Airtel Africa Declines, Share Price Marked Down for Dividend
Airtel Africa Plc’s market valuation dropped to N4.76 trillion on Friday after the telecom company’s share price was marked down for dividend payment. The Nigerian Exchange marked down the telco’s share price by N22.24 to close the week at N1,266.76 from N1,289.00.
The telecom giant share price had plunged significantly, falling from more than N2000 to N1175 per share amidst earnings decline – after hitting the rooftop earlier in the year,
In its latest financial report, Africa’s focused telecom company grew customers but its profit slumped year on year at a time when management put up efforts to deleverage its balance sheet.
Speaking with analysts conference, Segun Ogunsanya, Chief Executive of Airtel Africa said the telco’s customer base surged 9% to 140 million, while the mobile money customers base settled at 31.5 million, representing a 20.4% year-on-year growth.
Then, Airtel Africa’s board of directors announced a plan to pay shareholders a total dividend of 5.45 cents per share, representing an increase of 9% from 5 cents paid in the comparable period.
In naira terms, the stock adjusted its market price by N22.24 per share. The telecom company’s dividend announcement had failed to curb its share price volatility.
Earlier in 2023, Airtel Africa ranked ahead of other members of the trillion naira market capitalisation gang following sustained bullish runs.
The telecom giant’s share price had hit N2040 when its immediate rival was valued very lower in comparison, data from the local bourse show. Trading data tracked by MarketForces Africa show that Airtel Africa has lost 38% from the peak price of N2,040 per share in the local bourse.
The company’s share had maintained an uptrend after it moved to acquire minority interest owners in Nigeria. Its total market valuation had printed near N7 trillion. With declined earnings performance, its overvalued share price has continued to slump.
In its recent earning release, Airtel Africa reported a decline in profitability. Its financial scorecard showed that annual profit was $5 million below the previous year’s record. The telecom giant increased capital spending to boost its market position. Total capital expenditure printed at $748 million, up 14.0%.
According to its earnings presentation, 87% of capex investment is towards growth initiatives. Airtel Africa’s growth initiative is targeted to enhance network capacity, increase coverage and ensure reliable connectivity.
The telco operators increased data capacity by 41.2% to almost 24k Tb/day, with only 35.9% capacity utilization in the network (with peak-hour utilisation of 47.4%).
Management said 90.3% of sites had been upgraded to 4G and it rolled out 6,000+km of fibre over the last year resulting in 70,500+km of total fiber deployment. It said cash capex (excl. spectrum) was higher due to continued investment for future growth and increased spending related to the PSB launch in Nigeria.
“The higher spend is in line with our capital expenditure guidance for the year”, according to the management report. In its latest performance scorecard, Airtel Africa recorded a 27.8% growth in data revenues supported by increased capacity in Nigeria. #Airtel Africa Declines, Share Price Marked Down for Dividend Nigerian Treasury Bills Yield Rises to 7%
