Investing in Airtel Africa: A Growing FTSE 100 Stock in the African Telecom Market

Airtel Africa is an FTSE 100 stock that has been performing well in the past three years, competing against some of the top players in Africa, including East Africa’s Safaricom and Vodafone. Moreover, the company’s recent Q4 results show promise for the future, making it a potential investment opportunity for those looking to tap into the growth of the African market.

Airtel Africa has a strong presence in several African countries, and its Q4 results indicate that the company is well-positioned for growth in the future. With a competitive stance in the market and a solid track record of performance, Airtel Africa is a stock worth considering for those seeking a potentially profitable investment.

Airtel Stock Performance 2019-2023

Airtel Africa is an FTSE 100 stock that has been making strides in the African telecom market, competing against established players like Safaricom in East Africa. According to a report by Motley Fool, the company has been growing rapidly since its registration in 2019.

In 2020, Airtel Africa made a profit of $598 million before tax, and in 2022, this figure skyrocketed to over $1.2 billion, with the shares rising by over 60% in the same period. The company operates in East Africa, Nigeria, and most French-speaking African countries. Its Q4 results show that the revenue per user is over $3 and has been steady for some time.

This number indicates that revenue growth comes from new and increasing subscribers rather than existing customers. In the regions, the user base increased to over 138 million from 125 million, and the Average Revenue Per User (ARPU) of $3 is not high compared to other players in the region, such as Vodafone, which receives $2.90 from 185 million users.

The future looks bright for Airtel Africa as its mobile banking service is taking off and fending off competition from Safaricom in East Africa. The company transacts over $100 billion in payments yearly, which may not compare to Safaricom’s numbers, but the growth rate is quite high for Airtel Africa. With a focus on expanding its services, increasing its user base, and maintaining steady revenue growth, Airtel Africa is a good investment opportunity.

Dividends and Debt

Aside from earnings and growth, the company rewards shareholders with good dividends. In 2022, the dividend was $0.05 for each share, and the company hopes to pay mid-to-high single-digit percentages each year. In 2023, the interim dividend has been raised to 9%, with the stock currently yielding 3.7%.

The telecom’s debt, like any other telecom, is significant because the equipment is costly, especially as they roll out 5G in the regions. However, the company has its debt under control, owed to the net debt being 1.3 times higher than EBITDA.

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