French-speaking African markets were a growth driver for Airtel Africa in 2023
February 6th 2024
The French-speaking markets of Africa constitute a significant growth vector for Airtel Africa, a company listed on the London and Lagos Stock Exchanges. Over the nine months ending December 2023, Chad, Democratic Republic of Congo, Gabon, Madagascar, Niger, Congo and Seychelles generated an operating margin of $203 million, marking an increase of 8.5% compared to the previous year.
This performance surpasses that of the East African markets, which recorded growth of 1.2%, and that of Nigeria which saw its margins fall by 22.8%. Airtel Africa attributes the decline in revenues in Nigeria to an average 64.7% devaluation of the naira. In East Africa, there was a nominal increase in income of 8.5%.
But exchange rate-adjusted real growth is estimated to have reached 21.2%, affected by the devaluation of local currencies such as the Zambian kwacha and Kenyan shilling. Despite these monetary challenges, Nigeria and East Africa remain pillars of activity for Airtel Africa which has managed to increase its customer portfolio to 151 million users, including 62.7 million for Internet and 37.5 million for electronic money services.
However, the company experienced a significant $50 million gap between analysts’ revenue forecasts and reported results, highlighting less robust performance than expected. This factor combined with a limited volume of shares available – with Airtel directly and indirectly controlling 71.5% of the stakes – may make Airtel Africa less attractive to frontier market investors.
Major shareholders such as Warburg Pincus, Qatar Holdings, and Singapore Telecommunications remain long- and medium-term investors. Despite a market valuation of $5.04 billion which suggests undervaluation, according to some analysts, Airtel Africa is planning a $100 million share buyback program in March 2024. Which represents 2% of its market value. This operation will mainly benefit institutional investors, given the low number of retail investors.
The financial analysis of Airtel Africa reveals a company navigating through economic challenges with a strategy focused on expanding its user base and delivering value to its shareholders. Nonetheless, for a comprehensive assessment, it is crucial to consider the broader economic impacts, telecommunications industry trends and competitive position of Airtel Africa.
Source: Agency EcoFin
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