reports
- Chris Hoare
- Chris Hoare
African Telcos Deep dive on Fintech valuations; stay Bullish on AAF a...
We deep dive on African Telco’s Fintech valuations in this note which is a follow up of our higher-level note Show me the (Mobile) Money. African Telcos are becoming more active about unlocking value from Mobile Money (MoMo) with MTN’s recent deal with Mastercard and now rumours that AAF is looking to IPO its MoMo business. Global Fintech/Payments multiples have derated over the past couple of years, but we continue to see great value in the African Telco’s MoMo assets which remain one the key n...
- Chris Hoare
Sub-Saharan African Telecoms Good performance in a challenging macro ...
Q2 was a good quarter for Sub-Saharan African (SSA) operators which continue to benefit from strong fundamentals. Trends accelerated across the board in Nigeria as well as in the other geographies, margins were decent and the capex intensity slowed this quarter.
- Chris Hoare
EM Telcos Q2 23: Slightly slower driven by China
EM Telcos top line growth slowed somewhat in Q2 again driven by a slower quarter in China. However, other markets stayed strong and simple average revenue growth was 8.5%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates, as they have been now for 3 years. With the rates cycle seemingly peaking, macro headwinds may also start to improve, and we continue to believe that EM Telcos are still not in our view priced for mid-term GDP+ growth, and rising returns.
- Chris Hoare
- David Lopes
Nigerian Telcos Faster quarter, strong underlying trends but larger F...
Underlying performance remained strong for both MTN and AAF which saw an improvement in top line and EBITDA trends. However, macro challenges remain and the devaluation of Naira will have a greater impact on headline numbers next quarter.
- Chris Hoare
GEM Telcos Are the price wars finally over?
For 15 years, EM Telcos were engaged in a war for market share, with price the primary weapon. But peace is now breaking out globally. Mobile prices are rising across global EM (India, Brazil, Indonesia, Thailand among others). In this note, we analyze which markets have the greatest potential for recovery, based on 3 criteria: affordability, market structure and challenger returns.
- Chris Hoare
- Chris Hoare
EM Telcos Q1 23: Slowdown in India, elsewhere strong
EM Telcos top line growth slowed somewhat in Q1 driven by price increases in India lapping. However, other markets stayed strong and simple average revenue growth was 9%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates.
- Chris Hoare
- David Lopes
- Chris Hoare
- David Lopes
- Chris Hoare
- David Lopes
EM Telcos Validating the Enterprise thesis
In this note we revisit and update our thesis that Enterprise in EM is following an S-Curve. Key new work shows that as a result, absolute incremental Enterprise revenue in China has doubled each year for the past 3 years. This is why overall Telco revenues have sharply accelerated. We show the other countries/ stocks where the early signs are of the same thing happening.
- Chris Hoare
AAF (Buy, TP: 305p, +163%) MTN (Buy, TP ZAR250, +121%) IHS Towers (Buy...
According to Airtel Africa’s CEO, the diesel price in Nigeria has fallen 20% since the end of March. Additionally, the Nigerian press is reporting that after years of delays the commissioning of the Dangote Refinery is imminent. As a result, we see headwinds turning into tailwinds for the Nigerian Telcos and Towers and especially AAF, and medium term for IHS. This note runs through the potential for earnings upgrades across the space.
- Chris Hoare
Airtel Africa (Buy, TP: 305p, +168%) Q4 23: Mixed quarter
AAF has published a mixed set of Q4 results. Revenue and EBITDA came in slightly below consensus (-1.5% and -1% respectively). There was a small inflection in group trends this quarter driven by a nice inflection in East Africa and in Francophone, but the Nigerian business saw a slowdown in trends mainly because of the cash shortage that happened in calendar Q1 in the country.
- Chris Hoare
- Chris Hoare
- David Lopes
Sub-Saharan African Telecoms Fundamentals still strong; slight ARPU ...
Sub-Saharan African (SSA) operators continue to benefit from strong fundamentals. There was a small slowdown in market service revenue growth in Q4 but EBITDA trends were stable and a small reduction in capex intensity translated into an improvement in OpFCF.
- Chris Hoare
EM Telcos Q4 22: Double digit growth persists
EM Telcos continue to grow ahead of expectations as a group, and remain resilient to inflationary cost pressures on consumers, with growth in Q4 remaining strong for the leading telcos we track. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates.
- Chris Hoare
- David Lopes
Nigerian Telcos Improving top line driven by voice recovery; stay con...
Both MTN and AAF saw improvements in top line growth, driven by the recovery in voice in Q4. MTN slightly outperformed AAF in service revenue but AAF outperformed on the EBITDA side and with low capex intensity in Q4 AAF posted strong OpFCF margins.
- Chris Hoare
MTN & Airtel Africa Analysis of growth and returns suggests it’s time...
This note looks at the key drivers of growth and ROIC for AAF and MTN. Most metrics have been improving, and yet valuations are close to historic lows. AAF and MTN remind us of Bharti c. 2018/19 prior to the latter’s 200% rally, with the market ignoring the signs that fundamentals were improving. We incorporate significant Naira devaluation post–election but still think it is time to go all in.
- Chris Hoare
Airtel Africa (Buy, TP: 305p, +175%) Q3 23: Solid results in Nigeria ...
AAF has published a mixed set of Q3 results. Performance in Nigeria was solid but trends slowed in the other geographies. The market response seems slightly surprising to us as we think underlying trends remain broadly solid and Nigeria is inflecting, showing, in our view, that the company is managing these challenges well. Net profit forecasts for this year are likely to rise materially we think post these figures.
- Chris Hoare
- David Lopes
African Telcos and Towers What if the Naira devalues to 600?
Investor concerns about Naira devaluation, cash repatriation and USD availability in Nigeria have been growing over the past few months. With the Nigerian election in less than a month, we think it is likely that the Naira devalues in the near term. In this note we look at the implications for the African Telcos and Towers if the USD/NGN goes to 600:1USD.
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