The naira devaluation by the Central Bank of Nigeria (CBN) adversely affected the earnings of telecommunications company, Airtel Africa.

Ripples Nigeria learnt that Airtel Africa recorded a foreign exchange loss of $471 million following the naira devaluation that occurred on June 14.

Recall that the CBN devalued the naira in the official foreign exchange market from N471.67/$1 on June 13 to N664.04/$1 on June 14. Although the naira to dollar rate was last reported at N768.60/$1 on Thursday.

According to Airtel Africa in its second quarter (Q2) financial statements 2023 obtained on Thursday, the devaluation led to a foreign exchange loss of $471 million in Q2 but the chief executive officer of the firm, Olusegun Ogunsanya, said the devaluation is a welcome development.

“Despite the strong operating performance, our results have been impacted by foreign exchange headwinds. This quarter saw the announcement of the change to the FX market in Nigeria which resulted in a significant naira devaluation

We have welcomed this reform as very positive for the medium and long-term development of our business in Nigeria, our largest market.

The country offers significant untapped growth potential, underpinned by highly attractive fundamentals. This has supported and sustained a strong operating performance which has seen a five-year revenue and EBITDA CAGR of 23.5% and 27.3% in constant currency, respectively,” Ogunsanya said.

Airtel Africa’s CEO stated that the naira devaluation will eventually improve liquidity, which has been scarce in the foreign exchange market.

“We expect the FX reforms to improve liquidity over time, thereby alleviating the challenges faced by international businesses over the last few years associated with accessing US dollars and thus hindering accelerated growth.”

Ogunsanya also revealed that Airtel Africa has been reducing its exposure to the forex market and the firm will continue to do that to limit the impact of future devaluation.

“However, in the reporting period the devaluation has had a material impact on our results. Over the last few years, we have actively reduced our FX exposure across the Group, and this will continue to be a focus area in the future to limit the impact of any future devaluation,” he said