MTN Nigeria Communications Plc and Airtel Africa Plc have taken significant steps to mitigate their foreign exchange exposure amid the naira’s sharp decline, which has led to financial losses despite robust revenue growth. In the first half of 2024, both telecom companies reduced their combined foreign exchange debt to $100 million, down from $966.6 million in December 2023, to minimize losses from currency volatility.
The Central Bank of Nigeria’s decision to unify the country’s foreign exchange market in June 2023 caused the naira to depreciate from N471/$ to N1,384/$ by June 2024, erasing revenue gains reported by both MTN and Airtel. MTN, Nigeria’s largest telecom operator, saw a 32.83% revenue increase to N1.54 trillion in H1 2024 but recorded a post-tax loss of N519.1 billion. Similarly, Airtel Nigeria reported a 35.29% rise in naira revenue to N700.90 billion, though its dollar-denominated revenue fell to $522 million.
To combat FX losses, MTN reduced its outstanding letters of credit from $416.6 million to $100 million, while Airtel Africa cleared its external debt at the holding level, repaying $550 million in bonds. Both companies noted improved FX market liquidity and are adopting cost-saving measures, such as seeking local alternatives for solutions, to manage their foreign exchange reliance and support growth despite economic challenges.
Industry analysts note that the telecom sector’s financial performance has struggled to support its capital-intensive nature, with operating costs rising and revenue in naira stagnating despite increased subscriber numbers. However, telecom companies continue to explore strategies to mitigate these challenges and leverage growth opportunities across their markets.
