Airtel Africa is facing mounting cost pressures from rising fuel prices across its markets, with higher energy expenses beginning to erode operating margins despite strong revenue growth and cost-cutting measures.
The telecommunications group said geopolitical developments had driven a doubling of fuel prices in Nigeria since the beginning of its 2027 financial year, increasing operating costs progressively during the first half ended September 30, 2026.
Although the company’s underlying EBITDA margin improved by 181 basis points to 58.2 percent in the first half, the impact of higher fuel costs became more pronounced in the second quarter, when the margin declined to 57.5 percent from 58.8 percent in the first quarter.
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Airtel Africa said its cost efficiency programme helped contain the pressure, limiting the sequential margin decline to approximately 130 basis points.
The development highlights the growing challenge facing telecom operators that depend on energy-intensive network infrastructure to deliver mobile voice and data services, particularly in markets where unreliable electricity supply increases reliance on generators.
Despite the pressure, Airtel Africa delivered strong financial results during the period. Revenue increased by 26.6 percent in constant currency, supported by a 12.3 percent rise in average revenue per user (ARPU) and 15.1 percent growth in its customer base.
In reported currency, revenue climbed 44.6 percent to $1.008 billion, partly reflecting the appreciation of the Nigerian naira against the dollar. The weighted average exchange rate moved from N1,553 per dollar in the previous period to N1,360 in the current period.
Underlying EBITDA rose 30.7 percent in constant currency to $586 million, while reported-currency growth reached 49.2 percent, reflecting stronger revenue and continued benefits from the company’s cost efficiency programme.
However, the pressure from fuel prices presents a challenge to sustaining profitability as Airtel increases investment in its network to accommodate growing demand for connectivity.
The company said it had accelerated network investment during the period to expand capacity and improve service quality, positioning the business to capture future growth opportunities.
Operating free cash flow increased by 28.2 percent to $409 million, supported by higher underlying EBITDA, despite significantly increased capital expenditure.
Data services remained a major growth driver, with revenue rising 33.8 percent in constant currency, compared with 20.6 percent growth in voice revenue. Smartphone penetration increased by four percentage points to 56.8 percent, while monthly data consumption per smartphone customer rose to 16.7 gigabytes from 12.7 gigabytes a year earlier.
Sunil Taldar, chief executive officer of Airtel Africa, said the company delivered a strong operating and financial performance despite inflationary pressures from higher fuel costs.
He said the group achieved a record underlying EBITDA margin of 50.4 percent in the second quarter through operational discipline, cost efficiency programmes and scale benefits.
Taldar warned that future margin performance would continue to depend partly on the macroeconomic environment and its impact on fuel costs.
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The company said its confidence in the long-term growth prospects of its markets had informed its decision to accelerate network investment, even as it navigates higher operating expenses.
For Nigeria, the fuel price increase is particularly significant given the country’s electricity supply challenges and the energy requirements of telecom infrastructure. However, Airtel Africa did not disclose the Nigerian subsidiary’s standalone fuel expenses or the precise contribution of Nigeria to the group’s margin movement.
The extent to which higher energy costs will affect future profitability therefore remains an important consideration as the company balances network expansion, service quality and operating efficiency.
Royal Ibeh is a senior journalist with years of experience reporting on Nigeria’s technology and health sectors. She currently covers the Technology and Health beats for BusinessDay newspaper, where she writes in-depth stories on digital innovation, telecom infrastructure, healthcare systems, and public health policies.
