Airtel Africa Plc: Navigating Currency Headwinds to Fuel Digital Growth

In a year marked by macroeconomic turbulence, Airtel Africa Plc delivered a resilient performance, showcasing its ability to grow revenue, expand its digital ecosystem, and strategically manage debt. The telecom giant reported FY2024/25 results that highlight a shift toward financial stability and long-term growth, even as currency devaluation and inflation tested its operations. Here’s why investors should take note.

Revenue Growth Amid Currency Volatility

Airtel Africa’s total revenue reached $4.955 billion, a 21.1% increase in constant currency but a 0.5% decline in reported terms due to steep currency devaluations in Nigeria and Malawi. The Nigerian naira’s sharp depreciation—its exchange rate against the dollar nearly doubled compared to the prior year—weighed heavily on reported figures. However, the company’s focus on tariff adjustments and subscriber growth in key markets like Francophone Africa (13.7% revenue growth) and East Africa (22.6% in reported currency) helped offset these headwinds.

By the fourth quarter, revenue growth accelerated to 23.2% in constant currency, driven by stabilized pricing in Nigeria and improved macroeconomic conditions. This momentum suggests the company is navigating currency volatility effectively.

Debt Management: Local Currencies and Lease Liabilities

The company’s debt restructuring efforts stand out. Foreign currency debt was reduced by $702 million, with 93% of operating company (OpCo) debt now in local currency, down from 83% a year earlier. This shift significantly reduces foreign exchange risk—a critical move in an environment where currencies like the naira and Malawian kwacha have plummeted.

However, leverage ratios rose due to lease liabilities from renewed tower contracts. Reported leverage increased to 2.3x from 1.4x, while lease-adjusted leverage (a metric excluding these liabilities) rose to 1.0x from 0.7x. While this signals higher short-term costs, the contracts secure long-term infrastructure access, supporting network expansion and customer coverage.

Strategic Investments: Networks, Partnerships, and Mobile Money

Airtel Africa’s FY results underscore its commitment to digital transformation:
- Network Expansion: The company added 2,583 new sites and 3,300 km of fiber, boosting data capacity. This infrastructure upgrade supports the 30.4% surge in data usage per customer to 7.0 GB and a 15.4% rise in data ARPU.
- Network Sharing: Partnerships with MTN Group in Uganda and Nigeria aim to cut costs and improve rural coverage. Discussions are underway for similar agreements in Congo, Rwanda, and Zambia.
- Mobile Money Dominance: Subscribers grew 17.3% to 44.6 million, with transaction values hitting an annualized $145 billion in Q4. The Airtel Money IPO, now targeting early 2026, could unlock significant value, positioning the firm as a leader in Africa’s financial inclusion drive.

Margin Improvements and Cost Discipline

Underlying EBITDA margins dipped to 46.5% from 48.8% due to higher fuel costs and Nigeria’s prior-year currency shock. Yet sequential improvements were evident: margins expanded from 45.3% in Q1 to 47.3% in Q4, reflecting cost efficiencies. Mobile money margins also rose to 52.8%, underscoring the profitability of its digital services.

Challenges and Risks

• Currency Volatility: Nigeria and Malawi’s devaluations remain a wildcard.
• Hyperinflation: Malawi’s status as a hyperinflationary economy reduced profit after tax by $12 million.
• Regulatory Hurdles: Ongoing negotiations for network-sharing agreements and spectrum licenses could delay growth in key markets.

Outlook and Conclusion

Airtel Africa’s results paint a picture of a company strategically positioned to capitalize on Africa’s digital revolution. With $145 billion in annualized mobile money transactions, 73.4 million data customers, and a network infrastructure push, it is well-placed to dominate in markets with high smartphone adoption growth.

The planned Airtel Money IPO—a potential $2 billion valuation—adds further upside, while shareholder returns (a 9.2% dividend hike and $120 million buybacks) signal confidence in cash flow.

Despite short-term currency risks, the shift to local currency debt, disciplined capital allocation (projected $725–750 million CapEx in FY2025/26), and margin improvements position Airtel Africa as a long-term bet on Africa’s connectivity boom. Investors focusing on emerging markets’ digital transformation would do well to watch this space.

In short, Airtel Africa’s FY2024/25 results reflect resilience and ambition—a blend that could pay off handsomely as Africa’s digital economy scales.