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Airtel’s reduced PAT position doesn’t tell the whole story

It remains to be seen how Airtel Nigeria plans to cover the losses of Q3 2020 in its Q4 2020 financial results.



Like MTN, is Airtel Nigeria considering listing?

This ongoing Covid-19 pandemic has forced the hands of governments around the world to impose a lockdown on movements, activities and businesses. It has had such an impact on the telecommunication sector, especially as they have noted fluctuations in their revenue generation.

Data segment has blossomed whilst revenue from Voice segment continues to suffer. Overall, there seem to have been more negatives than positives for Airtel who for Q3 2020, recorded a profit after tax position of $261m, 21.1% worse off than their position in the previous year.

Analysis from the financial statement does indicate that this was largely due to one-off transactions in the prior year and increased finance costs amongst other things.

READ: 6 managers, 5 name changes, the journey from Econet to Airtel

Airtel and data

Airtel’s swivel to data came quite late. Unlike its counterparts, MTN and Co, who embraced and quickly established a presence with the 4G broadband in 2016, Airtel joined the party in 2018 and had to wrestle for a significant portion of market share in the “data bundle” space. Presently, Airtel Nigeria isn’t doing too badly, as they have exhibited such aggressiveness in the market to make “data” easily one of its most lucrative operating segments.

Data yielded as high as 31.6% of Airtel’s combined revenue according to Q3 reports. Revenue from data segment particularly, increased by 13.8% to $2.870m. Obviously, the telecom giants have continued to rack up impressive numbers in the last few years and by their recent activities, entertain plans to intensify this growth even further.

  • Take for instance, just recently, Airtel scored itself another 10 years in the Nigerian market. The company announced last month that its application for the renewal of its spectrum licenses was approved in December 2020.
  • 16.9 million active data subscribers chose the network in 2017. By March 2020, that figure doubled to 35.4 million. This does not necessarily speak to the efficiency and superiority of the network provider, not entirely anyway. Instead, it is seemingly suggestive of Airtel’s resilience and aggressiveness in the telecom sector. They are determined to compete, thrive and continue investments within and beyond Nigeria to its African counterparts.

READ: Devaluation hurts Airtel Nigeria’s revenue as data revenues grow by 40%

Attention and renewed drive are fully directed towards data and mobile money now and who could blame them. Contemporary times have put telecom services and reliable connectivity at the core of the daily lives of customers. Be it work-from-home, virtual classrooms or digital entertainment, telecom networks have become major drivers for doing most things from within the confines of our homes. But is all these happening at the expense of the voice segment which had hitherto been a pretty reliable source of revenue?

Only 10.4% of total revenue was derived from the voice segment in Q3 2020. Even though voice revenue continues to show growth thus far up by 14.2% in the 9 months period, there is the expectation that this increase will continue at a decreasing rate until it inevitably culminates in a negative.

READ MORE: MTN reports 23% rise in FinTech revenue to launch cash deposits and withdrawals

Every telecom network as a matter of fact is shaping up to harness more from this “data” market opportunity the consequence of the Covid-19 pandemic has created.

The major challenge presently facing Airtel in Nigeria is the new SIM registration rules by the federal government. Airtel’s customer base in Africa increased by 11% to 118.9million. This is a fundamental factor to their increased penetration across mobile data and mobile money usage in and around the continent. The present limitation in SIM registration by the government could hamper this recent growth trajectory Airtel enjoys from its data revenue.

The Chief executive officer Raghunath Mandava shared his thoughts on this, he said “…In part this is due to our continued delivery of strong customer growth in Q3, despite the introduction mid-December of additional customer registration requirements in Nigeria. This has meant a temporary halt to the ability of all operators in the country to onboard new customers. But we are working closely with the government to ensure that all our subscribers provide their valid National Identification Numbers (NINs) and update their SIM registration records, such that disruption is minimised.”

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It remains to be seen how badly the impact of this would be on Airtel Nigeria’s Q4 results or how Airtel plans to cushion the effects of the worst-case scenario playing out.


Ekene Onyeama is a Chartered Accountant currently plying one of the Tier one Banks in Nigeria. He started out his career at Ideascorp Limited, a private company in the hospitality industry where he served as the accountant before switching to banking. Ekene enjoys analyzing companies. He likes to write and is very excited by company valuations. He can be reached on Twitter @Ekenergy_

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Why there is a massive sell-off of US stocks



Nigerian stocks record worst quarterly drop since 2009

The United States 10-year Treasury yields rose to a new one-year high of  1.5% on Thursday sending the equities market on a bearish run. The US Dow Jones Industrial Average was down 1.5% as of 7.30 pm on Thursday falling by a whopping 500 points. The S&P 500 and NASDAQ were both down 2% and 2.75% respectively ad the sell-offs intensified.

Global bond prices also fell lower on Thursday and investors around the world sold off massively as they feared higher inflation could erode bond yields.

What is going on?

Investors are worried that massive injection of stimulus in the US and in most European countries could trigger higher inflation which will erode profits on bond yields assuming their fears materializes.

US inflation rate for the month of January 2021 was 1.4% the same as the month of December 2020. US inflation was as high as 2.3% a year ago yet investors remain worried. In response to this fear, bond yields have hit multiple one-year highs. This fear is has now spread to the US equities market.

