Malawian mobile operator, Telekom Networks Malawi (TNM) is anticipating a “challenging” economic environment exacerbated by foreign currency shortages, a volatile exchange rate and sustained cost pressures on margins and revenue.

The company raised mobile money revenue by 23% in the financial year to the end of December, in addition to uplifting data income by 21%. However, it now anticipates a worsening of the economic environment as inflation ravages Malawi’s economy.

“The macro-economic environment is expected to remain challenging putting pressure on revenue and margins,” TNM said as it released its 2021 full year financials. “The volatile exchange rates and foreign currency scarcity will continue to increase the cost of our operations.”

Despite these headwinds, TNM says it will “continue” with its “innovative model” aimed at minimising the effects of inflation and exchange rate volatility.

“TNM has embarked on a recovery plan that will grow the revenues for future profitability. Management will continue to pursue cost containment initiatives in order to protect margins and improve performance,” explained George Partridge, outgoing chairman of the board of TNM.

On the back of a 14% rise in subscribers, TNM posted a 25% rise in after tax profits for the period to about US$9.4-million. This was after the company lifted revenues by 9% to US$122-million.

TNM disclosed that it has a revolving credit facility with Standard Bank amounting to US$20-million. It said the “purpose of the facility to finance or refinance” capital expenditure.

“The facility has a tenor of 24 months and attracts an interest at a rate of Standard Bank reference rate plus 1.9% effectively 14.1%. TNM has covenanted to maintain a USD denominated account with Standard Bank and to channel all its USD receivables to the said account.”

Earlier in April, the TNM board of directors appointed Ted Phiri, who served as MultiChoice finance director for southern Africa, as new board chairman.

TNM CEO Arnold Mbwana said Phiri was bringing “diverse experience across many countries to foster world-class standards of service” to the telco.

TNM is looking to boost its mobile money unit. It said last year that “over 55% of Malawi’s adult population does not have access to financial services” of any kind.

“This means that the potential for growth of our business is still enormous,” it said, adding that it was thus investing in “infrastructure development and continuous improvement of our business” to tap into this potential.