The N1,905.40 per Airtel Africa Plc share closed on Monday July 18 represents a year-to-date (YtD) return of 99.5%. Telco’s stock price is trading at a 52-week high, according to stock trading news.
The telecommunications and mobile money service provider said it will announce its results for the three months ended June 30, 2022 on Thursday, July 28. Afterwards, its management will hold a conference call for analysts and investors at 12:00 p.m. , UK time (BST). Thursday, July 28, 2022.
Analysts say much improved FX liquidity could slow rally
In its May 11 note to investors, the Ope Ani analyst team at Lagos-based Coronation Research urged investors to sell Airtel shares due to their perceived downside risk amid their target price (TP) of 1,051.07 naira for the stock.
“Airtel Africa’s operating performance in the fourth quarter (Q4) 2022 was strong and in line with our expectations. We expect continued network and infrastructure expansion to enable the group to deliver substantial revenue and profit growth through 2023. The investment case for the business remains the same – the company is well positioned to capture the growing adoption of mobile and internet in largely under-utilized regions of Africa. market – and we believe that has already been priced in,” Coronation analysts said in their May 11 note to investors.
According to them, on the Nigerian Stock Exchange, shares of Airtel Africa continue to trade “at valuations which we find unduly high”.
“Plus, it’s gotten more expensive since our last note. By our estimates, the stock is trading at Forward P/E and EV/EBITDA multiples of 18.9x and 6.7x, a rich premium to emerging market peers’ multiples of 13.7x and 5.6x. Additionally, in London, it trades at a Forward P/E of 9.8x. Current valuations would place the stock higher than Safaricom, Africa’s best mobile money growth story, which trades at a PE of 18.0x and generates an ROE of 48.9%.
“We believe the main reasons for the poor valuation are primarily related to Nigeria’s FX liquidity conundrum and the stock’s low liquidity relative to its market capitalization. Although the FX situation is slightly better than “In 2020, FX liquidity is still very low for outbound equity investors compared to pre-pandemic. In our view, much improved FX liquidity could slow the rally. As a result, we maintain our SELL recommendation on the stock,” Coronation analysts had noted.
SmartCash Payment Service Bank started operations
Airtel Africa announced on May 19 that its subsidiary SmartCash Payment Service Bank Limited (SmartCash PSB) has commenced operations in Nigeria. He said his services were initially available at select retail touchpoints and operations will be gradually expanded across the country over the coming months.
“I am very pleased to announce the start of our operations for financial services in Nigeria through SmartCash PSB. This is the start of our journey to revolutionize the financial services landscape in the country. To help further digitize the economy , and especially to help the unbanked by reaching out to the millions of Nigerians who currently lack access to financial services by offering checking and savings accounts, payment and remittance services, debit cards and prepayment and more sophisticated services,” noted Segun Ogunsanya, Managing Director of Airtel Africa Plc.
Also Read: Nigerian stock market falls another 0.44%
Settlement of cash tender offer for outstanding senior bonds
Airtel Africa had confirmed on July 8 the settlement of the previously announced cash tender offer to repurchase up to $450 million of the $1 billion 5.35% senior secured bonds due 2024 (“Bonds”). ”) by its subsidiary Bharti Airtel International (Netherlands) BV
An aggregate principal amount of $450 million of notes accepted for purchase for a total of $462.6 million. All bonds accepted for purchase were canceled prior to their maturity in May 2024.
The initial repayment cap of $300 million, as mentioned in the June 22 press release, was increased on July 6 as BAIN, at its sole discretion, decided to obtain a greater debt reduction through the use of cash resources.
This early repayment was made from the Group’s cash reserves and is part of its strategy to reduce external debt in foreign currencies at Group level.
DRC Spectrum Acquisition
Airtel Africa announced on June 6 the purchase of 58 MHz of additional spectrum spread over the 900, 1800, 2100 and 2600 MHz bands, for a gross amount of 42 million dollars. The license for paired spectrum in the 2100 band is up for renewal in September 2032.
All other licenses will continue until July 2036. This additional spectrum will support Airtel Africa’s 4G expansion into the mobile data market and fixed wireless broadband capacity in the home, providing significant capacity to meet to its continued strong data growth in the country.
DRC is the largest country by area in Airtel Africa’s portfolio and its second largest market by population. This investment reflects the telecom operator’s continued belief in the tremendous opportunity inherent in the DRC, supporting local communities and economies by fostering digital inclusion and connectivity.
Review the full year dashboard through March 31
On May 11, Airtel Africa released its results for the fiscal year ended March 31, 2022. Its financial highlights for the full year show reported revenue rose 20.6% for the year to 4,714 million. dollars, and 17.8% for the fourth quarter (Q4).
Underlying constant currency revenue increased 23.3% for the year and 19.1% in the fourth quarter. Underlying constant currency revenue growth was strong across all regions: Nigeria up 27.7%, East Africa up 22.7% and Francophone Africa up 17.2%; and across all key services, with voice revenue up 15.4%, data up 34.6% and mobile money up 34.9%.
Airtel Africa is a leading provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and West and Central Africa.
Airtel Africa offers an integrated suite of telecommunications solutions to its subscribers, including mobile voice and data services as well as mobile money services, both domestically and internationally.
Underlying EBITDA of $2,311 million increased 29% in base currency. Underlying EBITDA margin of 49%, up 294 basis points. Operating profit increased 37.2% to $1,535 million in base currency. After-tax profit rose 82% to $755 million.
Basic earnings per share (EPS) of 16.8 cents represents an increase of 86.5%. EPS before special items was 16.0 cents (FY21: 8.2 cents). Free cash flow from operations of $1,655 million, up 40.5%, with net cash provided by operating activities up 20.7% to $2,011 million.
Over the past twelve months, the company has repaid nearly $1.4 billion of debt to HoldCo thanks to strong upstream cash in its OpCos and proceeds from minority investments in mobile money and sales of rounds. The leverage ratio improved to 1.3x from 2.0x the previous year, with $1 billion of debt now held by HoldCo (FY21: $2.4 billion). Customer base of 128.4 million, up 8.7%, with increased mobile data penetration (customer base up 15.2%) and mobile money services (customer base up 15.2%) 20.7%).
NIN/SIM regulation in Nigeria impacted customer growth in H1, but then returned to strong growth, adding 4 million customers in Nigeria in H2’22. The board had recommended a final dividend of 3 cents per share, bringing the total dividend for FY22 to 5 cents per share (FY21: 4 cents).