NIN, Naira depreciation cost Airtel Nigeria $192 million in lost revenue

Airtel Africa’s?Nigerian operations have reported a substantial revenue loss of?$110 million,?due to the barring of SIM cards due to the National Identification Number (NIN) registration requirement.

The company also reported it lost?$82 million?on the devaluation of the naira in the year under review. Airtel reports its year-end on March 31st, as they claim that a 1% devaluation would have a negative impact of $22m on revenues, $12m on EBITDA, and $7m on finance costs

Airtel Africa’s Nigerian operations initially showcased promising revenue growth, with reported currency figures indicating a 13.3% increase to $2,128 million, and an even more impressive 20.3% growth in constant currency.

Both voice and data services contributed significantly to the revenue growth, driven by a notable expansion in the customer base.

The overall customer base witnessed a commendable growth rate of 9.0%, while the data customer base experienced an even more impressive growth of 17.3%. This expansion and higher data and other revenue led to a 7.0% increase in the Average Revenue Per User (ARPU).

Barred Sim Cards

The adverse impact of the barred SIM cards on outgoing calls had a considerable effect on voice revenue.

• Of the initially affected 13.6 million customers, only 6.4 million customers (47%) have since submitted their NINs, and 3.5 million customers (26%) have been fully verified and unbarred.
• The company estimates that this unfortunate situation resulted in a staggering revenue loss of approximately?$110 million for the fiscal year ending on March 31, 2023.
• As a consequence, Airtel Africa’s revenue growth in Nigeria experienced a substantial?6% setback.

Data propel earnings growth

Despite this significant revenue loss, data revenue displayed resilience by increasing by 27.8% in constant currency.

• This growth was propelled by the expansion of the data customer base, which grew by 17.3%, and a remarkable 9.9% increase in data ARPU.
• Airtel Africa’s efforts to enhance its 4G network significantly contributed to this growth, with nearly 100% of their sites now operating on
• 4G. As a result, the 4G data customer base expanded by 27.6%, and data usage per customer increased by 24.8%, reaching an average of 5 GB per customer per month.

Other revenue sources

While Airtel Africa’s Nigerian operations faced these challenges, other revenue sources witnessed growth, with a remarkable 27.5% increase in constant currency.

• This growth was primarily driven by the rise in value-added services revenue, particularly in airtime credit services.
• Airtime credit allows customers to take an airtime credit and continue to use their voice and data
• services, with the credit recovered through subsequent customer recharge.

Increase in cash

Airtel Africa’s Nigerian operations also maintained a positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $1,099 million, marking an 11.8% increase in constant currency.

• However, the EBITDA margin declined from 55.5% to 51.6%, primarily due to rising operating costs, including inflationary pressures and increased fuel costs.
• Nevertheless, the EBITDA margin stabilized at 52.3% during the fourth quarter of 2023.
• Airtel Africa’s Nigerian operations managed to generate an operating free cash flow of $806 million, indicating a 10.0% increase. This increase was attributed to the expansion of EBITDA, albeit partially offset by higher capital expenditure.

Airtel Nigeria operations contributed about 40% of the group’s revenue and EBITDA respectively in 2022.

On 9th May 2023, the company announced that its Nigerian subsidiary, Airtel Networks Limited made a payment of NGN58.7bn ($127.4m), payable to the Nigerian Communications Commission (NCC), to renew its 2x10MHz 2100 MHz spectrum license. The license will be valid for a period of 15 years following the expiry of the previous license (30 April 2022).

On 9 January 2023, it announced that it had purchased 100 MHz of spectrum in the 3500 MHz band and 2×5 MHz of 2600 MHz from the Nigerian Communications Commission (NCC) for a gross consideration of $317m, paid in local currency.