Airtel Africa (LSE:AAF) - Share price, News & Analysis

Q: What is the Fair Price of AAF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

AAF (£1.38) is trading below our estimate of [[fair value]] (£6.69)

AAF fundamental analysis
Snowflake Score
Valuation	6/6
Future Growth	3/6
Past Performance	6/6
Financial Health	4/6
Dividends	3/6

AAF Stock Overview

Airtel Africa Plc provides telecommunication and mobile money services to customers in Nigeria, East Africa, and Francophone Africa.

Rewards

Trading at 79.4% below our estimate of its fair value

Earnings are forecast to grow 13.65% per year

Earnings grew by 86.1% over the past year

Risk Analysis

Unstable dividend track record

Airtel Africa Competitors

Vodafone Group

LSE:VOD

UK£35.5b

Gamma Communications

AIM:GAMA

UK£1.1b

BT Group

LSE:BT.A

UK£18.5b

PLDT

PSE:TEL

₱373.1b

Price History & Performance

Summary of all time highs, changes and price drops for Airtel Africa
Historical stock prices
Current Share Price	UK£1.38
52 Week High	UK£1.63
52 Week Low	UK£0.76
Beta	1.32
1 Month Change	-13.82%
3 Month Change	-2.27%
1 Year Change	76.44%
3 Year Change	94.09%
5 Year Change	n/a
Change since IPO	103.25%

Recent News & Updates

Jun 17

Why We Like The Returns At Airtel Africa (LON:AAF)

Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key...

Shareholder Returns

	AAF	GB Wireless Telecom	GB Market
7D	0.9%	0.4%	2.3%
1Y	76.4%	-0.3%	-8.6%

Return vs Industry: AAF exceeded the UK Wireless Telecom industry which returned -0.3% over the past year.

Return vs Market: AAF exceeded the UK Market which returned -8.6% over the past year.

Price Volatility

Is AAF's price volatile compared to industry and market?
AAF volatility
AAF Average Weekly Movement	4.9%
Wireless Telecom Industry Average Movement	5.3%
Market Average Movement	5.5%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: AAF is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: AAF's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2018	3,757	Segun Ogunsanya	https://airtel.africa

Airtel Africa Plc provides telecommunication and mobile money services to customers in Nigeria, East Africa, and Francophone Africa. It offers prepaid and postpaid wireless voice, international roaming, and fixed line telephone services; data communication services, including 2G, 3G, and 4G; and mobile money services, such as payments, microloans, savings, and international money transfers. The company also provides messaging, value added, enterprise, and site sharing services, as well as support services; and sells handsets.

Airtel Africa Fundamentals Summary

How do Airtel Africa's earnings and revenue compare to its market cap?
AAF fundamental statistics
Market Cap	US$6.36b
Earnings (TTM)	US$631.00m
Revenue (TTM)	US$4.72b

10.1x

P/E Ratio

1.3x

P/S Ratio

Is AAF overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
AAF income statement (TTM)
Revenue	US$4.72b
Cost of Revenue	US$1.79b
Gross Profit	US$2.94b
Other Expenses	US$2.31b
Earnings	US$631.00m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Jul 28, 2022

Earnings per share (EPS)	0.17
Gross Margin	62.19%
Net Profit Margin	13.36%
Debt/Equity Ratio	62.3%

How did AAF perform over the long term?

See historical performance and comparison

Dividends

2.8%

Current Dividend Yield

30%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is AAF undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for AAF?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for AAF. This is calculated by dividing AAF's market cap by their current preferred multiple.
What is AAF's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$6.36b

AAF key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2x
Enterprise Value/EBITDA	4.5x
PEG Ratio	0.7x

Price to Earnings Ratio vs Peers

How does AAF's PE Ratio compare to its peers?

AAF PE Ratio vs Peers

The above table shows the PE ratio for AAF vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	16.9x
VOD Vodafone Group	19.8x	4.9%	UK£35.5b
GAMA Gamma Communications	20.6x	7.3%	UK£1.1b
BT.A BT Group	14.3x	6.9%	UK£18.5b
TEL PLDT	12.6x	-7.2%	₱373.1b
AAF Airtel Africa	10.1x	13.7%	UK£5.2b

Forward PE

Price-To-Earnings vs Peers: AAF is good value based on its Price-To-Earnings Ratio (10.1x) compared to the peer average (16.9x).

