A decline of 5% in year-end 2022 profits was recorded by Airtel Africa.
Airtel Africa Faces Challenges Amidst Growth
In a recently published financial statement on the Nigerian Exchange Group (NGX), Airtel Africa revealed a mixed performance for 2022. The telecommunications giant, led by CEO Olusegun Ogunsanya, reported a 16.2% growth in mobile services revenue across its regions, but also a 0.6% drop in profit after tax (PAT) to $750m.
Ogunsanya acknowledged the operational challenges faced by Airtel Africa, citing significant inflationary and foreign exchange pressures, as well as the local currencies of their operating countries being under pressure. One of the most notable challenges is the controversial 50% price hike in telecommunications services in Nigeria, which led to calls for consumer boycotts by Nigeria's largest labor union. This regulatory pressure, combined with the high cost of expanding infrastructure in challenging markets, has typically limited profit margins and constricted revenue acceleration.
Despite these challenges, Airtel Africa continues to invest in growth initiatives. The company reported strong customer and Average Revenue Per User (ARPU) growth over the year, demonstrating that demand for their services remains very strong. The growth in mobile services revenue was driven by both voice and data services, with voice revenue growing by 11.8% and data revenue by 23.8%. Airtel's revenue grew by 11.5% to $5.25m in 2022.
Airtel Africa also faced a setback due to a clampdown on Nigerian subscribers who had not submitted their National Identification Number (NIN). This resulted in a revenue loss of $110m and a lag in revenue growth of almost 2.4% at Group level, and 6% in Nigeria. However, as of March 2023, 6.4 million Airtel Africa customers had submitted their NINs, while 3.5 million customers had been fully verified and unbarred.
Despite the challenging operating environment, Ogunsanya expressed hopes of improvement and emphasised the resilience of Airtel's underlying EBITDA margins, which shows the effectiveness of their operating model. The company is also actively investing to build longer-term digital infrastructure and financial inclusion services that could support future growth. These efforts include ramping up Airtel Money’s customer base and adding infrastructure sites to support future growth and sustainability.
In summary, Airtel Africa is navigating a complex landscape of regulatory and socio-political challenges, as well as operational hurdles in expanding network coverage across diverse African markets. However, the company remains optimistic, with a forward-looking approach that prioritises long-term growth and digital inclusion.
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- In the rapidly evolving mobile industry, Airtel Africa's growth strategy includes significant investments in digital infrastructure and financial inclusion services, aligning with the broader technology and financial business trends.
- Despite the dropped profit after tax (PAT) and regulatory pressures, such as the price hike in telecommunications services in Nigeria, Airtel Africa's growth in mobile services revenue reflects strong demand for voice and data services within the African business sector, a testament to the company's resilience in these challenging market conditions.
