November 8, 2024/CSL Research
In the first nine months of 2024, Nigeria’s telecom sector saw varied performances among its listed companies. MTN Nigeria maintained its revenue growth momentum, achieving a 33.7% y/y increase, reaching N2.37 trillion from N1.77 trillion in 9M 2023. In contrast, Airtel Africa reported a 9.6% y/y Revenue decline in its H1 2025 results (March year end), dropping to US$2.37 billion from US$2.62 billion in H1 2024. Airtel’s Revenue decline was largely attributed to substantial currency devaluations in key markets, including Nigeria, Malawi, Zambia, and Tanzania. MTN’s top-line growth was driven by notable increases of 52.3% and 13.8% y/y in data and voice revenue, respectively. Meanwhile, Airtel faced a 7.7% and 17.9% y/y decline in data and voice revenue due to these devaluations.
Operators in the Nigerian telecommunications sector are facing rising operational costs due to inflation, increasing energy prices, currency devaluation, and a shortage of foreign exchange, all of which are straining profitability. This impact is evident in MTN Nigeria’s Direct Network Operating Costs, which surged by 101.5% y/y reaching N902.08 billion in the first nine months of 2024, up from N447.60 billion in the same period in 2023. In contrast, Airtel has managed its costs more effectively, with Direct Network Operating Costs decreasing by 5.7% y/y to US$463 million in the first half of 2025, down from US$491 million in the first half of 2024.
Currency devaluation, particularly of the Naira, has created major challenges for Nigeria’s telecoms sector, with foreign exchange (FX) losses heavily impacting publicly listed operators. MTN Nigeria has been especially affected, recording FX losses totalling N904.93 billion in the first nine months of 2024. To reduce its FX exposure, MTN renegotiated tower lease agreements with IHS and ATC, achieving more favourable terms. The revised leases are now primarily Naira-based, with the US dollar-linked portion minimized. Additionally, they are tied to a discounted US Consumer Price Index (CPI) with a cap on the Naira CPI escalator.
The technology-based pricing model has been removed, and payments are now focused solely on tower space and power for new upgrades. Thanks to these initiatives, MTN’s FX losses declined in the third quarter of 2024, enabling the company to achieve a quarterly profit of N4.13 billion—a significant turnaround from a loss of N126.36 billion in the same quarter the previous year.
Airtel has also taken steps to reduce its FX exposure by localizing its foreign debt, resulting in a significant decrease in FX losses to US$260 million in the first half of 2025, down from US$654 million in the same period in 2024. This strategy has positively impacted its financial performance, with Airtel reporting a Net Profit of US$79 million—a substantial improvement from the US$13 million Net Loss recorded in the first half of 2024.We continue to emphasize the importance of implementing a cost-reflective tariff increase to help telecom operators protect their profitability in the near term. Despite current challenges, we remain optimistic about the long-term outlook for Nigeria’s telecom sector. This optimism is driven by factors such as rising adoption of advanced technologies, a largely untapped internet market, underserved rural areas, and favourable demographics.
