Airtel Africa Hits N6.76T as Fallen Angel Resurrects
At N6.764 trillion, Airtel Africa Plc has again reclaimed its highest position in the equities market movers’ category on the Nigerian Exchange. The increase in market value was supported by investors’ sentiment, rather than earnings performance.
As a fallen angel, Airtel Africa’s stock market valuation has declined speedily below N5 trillion before its latest resurrection journey despite its unimpressive financial scorecard posted on the Nigerian Exchange.
Investment banking firm analysts predicted that demand for the telecom stock is expected to jump as foreign investors seeking to repatriate funds abroad rotate their portfolio to leverage Airtel Africa’s dual listing.
In the first half of 2024 result, Airtel Africa’s earnings was negatively impacted by a series of macroeconomic development. Profit came negative after large foreign exchange losses, details from its unaudited financial statement revealed.
Some analysts believe that a positive expectation about the company’s future earnings stream continues to drive momentum – as capital spending rose, albeit, moderately.
After the acquisition of its Nigerian minority interest through its share buyback programme, Airtel Africa’s share has become less volatile. From about N8 trillion in market value, the telecom company had plunged below N5 trillion following large share sales by equities investors.
Profit after tax was negative in the first half of the financial year 2024. In the first half of 2023/24 financial year, Airtel Africa revenue grew by 2.3% year on year to $2.623 billion from $2.565 billion in the comparable period.
The improvement in the topline was supported by growth in data and mobile subscribers. Details obtained from its book showed that the telecom company grew its data subscribers by 23%, and mobile subscribers advanced by 9.7% in the period, according to details from its results.
The telco deepened its footprint in the mobile money business where revenue jumped by 25.5% year on year to US$416 million in the first half of FY2024. This was supported by data revenue which grew by 5.9% to US$915 million. Airtel Africa posted above 5% year-on-year decline in its voice revenue which settled at US$1.16 million in the period.
The telecom bottom line performance was significantly impacted by FX losses in the first half of its 2024 earnings result, as net finance costs grew by 144.1% year on year to US$873 million. This negatively affected the bottom line as profit before tax declined by 97.7% year on year to US$12 million compared with US$330 million in H1 2022.
Airtel made significant investments in network infrastructure and expanding data coverage should help improve the quality of the company’s services, according to CSL Stockbrokers update on the company.
Pre-tax profit slumped by about 98% to $12 million, though operating free cash flow ascended by about 5% to $900 million despite a 0.6% increase in capital expenditure to $312 million. The company declared an interim dividend of 2.38 cents per share for the review period.
Rather than its recent earnings release, investors’ sentiment and low share volatility are major drivers of Airtel Africa’s higher-than-peer stock market valuation. #Airtel Africa Hits N6.76T as Fallen Angel Resurrects Nigeria Eurobond Slumps after CBN Resumes OMO Auction
