Airtel Africa, a leading provider of telecommunications and mobile money services, has expressed optimism regarding the recent changes made to Nigeria’s foreign exchange market. In a regulatory notice addressed to the Nigerian Exchange Limited, the company stated that these modifications would alleviate the challenges it had faced in accessing US dollars in the market over the past few years.

The Central Bank of Nigeria (CBN) recently announced a series of changes to the operations of the Nigerian Foreign Exchange (FX) Market. These changes include the abolition of segmentation, with all segments now merging into the Investors and Exporters (I&E) window. Furthermore, the CBN reintroduced the ‘Willing Buyer, Willing Seller’ model at the I&E window. As a consequence of these decisions, the US dollar has appreciated against the naira in the I&E window. “Airtel Africa welcomed these changes, recognizing them as a positive step towards a more stable Nigerian FX market,” the company said in a statement.

Airtel Africa’s Group Company Secretary, Simon O’Hara, elaborated on the company’s position in a statement. He highlighted that the company’s recent financial results for the year 2022/23 included a currency devaluation sensitivity analysis. According to this analysis, a 1% devaluation in the Nigerian naira would have a negative impact of $22 million on revenues, $12 million on earnings before interest, taxes, depreciation, and amortization (EBITDA), and $7 million on finance costs (excluding derivatives) over a 12-month period.

Additionally, a 1% devaluation in the Nigerian naira would negatively impact derivative instruments held by the company by approximately $1.5 million. However, Airtel Africa stated that the weighted average exchange rate used in their profit and loss statement for the 12 months ending on March 31, 2023, was approximately 440 NGN/USD, and the rate used to prepare the balance sheet as of the same date was 461.4 NGN/USD. The company further emphasized that the US dollar component of operating costs within their Nigerian business is minimal and, therefore, they do not anticipate a significant impact on the EBITDA margin.

The statement also highlighted the growth potential of Airtel Nigeria, which is Airtel Africa’s largest market. The company believes that Airtel Nigeria can experience substantial growth due to its underpenetrated market, population growth, and strong demand for digital and financial services.

With these changes to the foreign exchange market in Nigeria, Airtel Africa is hopeful that the new currency policy and the realignment of market exchange rates will increase the availability of US dollars, ultimately resolving the dollar access challenges that have persisted in recent years. As the company’s largest market, the positive outlook for Airtel Nigeria bodes well for Airtel Africa’s future growth prospects in the region.