Airtel Africa Plc 2024FYE Performance - Strong Local Currency Sales Hampered by FX Devaluations
Currency Woes Persist in Nigeria
In three operating regions, AIRTELAFRI recorded stronger YoY reporting currency revenue growth in only Francophone Africa . In reporting currency terms, Francophone Africa grew by 12.39% YoY to NGN1.35bn in 2024FYE (vs. 6.21% YoY in 2023FYE). This growth was stronger than 10.34% YoY in 2024FYE recorded in constant currency (vs. 12.66% YoY in 2023FYE), due to currency appreciation in the Central African Franc during the period.
Stable Operating Margins: Lower Costs Offset Declining Sales
In reporting currency, the 4.55% YoY decline in operating expenses to USD2.57bn in 2024FYE (from +11.62% YoY in 2023FYE) was more than offset by the 5.25% YoY decrease in total revenue. This led to a dip in EBITDA by 5.67% YoY to USD2.43bn in 2024FYE (+11.42% YoY in 2023FYE). A decline in revenue and, subsequently, EBITDA inadvertently led to a lower EBITDA margin, closing 45bps lower on a YoY basis to 48.77% in 2024FYE (vs. 7bps YoY decline in 2023FYE).
After considering the factors outlined, we revise our views on Airtel Africa Plc. and update to the "NEUTRAL" recommendation, with a revised target price of NGN2,300.03 (6.98% upside potential as of June 3rd, 2024).
Airtel Africa PLC Formerly known as Airtel Africa Ltd. Airtel Africa PLC is a United Kingdom-based provider of telecommunications and mobile money services. The Company offers an integrated suite of telecommunications solutions, including mobile voice and data services as well as mobile money services both nationally and internationally. It offers traditional mobile voice services, with a primary focus on data and non-voice services through its third generation (3G) and fourth generation (4G) networks. It also offers mobile money services under its Airtel Money brand to customers in all of the Company's 14 countries of operation in Africa, primarily in East Africa and Central and West Africa. The mobile voice business line comprises pre- and post-paid wireless voice services, international roaming and fixed-line telephone services. The mobile data business line comprises data communications services, including second generation (2G), 3G and, increasingly, 4G data services, and other value added services (VAS).
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
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