Bharti Airtel reported fourth-quarter (Q4) profit that missed estimates as currency depreciation in Nigeria, Zambia and other African nations, continues to crimp growth amid challenges of higher costs for airwaves in India, where the company is the largest carrier.
“India is relatively stable now,” Aliasgar Shakir, an analyst with Elara Securities (India) Private Limited, who recommends investors buy the stock, said before the announcement. “But Africa continues to have issues which are impacting the overall numbers.”
The year saw sharp decline in crude oil and other commodity prices impacting several African economies such as Nigeria. Further, due to a change in the Nigerian regulation, dollars have to be purchased in the open market for import payments at higher rates than the Central Bank of Nigeria auction rates available earlier.
The revenue-weighted currency depreciation versus the US dollar across 17 countries in Africa over the last 12 months (exit March 31 rates) has been 21.0 percent, mainly caused by depreciation in Ghana cedi by 36.4 percent, Nigerian naira by 28.5 percent and CFA by 27.0 percent.
In terms of the 12-month average rates, the revenue-weighted y/y currency depreciation has been 8.2 percent, mainly caused by depreciation in Ghana cedi by 49.1 percent, Zambian kwacha by 16.8 percent, Malawi kwacha by 12.3 percent, Nigerian naira by 8.5 percent and CFA by 6.0 percent.
In the African market, exchange rates have continued to depreciate versus the US dollar. The revenue-weighted currency depreciation during the quarter has been 8.0 percent compared with previous quarter, mainly caused by the depreciation in Nigerian naira by 15.1 percent, the CFA by 10.7 percent and Ghana cedi by 6.9 percent.
In a statement, Christian de Faria, managing director/CEO, Airtel Africa, said: “Airtel Africa grew net revenues by 7.5 percent in constant currency terms during FY 2014-15 amidst rather tough economic conditions – results of the commitment demonstrated by the 5,000 – strong Airtel family in Africa. This was also a year when we re-aligned our organisation to bring sharper market and customer focus. “Overall customer base grew by 6.8 million during the year and Airtel Money customer base by 2.7 million. With 3G operations now in all 17 countries and with 3,088 new 3G sites, data revenues have increased by 61.3 percent in constant currency terms. We are pleased to see all round performance in Nigeria, our largest market in Africa.”
Africa’s revenues grew by 3.4 percent y/y in constant currency terms, but the reported revenues were down by 12.6 percent due to significant currency movements in last 12 months.
Reported data revenues stood at $115 million with growth of 55.4 percent y/y in constant currency terms, led by increase in Data customer base by 36.2 percent and higher usage per customer by 34.5 percent. Data revenues contributed to 11.5 percent of overall African revenues vis-à-vis 7.7 percent in the corresponding quarter last year.
Net income rose to 12.6 billion rupees ($199 million) in the three months ended March from 9.6 billion rupees a year earlier, New Delhi-based Bharti said today in a statement. That compared with the 14.8 billion-rupee median of 17 estimates compiled by Bloomberg.
Dan Ojabo