US President Joe Biden is seeking a $1.9 trillion stimulus package which many had hoped will please the market. However, it appears investors are rather afraid that it could trigger a “reflation” eroding whatever positive jolt it could have had on the wider economy.

What this means for your stocks

A rise in interest rates is triggering a massive sell-off in US stocks ad investors fear a return to higher inflation could signal the market could be entering a bearish era. Stocks have hit multi-year highs since January as investors poured in billions of dollars into stocks. If this sell-off persists then investors in US stocks could see the value of their portfolio plummet.

Tech Stocks are particularly affected by the sell-offs with investors dumping heavyweights like Netflix, Tesla, Amazon, Microsoft, Facebook, Google all falling. Meme stocks, an acronym for stocks popular with Reddit and Twitter retail investors have also suffered losses.

Nairametrics SSN  subscribers are advised to track their portfolios accordingly.

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Buharinomics: In Stagflation we trust

We explain why President Buhari is synonymous with stagflation and what he can do to get us out of it.



Military located bandits in kankara, Q1 2020 National Debt report, Buhari finally speaks on NDDC probe, urges NA to act with a sense of urgency,National Human Rights Commission,Presidency bows to pressure, agrees to demand made by EndSARS protesters, Our economy is too fragile to bear another round of lockdown-Buhari, Zarbarmari: Massacre by Boko Haram is nothing short of senseless, barbaric, gruesome and cowardly- Buhari

Economists define stagflation as a period of slow economic growth, high unemployment rate and higher inflation. It is one of the worst kinds of economic state of affairs that often leads to poverty, insecurity and social-economic crisis. It is a sticky economic conundrum that is incredibly difficult to escape from.

The latest data from the National Bureau of Statistics reveal Nigeria barely slipped out of a recession in the 4th quarter of 2020 with a 0.11% GDP Growth rate. Despite being a welcome news, it is the slowest GDP Growth rate on record at least since 2011.

Earlier on, in the same week, the Statistics Bureau also released inflation data for the month of January revealing an inflation rate of 16.47%, the highest since April 2017, and affirming Nigeria’s galloping inflation status.

Nigeria is in a protracted state of stagflation and has been in the state since the Buhari administration came into power in 2015. Nigeria’s Gross Domestic product per quarter has averaged 0.18% in the last 6 years since this administration got elected into power. The Buhari government has also presided over a consumer price index change of 108.6%, meaning that prices of nearly every measurable item have doubled in the last 6 years.

Flashback to the first installment of General Buhari and the story is all too familiar. Nigeria’s GDP Growth rate for 1983, 1984 was -10.92% and -1.12% respectively. Annual inflation rate in the same period was 17.2% and 23.8% respectively.

Buharinomics is synonymous with Stagflation.

How did we get here?

While it all started from the drop in oil prices in 2014, a cocktail of economic policies from the Buhari-led administration is largely blamed for Nigeria’s economic quagmire. Since it came into power, the government has adopted economic policies that are centered around defending the local currency, import substitution and social spending.

For all its good intentions, these policies are pregnant with side effects that potentially erase its positives, turning into cancer of cataclysmic proportions.

For example, while the policy of defending the exchange rate stabilized the naira between 2016 and 2019, it cost the CBN trillions in interest payments and high cost of borrowing.

The high cost of borrowing is associated with higher inflation and stunted economic growth as small businesses cannot secure the funding required to expand and even when they do it is expensive.

The policy of promoting locally made goods over their foreign alternatives has also led to multiple bans of access to forex to imports, higher customs duties and taxes on imports and a crushing border closure all of which have combined to send inflation off the roof.

Nigeria’s inflation rate conundrum can also be traced to supply-side challenges such as insecurity, logistic gridlocks, corruption and inefficiencies at the Nations ports and an overall bitter experience in the nation’s ease of doing business.

How to get out of Stagflation

There is no clear-cut set of rules that can end stagflation however a rethink of the government’s approach to policymaking and implementation could be a good first step to control it, especially if the target is one of the major causes of stagflation, supply-side inflation.

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To address Nigeria’s challenges with Stagflation, the Buhari Government will have to swallow its pride and relinquish trust in moribund policies that have not worked. Wholesome of Nigeria’s economic challenges are out of its control (like fall in oil prices) a huge chunk of it is self-inflicted and as such within its control. For example, it must fix the spate of insecurity around the country by being more deliberate with dealing with bandits, militant herdsmen and terrorists.


It must declare a national emergency in the nation’s ports and reduce the lead time to clearing goods for import or export. It must address the logistics issues affecting the distribution of farm produce from a place of planting to the destination of consumption.

Monetary policy restrictions stifling trade must be loosened and replaced with a reward policy system that encourages exports as against imports without banning cheap substitutes that have no local production advantage. We need new regulations and laws that favour private sector investments, protect property and enable capital formation. A case in point is the perennial PIB Bill that gets debated year after year.

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These are not novel ideas within economic circles and as such cannot be that difficult to conceive and concede to doing. The challenges have always been the will and courage to act in defiance of snags such as vested interests, political ideology, endemic bureaucracy, and corruption. This government has shown in the past that it can roll back on unpopular policies except that it does it too late with not enough time to create a positive impact.

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