Devaluation of Naira to negatively impact $1.5m derivative instruments, says Airtel Africa
Airtel Africa Plc Tuesday announced that the devaluation of the naira would have a negative impact on its $1.5million derivative instruments.
The telecommunication giant on the Nigerian Exchange Limited (NGX) also said the currency devaluation sensitivity analysis revealed in the recent results for the financial year 2022/23, highlighted that the devaluation would have a negative impact of $22million on revenues, $12million on EBITDA and $7million on finance costs (excluding derivatives) on a 12- month basis.
The Central Bank of Nigeria (CBN) recently announced changes to the operations in the Nigerian Foreign Exchange (FX) Market, including 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.
Group Company Secretary, Airtel Africa, Simon O’Hara in a signed statement said it welcomed the new policy by CBN, stressing that it is a positive move towards a more stable Nigerian FX market.
he said: “The weighted average exchange rate used in the profit and loss statement for the 12 months ended March 31, 2023 was approximately N440 against dollar, and the rate used to prepare the balance sheet as of March 31, 2023 was N461.4 against the dollar.
“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 market expectation is that the new foreign currency policy and subsequent realignment of the several market exchange rates will provide greater US dollar liquidity and help to alleviate the challenges faced in the last few years to access US dollars in the market.
“Airtel Nigeria is Airtel Africa’s largest market, with significant growth potential driven by an underpenetrated market, population growth and strong demand for digital and financial services.
“In our recently reported results for the financial year 2022/23, the customer base increased by nine per cent, with 4G data customers increasing by 27.6per cent.
“This, combined with continued ARPU expansion drove Nigerian constant currency growth of 20.3 per cent in revenues and 11.1 per cent in EBITDA. This strong performance has been sustained over many years with five-year CAGR revenue and EBITDA growth of 23.9per cent and 29.5per cent in constant currency, respectively.”
He expressed that the Group would continues to invest in Nigeria to enable it to capture its growth opportunity.
“This continued investment will facilitate growth, drive continued digitalisation across the country, facilitate economic progress and transform lives across Nigeria,” O’Hara added.
