Airtel Africa’s Q1 loss after tax was N118.57 billion ($91
million), a far cry from the N104.65 billion ($227 million) profit after tax it
recorded in Q1, 2023. Similarly, MTN Nigeria’s N392.69 billion loss after tax
is a departure from the N108.43 billion profit after tax recorded in the same
period last year. Both companies attributed these losses to foreign exchange
headwinds.
MTN’s foreign exchange loss for Q1 was N575.69 billion, and
Airtel Africa’s FX loss for the entire year ended March 2024 was $549 million.
Airtel blamed this loss on the naira devaluation in June 2023 and the Malawian
kwacha devaluation in November 2023.
Despite these losses, both companies achieved impressive
revenue growth in constant currency terms (excluding exchange rate effects) in
Q1.
MTN’s revenue reached a record high of N752.98 billion from
N568.13 billion. Airtel Nigeria’s constant currency revenue rose to N346.59
billion from N250.32 billion (reported revenue declined to $266 million from
$543 million).
“Nigerian constant currency revenue growth accelerated to
34.2% in (the three months through March 2024) despite the challenging
backdrop,” Airtel stated.
Airtel Africa (Airtel Nigeria’s parent company), operating
in 14 countries, reported Q1 revenue of $1.12 billion, down from $1.34 billion
in the corresponding period of 2023. The telco’s overall reported revenue
declined by 16.6 percent, reflecting the impact of currency devaluation,
particularly the naira.
However, Airtel Nigeria grew both voice and data revenue in
naira terms. Voice revenue increased to N161.57 billion ($124 million) from
N120.78 billion ($262 million), and data revenue to N151.15 billion ($116
million) from N106.03 billion ($230 million).
MTN also grew voice revenue to N318.92 billion from N277.61
billion and data revenues to N349.51 billion from N227.82 billion.
Airtel Africa would have made $460 million in profit after
tax in its full year, which ended March 2024, if not for significant currency
devaluations in Nigeria and Malawi.
Meanwhile, MTN would have made a profit of N263.7 billion
without the devaluation of the naira.
Olusegun Ogunsanya, chief executive officer of Airtel
Africa, said, “The consistent deployment of our ‘Win with’ strategy supported
the acceleration in constant currency revenue growth over the recent quarters,
which has reduced the impact of currency headwinds faced across most of our
markets.”
Karl Toriola, MTN Nigeria’s chief executive officer, during
the Q1 announcement of the telco, said, “These factors have caused significant
difficulties for businesses operating in Nigeria, including MTN Nigeria,
putting additional pressure on consumers, the cost of doing business, and
further foreign exchange (forex) losses.”
These financial losses coincide with renewed calls by telcos
for an increase in the prices of calls, data, and other services. In a recent
communique by the Association of Licensed Telecom Operators of Nigeria (ALTON)
and the Association of Telecommunication Companies of Nigeria (ATCON) argued
that rising inflation and currency devaluation necessitate higher tariffs.
They said, “For a fully liberalised and deregulated sector,
the current price control mechanism, which is not aligned with economic
realities, threatens the industry’s sustainability and can erode investors’
confidence.”
These same calls were earlier made in 2022 when ALTON wrote
to the Nigerian Communications Commission for regulatory approval to raise
tariffs by 40 percent because of surging diesel prices and economic headwinds.
The price hike would have raised the floor price of calls from N6.4 to N8.95
and the price cap of SMS from N4 to N5.61.
Toriola, MTN’s CEO, noted in the telco’s Q1 report that the
company is engaged with authorities, through its industry body, on a tariff
increase because of the effects of challenging operating conditions.
“Importantly, appropriate tariff increases will be necessary
to support continued investment and the long-term sustainability of the
industry. This will support our commercial interventions in our work to
accelerate top line growth,” he said.
Gbenga Adebayo, president of ALTON, noted that telcos are
currently facing challenges regarding core infrastructure deployment.
“Both MTN and Airtel have declared significant foreign
exchange losses in Nigeria, and the stress is not linked to them alone. The
entire ecosystem is battling with a range of challenges that must be addressed.
If we fail to do so, the downstream impact on innovation will be severe,” he
declared.
He highlighted that while the cost of living has worsened,
the price of connectivity must increase in a measured way for people to enjoy
its benefits.
“We need to find a long-term, sustainable, and manageable
solution to this problem,” he added.
Aminu Maida, executive vice chairman of the NCC, recently
suggested that telecom operators must consider strategic actions to stay in
business.