MTN Nigeria and Airtel Africa Make Significant Strides in Reducing Foreign Debt

In a bold move to mitigate the impact of foreign exchange fluctuations on their financials, MTN Nigeria Communications Plc and Airtel Africa have collectively repaid a staggering $1.2 billion in foreign debt in 2024. This significant repayment is aimed at easing the foreign exchange burden that has been weighing heavily on their financials.

The naira’s steep depreciation in 2023 had a devastating impact on both telcos, resulting in massive foreign exchange losses totaling $1.56 billion. MTN Nigeria was particularly hard hit, declaring its first loss after tax of N137 billion since its 2019 listing on the Nigerian Stock Exchange. Airtel Africa also reported a loss after tax of $89 million for its full year ended March 2024.

To avoid further foreign exchange-induced losses, MTN and Airtel have taken proactive steps to reduce their foreign currency liabilities. MTN Nigeria has made significant strides in this regard, slashing its outstanding letters of credit (LC) dollar obligations from $416.6 million to $20.8 million by the end of 2024. This represents a remarkable reduction of over 95% in just one year.

Airtel Africa has also made significant progress in reducing its foreign currency debt exposure. The company repaid a whopping $739 million in foreign currency debt over the last year, bringing its total foreign currency debt down to just 8% of its total debt.

As both companies continue to navigate the complexities of foreign exchange fluctuations, they are shifting their focus towards local debt. Airtel Africa now holds an impressive 92% of its debt, excluding lease liabilities, in local currency, up from 79% a year ago. MTN has also restructured its loan portfolio, with 72% now in naira and 28% in dollars.

This strategic shift towards local debt is expected to reduce the companies’ exposure to foreign exchange fluctuations, enabling them to better manage their financials and make more informed investment decisions.

In conclusion, MTN Nigeria and Airtel Africa’s proactive efforts to reduce their foreign debt and shift towards local debt are a testament to their commitment to mitigating the impact of foreign exchange fluctuations on their financials. As they continue to navigate the complexities of the telecoms industry, their strategic decision-making is likely to have a positive impact on their bottom line.