Airtel Africa Plc, a leading provider of telecommunications and mobile money services, has expressed optimism that recent changes in Nigeria’s foreign exchange market will alleviate the challenges faced in accessing US dollars over the past few years.
In a regulatory notice to the Nigerian Exchange Limited, the company highlighted the positive impact of the new foreign currency policy and the realignment of market exchange rates, which are expected to provide greater liquidity in US dollars.
The Central Bank of Nigeria (CBN) announced modifications to operations in the Nigerian Foreign Exchange (FX) Market, including the abolition of segmentation and the consolidation of all segments into the Investors and Exporters (I&E) window. The reintroduction of the ‘Willing Buyer, Willing Seller’ model at the I&E window is also part of the changes.
As a result of these decisions by the CBN, the US dollar has appreciated against the naira in the I&E window. Airtel Africa views these changes as a positive step toward a more stable Nigerian FX market.
A regulatory statement signed by Simon O’Hara, Group Company Secretary, explained that the company had disclosed a currency devaluation sensitivity analysis in its recent financial results for the year 2022/23. The analysis revealed that a 1% devaluation in the Nigerian naira would have a negative impact on revenues, EBITDA, and finance costs, as well as the Group’s derivative instruments.
“Additionally, the direct impact of 1% devaluation in the Nigerian naira on derivative instruments held by the Group would have a negative impact of approximately $1.5 million.
The weighted average exchange rate used in the profit and loss statement for the 12 months ended 31 March 2023 was approximately 440 NGN/USD, and the rate used to prepare the balance sheet as of 31 March 2023 was 461.4 NGN/USD.
The USD component of operating costs within the Nigerian business is minimal and, therefore, we do not anticipate a material impact on the EBITDA margin,” the company said.
The company highlighted its sustained strong performance over the years, with a five-year Compound Annual Growth Rate (CAGR) of 23.9% in revenue and 29.5% in EBITDA in constant currency terms. Airtel Africa continues to invest in Nigeria to capture the growth opportunity, support digitalization efforts, drive economic progress, and transform lives across the country.
“In our recently reported results for the financial year 2022/23, the customer base increased by 9%, with 4G data customers increasing by 27.6%.
This, combined with continued ARPU expansion drove Nigerian constant currency growth of 20.3% in revenues and 11.1% in EBITDA.
This strong performance has been sustained over many years with 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 enable it to capture this growth opportunity.
This continued investment will facilitate growth, drive continued digitalization across the country, facilitate economic progress, and transform lives across Nigeria,” the company said