.4% in constant currency terms if the challenges were not present.
For mobile services and mobile money services combined, total revenue grew in Nigeria by 19.7%, East Africa by 16.2% and Francophone Africa by 13.0% over the period.
The company also saw a strong constant currency revenue growth posted across all reporting segments: mobile services revenue for the Group was up by 15.6% driven by Nigeria (19.7%), East Africa (12.4%) and Francophone Africa (12.1%). Similarly, voice revenues continued to see double-digit revenue growth of 12.0%, whilst data revenues grew 22.1%. Revenue in mobile money also grew by 29.5% in constant currency, driven by 31.5% growth in East Africa and 23.6% growth in Francophone Africa.
Revenue growth in Q2’23 accelerated to 18.5% in constant currency from 15.3% in Q1’23: Nigeria mobile services grew by 21.0%, East Africa by 13.6% and Francophone Africa by 13.5%. Further, mobile money revenue grew by 32.3% in Q2’23 in constant currency.
Finance costs increased by $189 million, largely driven by a $160 million increase in foreign exchange and derivative losses, as a result of a $31m derivative loss, a Nigerian naira devaluation impact of $30 million, a CFA (Central African franc) devaluation impact of $45 million and the balance being devaluation in the Malawian kwacha, Ugandan shilling & Kenyan shilling.
What Airtel is saying
Segun Ogunsanya, Airtel’s Chief Executive Officer, said the company improved revenue despite the macro-economic challenges and currency devaluation risks. He said:
“Airtel Africa continued to deliver strong results as its purpose of transforming the lives of people across sub-Saharan Africa through digital and financial inclusion gained further momentum, with growth accelerating in the second quarter. Whilst we are not immune to the current macro-economic challenges and currency devaluation risks, I am pleased to report double-digit reported revenue growth in the period, largely driven by customer growth of 9.7% and ARPU growth of 7.2%, as we increased penetration and usage through our affordable service offerings”.
Ogunsanya also noted that Airtel Africa has been able to offset inflationary pressure by adopting a cost-efficiency initiative alongside innovations during the period. He said,
“Our cost efficiency initiatives combined with improving growth trends have also helped offset inflationary pressures on our cost base and expand our EBITDA margin by 38bps in constant currency. We continue to de-risk our balance sheet and have further reduced HoldCo debt with the early repayment of $450 million of bond in July”.
