Airtel Africa sticks to $825m fresh capital plan despite loss

Airtel Africa is set to inject up to $825 million in fresh capital to support its African operations after reporting a net loss of $13 million for the half-year period ending September 30. This loss contrasts with a net profit of $330 million recorded during the same period last year, largely due to the steep depreciation of currencies in key markets such as Kenya, Tanzania, Zambia, Malawi, and Nigeria. The group is also facing a $550 million debt repayment due in May 2024.

Despite these challenges, Airtel Africa, which is listed on both the London and Nigerian Stock Exchanges, remains committed to its long-term strategy in Africa. The company reiterated that its capital allocation policy remains unchanged, with plans to continue investing in operations to ensure future growth. The firm emphasized its capital expenditure commitment for the financial year, targeting between $800 million and $825 million.

As part of its investment, by March 31, Airtel Africa had already spent $500 million on acquiring spectrum, including 5G networks. For example, Airtel Kenya acquired 60 MHz in the 2,600 MHz spectrum band for $40 million, and Airtel Tanzania secured 80 MHz in the 3,500 MHz band, alongside two 15 MHz blocks in the 2,600 MHz band, for a total of $60 million.

In Uganda, Airtel Uganda is facing challenges in complying with regulations that require telecom operators to offer 20% of their shares to the public. The National Social Security Fund (NSSF) Uganda has already invested $52.7 million in Airtel Uganda, equivalent to 10.55% of the shares on offer.

A major factor contributing to Airtel Africa’s financial losses has been the sharp depreciation of currencies across several African markets, which wiped out $345 million in revenue from foreign exchange revaluations. The Nigerian naira’s 51.7% depreciation, followed by significant drops in the Kenyan shilling, Zambian kwacha, and others, took a heavy toll on the company’s earnings. Should the U.S. dollar appreciate further, the company could face additional revenue and finance cost losses.

Voice revenue for Airtel Africa declined by 4.6%, while data revenue saw a 5.9% increase. Mobile money services experienced significant growth, with revenue up by 30.9%, driven largely by strong performance in East Africa and Francophone Africa.

Airtel Africa has been working to manage its debt load, recently recalling $505 million in bonds to save on interest payments. With $1 billion in bonds still outstanding, $550 million is due for repayment in May 2024. The group has already prepaid $450 million in bonds, reducing its overall debt burden.

The financial pressures from currency fluctuations and early debt repayment contributed to a marginal 0.6% decline in net earnings for the financial year ending March 31, 2023, with profit after tax at $750 million. The company, a subsidiary of India’s Bharti Airtel Ltd, continues to explore options to manage its debt, which is approximately $3 billion across its African operations.