Price to Earnings Ratio vs Industry

How does AAF's PE Ratio compare vs other companies in the Global Wireless Telecom Industry?

Price-To-Earnings vs Industry: AAF is good value based on its Price-To-Earnings Ratio (10.1x) compared to the European Wireless Telecom industry average (14.5x)

Price to Earnings Ratio vs Fair Ratio

What is AAF's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

AAF PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	10.1x
Fair PE Ratio	20x

Price-To-Earnings vs Fair Ratio: AAF is good value based on its Price-To-Earnings Ratio (10.1x) compared to the estimated Fair Price-To-Earnings Ratio (20x).

Share Price vs Fair Value

What is the Fair Price of AAF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: AAF (£1.38) is trading below our estimate of fair value (£6.69)

Significantly Below Fair Value: AAF is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: AAF is good value based on its PEG Ratio (0.7x)

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Future Growth

How is Airtel Africa forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

13.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: AAF's forecast earnings growth (13.7% per year) is above the savings rate (0.9%).

Earnings vs Market: AAF's earnings (13.7% per year) are forecast to grow faster than the UK market (11% per year).

High Growth Earnings: AAF's earnings are forecast to grow, but not significantly.

Revenue vs Market: AAF's revenue (10.2% per year) is forecast to grow faster than the UK market (4.1% per year).

High Growth Revenue: AAF's revenue (10.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: AAF's Return on Equity is forecast to be low in 3 years time (19.3%).

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Past Performance

How has Airtel Africa performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

46.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: AAF has high quality earnings.

Growing Profit Margin: AAF's current net profit margins (13.4%) are higher than last year (8.7%).

Past Earnings Growth Analysis

Earnings Trend: AAF has become profitable over the past 5 years, growing earnings by 46.8% per year.

Accelerating Growth: AAF's earnings growth over the past year (86.1%) exceeds its 5-year average (46.8% per year).

Earnings vs Industry: AAF earnings growth over the past year (86.1%) exceeded the Wireless Telecom industry 46.1%.

Return on Equity

High ROE: AAF's Return on Equity (20.7%) is considered high.

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Financial Health

How is Airtel Africa's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: AAF's short term assets ($2.0B) do not cover its short term liabilities ($3.1B).

Long Term Liabilities: AAF's short term assets ($2.0B) do not cover its long term liabilities ($3.6B).

Debt to Equity History and Analysis

Debt Level: AAF's net debt to equity ratio (38.8%) is considered satisfactory.

Reducing Debt: AAF had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: AAF's debt is well covered by operating cash flow (88.5%).

Interest Coverage: AAF's interest payments on its debt are well covered by EBIT (5.3x coverage).

Balance Sheet

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Dividend

What is Airtel Africa current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.84%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: AAF's dividend (2.84%) is higher than the bottom 25% of dividend payers in the UK market (1.88%).

High Dividend: AAF's dividend (2.84%) is low compared to the top 25% of dividend payers in the UK market (5.18%).

Stability and Growth of Payments

Stable Dividend: AAF has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: AAF has only been paying a dividend for 3 years, and since then payments have fallen.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (29.7%), AAF's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (14.2%), AAF's dividend payments are thoroughly covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

3.1yrs

Average management tenure

CEO

Segun Ogunsanya

0.67

Tenure

US$1,862,000

Compensation

Mr. Olusegun Ogunsanya, also known as Segun, serves as the Chief Executive Officer, Managing Director & Director at Airtel Africa Plc since October 1, 2021. He serves as the Chief Executive Officer and Man...

CEO Compensation Analysis

Compensation vs Market: Segun's total compensation ($USD1.86M) is below average for companies of similar size in the UK market ($USD3.26M).

Compensation vs Earnings: Insufficient data to compare Segun's compensation with company performance.

Leadership Team

Experienced Management: AAF's management team is considered experienced (3.1 years average tenure).

Board Members

Experienced Board: AAF's board of directors are considered experienced (3.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/27 00:00
End of Day Share Price	2022/06/27 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31