Airtel loses $192m to NIN and naira in difficult operating terrain
By Jeph Ajobaju, Chief Copy Editor
Airtel lost $110 million revenue on government order for telecom operators to bar subscribers who failed to link their SIM with their National Identity Number (NIN).
But the overall revenue of Nigeria’s second largest network shows resilience, with a 27.8 per cent rise in constant currency driven by a 17.3 per cent growth in customer base and a 9.9 per cent increase in data ARPU.
The financial result of Airtel for full year ended 31 March 2023 (FY 2023) shows other revenue sources witnessed growth, primarily due to the rise in value-added services revenue, with a remarkable 27.5 per cent increase in constant currency.
Airtel also reported it lost $82 million on the devaluation of naira, explaining how a 1 per cent devaluation alone has a negative impact of $22 million on its revenues, $12 million on EBITDA, and $7 million on finance costs.
Airtel operations initially showcased promising revenue growth, with reported currency figure of 13.3 per cent fetching $2,128 million, and an even more impressive 20.3 per cent growth in constant currency.
Both voice and data contributed significantly to revenue growth, driven by expansion in customer base.
Customer base grew 9.0 per cent, with data customers on 17.3 per cent, which led to a 7.0 per cent rise in Average Revenue Per User (ARPU).
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Impact of barred phone numbers
The adverse impact of barred SIM cards on outgoing calls had a considerable effect on voice revenue, per Nairametrics.
Of the initially affected 13.6 million customers, only 6.4 million (47 per cent) have since linked their NINs, and 3.5 million (26 per cent) verified and unbarred.
Airtel said this resulted in a $110 million revenue loss, dipping 6 per cent its projected earnings in Nigeria in FY 2023.
Data propel earnings growth
Despite significant overall revenue loss, data revenue rose 27.8 per cent in constant currency, propelled by the expansion of data customer base by 17.3per cent, and a 9.9per cent increase in data ARPU.
Its 4G network also contributed to the growth, with nearly 100 per cent of its sites now operating on 4G which customer base expanded 27.6 per cent.
Data usage per customer jumped 24.8per cent, reaching an average 5 GB per customer per month, Airtel said in the financial result.
Other revenue sources
Other revenue sources witnessed growth, with a 27.5per cent increase in constant currency, primarily driven by the rise in value-added services revenue, particularly 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 recharges.
Increase in cash
Airtel maintained a positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) of $1,099 million, marking an 11.8 per cent increase in constant currency.
However, EBITDA margin declined from 55.5 per cent to 51.6 per cent due to rising operating costs, including inflationary pressures and higher fuel costs.
EBITDA margin stabilised at 52.3per cent during Q4 2022.
Airtel generated operating free cash flow of $806 million, a 10.0 per cent increase attributed to the expansion of EBITDA, albeit partially offset by higher capital expenditure.
Airtel said its Nigerian operations contributed about 40 per cent of the group’s revenue and EBITDA in 2022.
Airtel Africa announced on 9 May 2023 its Nigerian subsidiary paid N58.7 billion ($127.4 million) to the Nigerian Communications Commission (NCC) to renew its 2x10MHz 2100 MHz spectrum licence which expired on 30 April 2022.
The new licence is valid for 15 years.
It had announced on 9 January 2023 it purchased 100 MHz of spectrum in the 3500 MHz band and 2×5 MHz of 2600 MHz from the NCC for $317 million paid in local currency.