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Below is a detailed overview of Airtel Africa Plc’s performance during the first half of its fiscal year.

FX Devaluation Hinder Revenue Growth

In its recently released H1:2024 financial result, Airtel Africa Plc (AIRTELAFRI) posted a marginal increase in its consolidated topline in reporting currency. Overall Revenue increased by 2.28% Year-on-Year (YoY) in H1:2024 (vs. 12.88% YoY in H1:2023). This slowdown in growth can be attributed to currency devaluations across markets in all its regions of operation. In Nigeria, the effect of the FX liberalization policy—which resulted in a sizable devaluation in June 2023—on revenue and EBITDA was mostly captured in Q1:2024.

Foreign Currency Obligations: A Recurring Theme

In H1:2024, AIRTELAFRI recorded USD471.08mn in unrealized foreign exchange losses owing to the currency devaluation in Nigeria. Also, given the Group’s strategy to have its OpCos hold more debt, finance costs (excluding FX losses) increased by 12.39% YoY (or USD44.31mn) to USD401.88mn.

After considering the factors outlined, we maintain our bearish stance on Airtel Africa Plc. and retain “SELL” recommendation, with a revised target price of NGN1052.58 (41.20% loss potential as of November 20th, 2023).

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