February 10, 2025/Cordros Report
In this note, we review our estimates and update our outlook for AIRTELAFRI following the release of the company’s 9M-25 result. As anticipated, persistent currency pressures, particularly in Nigeria, weighed on AIRTELAFRI’s revenue growth (-5.8% y/y) in 9M-25, offsetting gains from an expanding customer base (+7.9% to 163.10 million), higher data usage (+32.3% to 6.9GB), and increased mobile money adoption. Nonetheless, we revise our 2025E revenue growth projection upward to +3.2% y/y (Prev.: +2.0% y/y), reflecting expectations of stronger growth in the mobile subscriber base (+8.9% y/y | Prev: +6.3% y/y), while maintaining our ARPU forecast at USD2.16. Thus, we raise our target price (TP) to NGN2,730.71/s (Prev.: NGN2,396.55/s) and upgrade our rating to a “BUY”, implying a 26.6% upside from the last closing price of NGN2,156.90 (Feb 07). Furthermore, we now forecast a total DPS of USD0.06 for 2025E (Prev: USD0.03), translating to a 4.1% dividend yield. Based on our estimates, AIRTELAFRI is trading at a 2025E P/E of 15.4x and an EV/EBITDA of 3.9x.
Revenue and earnings recovery in sight: We now forecast AIRTELAFRI’s revenue to expand by 3.2% y/y in 2025E (Prev: +2.0% y/y), rebounding from the currency depreciation-induced slump in 2024FY (-5.3% y/y). This upward revision reflects sustained operational performance and a relatively stable naira. However, we lowered Nigeria’s OpCo revenue projection (-29.7% y/y | Prev: -25.7% y/y), reflecting a lower ARPU (-30.0% y/y to USD1.80) stemming from sustained naira depreciation despite a higher subscriber base forecast (+4.5% y/y to 53.20 million). Across other regions, we project revenue growth in East (+13.0% y/y) and Francophone (+7.0% y/y) Africa, driven by higher subscriber counts (East Africa: +12.4% y/y to 78.10 million | Francophone Africa: +8.3% y/y to 35.03 million) despite variable ARPU trends (East Africa: +2.0% y/y to USD2.06 | Francophone Africa: -3.1% y/y to USD3.19). Across product segments, we expect growth in data (+1.8% y/y) and mobile money (+49.7% y/y) revenue, while voice revenue is projected to decline by 4.6% y/y. Furthermore, we estimate a 275bps y/y contraction in EBITDA margin to 46.0% still reflecting OPEX pressures in Nigeria and Francophone Africa. