Upgrades And Market Expansion Will Drive Future Opportunity In African Telecommunications

Key Takeaways

• Strong growth in mobile, data, and fintech segments, underpinned by demographic trends and low market penetration, supports sustained revenue and earnings expansion.
  
• Network investments, cost efficiencies, and reduced FX risk are structurally improving margins, cash flow, and returns to shareholders.
  
• Heavy reliance on macroeconomic stability, regulatory compliance, and resilient currency environments exposes future margins, liquidity, and growth prospects to considerable risk and volatility.

Catalysts

Provides telecommunications and mobile money services in Nigeria, East Africa, and Francophone Africa.

• The combination of continued strong population growth, a young demographic profile, and currently low mobile and data penetration rates across Airtel Africa's markets provides a long multi-year runway for organic customer expansion and ARPU growth, directly supporting sustained increases in revenue and EBITDA.
  
• Rapidly rising smartphone penetration (now at ~46% but still well below global averages) and accelerating data consumption (data traffic up 47%) are driving higher-value data revenues, with substantial room for further ARPU uplift and mix improvement as 2G users migrate to 4G/5G-positively impacting both topline and margins.
  
• Airtel Money's customer base and transaction value are growing strongly (mobile money customers near 46 million, transaction value up 35%), while over 90% of transactions in core markets remain in cash-indicating a significant future addressable market for fintech, which can drive high-margin, non-voice revenue and earnings growth as digital financial adoption continues.
  
• Sustained investment in network rollouts (4G covers ~75% of population, annual deployment of 2,500-3,000 sites, and new data center initiatives), combined with ongoing cost efficiency programs, are structurally expanding EBITDA margins (now 48%, up from 45.3%) and supporting robust free cash flow generation.
  
• Reduced exposure to FX risk through aggressive de-dollarization of the balance sheet (now 95% local currency OpCo debt) and more stable macroeconomic environments are lowering finance costs and improving earnings quality-setting the stage for stronger net profit margins and increased cash available for shareholder returns.

Airtel Africa Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Airtel Africa's revenue will grow by 16.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.5% today to 14.8% in 3 years time.
• Analysts expect earnings to reach $1.2 billion (and earnings per share of $0.3) by about September 2028, up from $339.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.5 billion in earnings, and the most bearish expecting $1.0 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.5x on those 2028 earnings, down from 31.1x today. This future PE is lower than the current PE for the GB Wireless Telecom industry at 31.1x.
• Analysts expect the number of shares outstanding to decline by 1.52% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.82%, as per the Simply Wall St company report.

Airtel Africa Future Earnings Per Share Growth

Risks

• While Airtel Africa reports strong recent revenue and EBITDA growth, management attributes some of this margin expansion to temporary macroeconomic stability (e.g., stable fuel and exchange rates), suggesting that future margin resilience is highly vulnerable to renewed macro or currency volatility, which could reduce net margins and earnings.
  
• Persistent currency devaluation and foreign exchange risk remain acute, especially in Nigeria and other key markets, with the CFO explicitly noting restrictions and delays on upstreaming cash due to negative retained earnings-these ongoing challenges threaten group-level liquidity, profit translation into USD, and dividend policy fulfillment.
  
• The company acknowledges heightening regulatory intervention, such as customer registration (NIN/NIMC process), spectrum renewals, fintech take-rate caps, and broader compliance pressures, each of which introduces risks of higher costs, operational disruption, and possible revenue/margin compression over the long term.
  
• The competitive landscape is intensifying, especially as new technologies like Starlink (satellite broadband) or entrenched local fintechs may limit Airtel's ability to grow ARPU or take rates in both core connectivity and mobile money-jeopardizing future revenue and earnings growth.
  
• Structural challenges-such as the recent slowdown in SIM and customer acquisitions due to regulatory change or increased customer authentication friction, as well as lingering macroeconomic fragility (e.g., droughts impacting operational costs in Zambia)-raise concerns that high historical growth rates in revenue and customer base may not be sustainable, potentially constraining long-term topline and margin expansion.

Valuation

• The analysts have a consensus price target of £2.239 for Airtel Africa based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £2.98, and the most bearish reporting a price target of just £1.44.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $8.2 billion, earnings will come to $1.2 billion, and it would be trading on a PE ratio of 10.5x, assuming you use a discount rate of 6.8%.
• Given the current share price of £2.15, the analyst price target of £2.24 is 3.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.