10% Drop: ‘Airtel Africa’s Fundamental Remains Strong’

A financial expert, David Adnori has said that following the loss of about N827 billion so far in the month of May by the investors of Airtel Africa Plc, on the Nigerian Stock Exchange, the company’s fundamentals remain strong.

The domestic equities market came under sell pressure given the recent developments in the fixed-income market. Airtel Africa which opened the month of May at N2,200 per share declined by N2.20 or 11.11 per cent to close at N1,980 per share on May 7, 2024. Also, the Airtel Africa market capitalization declined by N827 billion from N8.268 trillion on April 30, 2024 to N7.441 trillion on May 7, 2024.

Speaking on the Company’s share trading, Adnori, who is also the vice president, Highcap Securities Limited, said Airtel Africa, just like other big companies that occupy the commanding height of the Nigerian economy, will recover from the losses that they suffered as a result of the devaluation of the naira and they would become very relevant to long-term investors.

“So, most of the investors selling off now are speculators or short-term investors. Long-term investors are still there. So, the investment has actually just transformed from short-term to long-term,” he said.

Another expert, Dayo Bello said that the drop recorded by the company on Monday was not an indicator of Airtel’s performance as a company but a general pressure in the market.

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The year end results of Airtel Africa for the financial period ended March 2024 is yet to be released on the Nigerian Exchange. Meanwhile, the Company in a notice to the NGX said it will announce its results for the full year ended March 31, 2024 on May 9, 2024.

The mobile network operator in February 2024 announced a significant move to buy back 8.6 million ordinary shares from Citigroup Global Markets Limited. This decision is part of a broader share buyback plan.

The primary objective of this buyback program is to reduce Airtel Africa’s share capital, which in turn will help lower the company’s debt obligations and operational costs. The CEO of Airtel Africa, Segun Ogunsanya highlighted that the company’s businesses have generated substantial cash flow, prompting the board’s decision to launch this share repurchase initiative.

“The board believes that repurchasing its shares is an attractive use of its capital in light of the Group’s strong long-term growth outlook,” said Segun Ogunsanya.

The company’s financial statement for December 2023 showed a 21.96 per cent drop in revenue, from $1.59 billion to $1.24 billion, which was largely attributed to the decline in the value of the Nigerian naira and its impact on Airtel’s conversion rates.

To address these challenges, Airtel Africa has taken steps to reduce its high operating costs, including outsourcing a significant portion of its tower operations to IHS Towers. The share buyback program is another strategic move by the company to optimise its capital structure and maintain profitability.

By reducing its share capital and debt obligations, Airtel Africa aims to strengthen its financial position and enhance its long-term growth prospects. This bold initiative reflects the company’s commitment to adapting to the evolving market conditions and exploring innovative ways to create value for its shareholders.