Airtel Africa Surged Ahead of March Share Buyback
The market value of Airtel Africa rose by 10% to N8.267 trillion following large daily transactions on the telecom company’s share ahead of its March 2024 share buyback plan.
According to data from the Nigerian Exchange, the telco’s 3.71 billion shares outstanding rose 10% to settle at N2200 on Friday– the most expensive in the stock market.
Under Airtel Africa’s share repurchase plan, management has proposed to purchase up to US$100 million worth of the telecom company’s shares over 12 months using its cash reserves and per applicable securities laws and regulations.
In its latest earnings release, Airtel Africa’s earnings went down sharply – profit tumbled by more than 99%. This was due to negative foreign exchange rates across its African markets.
Airtel Africa had reduced Nigerian minority shareholders’ interest via a share buyback program. This comes in contrast to its immediate competitor, MTN Nigeria Plc, which sold more shares to Nigerians.
Unimpressive Earnings
Airtel Africa’s 9 months of financial data for 2024 was unimpressive as foreign currency exposure dampened earnings weight strongly following a mild decline in the company’s revenue.
The company’s results showed that revenue declined by 1.4% to US$3.86 billion from US$3.91 billion posted at the end of 9 months of financial year 2023. The slide in revenue was on the back of weak local currency in its major markets.
In Nigeria, the naira was weakened, in Zambia, the Kwacha lost value and Malawian Kwacha declined while the Kenya shilling also lost value, the company said. Management noted that the Nigerian Naira devaluation reduced revenue by US$579 million during the nine months ended 31 December 2023.
Airtel Africa said in its financial update that data revenue remained resilient, increasing by 1.9% year on year to US$1.34 billion from US$1.32 billion posted in the comparable period in 2023.
Analysts attributed the telco’s data revenue surge to increased usage, supported by the enhanced capacity through network expansion and smartphone penetration. Its customer base grew but was not strong enough to upturn its negative earnings trend.
The company reported that its total customer base grew by 9.1% to 151.2 million year on year, as mobile data and mobile money services penetration continued to rise.
Data customers increased by 22.4% to 62.7 million while mobile money customers grew by 19.5% to 37.5 million year on year. The company said its mobile money revenue also grew significantly by 22.4% in 9M 2024 to US$631 million from US$515 million.
In contrast, Airtel Africa posted a decline in voice revenue which settled 8.8% below the amount the company achieved in the comparable period in 2023. Its revenue from voice came at US$1.7 billion in 9 months of 2024 from US$1.87 billion.
The company’s spending on direct network moderated in the period, in addition to a moderation on operating expenses which settled at $1.26 million
At the end of the period, Airtel Africa said in its report that the company’s operating profit declined by 1.9% year on year to US$1.29 billion. The company’s operating profit was pressured by increased net finance costs.
In the period, net finance cost increased by 138.54% to US$1.24 billion from US$519 million in the comparable period in 2023.
According to the company, net finance cost was largely impacted by US$748 million of derivatives and foreign exchange losses because of the currency devaluations, especially the Nigerian Naira devaluation.
All in, Airtel Africa’s pre-tax profit decreased by 93.1% to US$55 million from US$801 million over 12 months. Higher tax provisions plunge net income down to $2 million, translating to a 99.6% year-on-year decline in the company’s bottom line. #Airtel Africa Surged Ahead of March Share Buyback
