October 4, 2021/CSL Research
Yesterday, Airtel Africa, the second-largest mobile operator in Africa by active subscribers, announced plans to buy back the 8.27% minority shareholdings in its subsidiary, Airtel Networks Limited (Airtel Nigeria). Details from the offer document revealed that Airtel Africa is offering N55.81 per share, which by implication, results in a total consideration of N61.24bn (c.US$148.1m at an exchange rate of N413.38/US$) should all minority shareholders sell their shares. At a current price of N715.00/s, Airtel Africa Plc is the third most capitalized stock on the local bourse. While we expect further announcements, we believe it may conduct the share buyback program in tranches given the sizable transaction amount.
Airtel Africa has its footprints in 14 African countries, including Nigeria, Niger, Kenya, Congo, etc. The company offers two primary services, telecommunications (mobile voice and data) and mobile money. By the number of countries, the company has its largest base in East Africa with a presence in 6 countries. Nevertheless, Nigeria is Airtel Africa’s largest single-country market. This lends credence to the 40% revenue contributed by Airtel Nigeria to the Group revenue as of Q1 2022, trailed by East Africa (35%). In essence, Nigeria remains an attractive market for it to expand its presence.
In terms of ownership structure, Airtel Africa held the majority shareholding of Airtel Nigeria at 91.7% with the rest held by minority shareholders as of Q1 2022. In effect, the proposed transaction shows Airtel Africa will have full control and ownership of its subsidiary, Airtel Nigeria. This allows the Group company to promote its ‘Win with’ strategy to offer extensive and affordable solutions to customers. Meanwhile, Olusegun Ogunsanya, who formerly was the CEO of Airtel Nigeria, assumed the role of the Group CEO and MD on 1 October 2021. Given his stint and exceptional track record at the subsidiary company, we believe he is well capable to drive the company to its destination
