Airtel Africa plc has announced that it has further renewed the existing services agreements in place with Bharti Airtel Limited (BAL) and its wholly owned subsidiary Bharti Airtel International (Netherlands) B.V, (BAIN).
This was contained in the company’s notice to the Nigerian Exchange Limited seen by Nairametrics.
According to the statement signed by Simon O’Hara, Group company secretary, the renewal was under which, BAL (itself or through its affiliates) provides certain services to the Company (and its subsidiaries) relating to finance, operations, and corporate head office functions.
The company noted that the existing services agreements and the arrangements under them were described in the Company’s prospectus published in connection with its listing in June 2019.
“For Chapter 11 of the Listing Rules, BAL is a related party of the Company by its shareholding in the Company through its wholly-owned indirect subsidiary Airtel Africa Mauritius Limited. Under Listing Rule 11.1.10R, the Transaction constitutes a ‘smaller related party transaction’, and this announcement is made by Listing Rule 11.1.10R(2)(c).
Accordingly, the Company has received confirmation from a sponsor that the terms of the Transaction are fair and reasonable as far as shareholders of the Company are concerned,” the statement said.
Estimated total payments
The company explained that the consideration paid to BAL under the existing services agreements in the financial year ended 31 March 2023 was $9.9 million.
It added that it is estimated that the total payments to BAL in the current financial year and the next financial year under the renewed existing services agreements will amount to between $19.8 million and $24 million in aggregate over the two years.
What you should know
Airtel Africa plc recorded a foreign exchange loss of $471 million in the first quarter ending on June 30.
This is according to the company’s financial statement filed at the Nigerian exchange.
The unification of the exchange rate by the Central Bank, which pushed the exchange rate from N460/$ in June to N790/$ was the reason for the loss.
The company’s revenue increased by 9% during the period to $1.37 billion from the $1.25 billion it recorded in the same period for 2022.
However, it stated that the company used an exchange rate of N502/$ to prepare its financial result. If the closing rate of N752/$ were used to calculate its financial results, revenues would have slumped to $1.20 billion representing a 4.4% decline.
Airtel Africa plc made a loss after tax of $151 million in the period under review.
This represents an 184.7% decrease compared to the profit after tax of $178 million made in the same period of 2022.
This was driven by the $570 million incurred in foreign exchange and derivative losses. It also recorded a loss before tax of $221 million.
Earnings per share (EPS) for the period declined to negative 4.5 cents.
This represents a 204% decrease from 4.4 cents recorded in the same quarter of 2022.
The company saw its tax bill reduced on account of the naira devaluation from $119 million in the prior period to $84 million in the current financial statement.
Despite the harsh macroeconomic environment, Airtel Group saw its customer base increase by 8.8% to 143.1 million users.
The customer base for its Nigerian subsidiary grew by 4.8% as the average revenue per user (ARPU) increased by 16%.
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