Airtel Africa plc has announced the renewal of its existing service agreements with Bharti Airtel Limited (BAL) and its subsidiary Bharti Airtel International (Netherlands) B.V. The Nigerian Exchange Limited was notified of this development through a statement by Simon O’Hara, the Group company secretary.
The agreements entail BAL providing services related to finance, operations, and corporate head office functions to Airtel Africa and its subsidiaries. These agreements were previously described in Airtel Africa’s prospectus published during its listing in June 2019.
As BAL indirectly holds shares in Airtel Africa through Airtel Africa Mauritius Limited, it is considered a related party according to the Chapter 11 of the Listing Rules. The Transaction is classified as a ‘smaller related party transaction’ under Listing Rule 11.1. A sponsor has confirmed that the terms of the Transaction are fair and reasonable for the shareholders.
In the financial year that ended on March 31, 2023, Airtel Africa paid $9.9 million to BAL under the existing services agreements. The company estimates that the total payments to BAL over the next two years, under the renewed agreements, will range from $19.8 million to $24 million.
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Meanwhile, Airtel Africa faced significant challenges in its first quarter ending on June 30. The company reported a foreign exchange loss of $471 million due to the unification of the exchange rate by the Central Bank, causing the Naira to depreciate from N460/$ in June to N790/$.
This depreciation impacted the company’s financial performance. Despite these challenges, Airtel Africa experienced a 9% increase in revenue during the period, reaching $1.37 billion compared to $1.25 billion in the same period in 2022.
However, this growth was based on an exchange rate of N502/$. If the closing rate of N752/$ had been applied, revenue would have decreased to $1.20 billion, a decline of 4.4%. Airtel Africa reported a loss after tax of $151 million, representing a significant decrease compared to the profit after tax of $178 million achieved in the same period of 2022.
This loss was primarily driven by foreign exchange and derivative losses amounting to $570 million, resulting in a loss before tax of $221 million. Earnings per share (EPS) also declined by 204% to negative 4.5 cents.
Despite the challenges posed by the macroeconomic environment, Airtel Africa managed to increase its customer base by 8.8% to reach 143.1 million users.
Its Nigerian subsidiary experienced a 4.8% growth in customer base, driven by a 16% increase in average revenue per user (ARPU)
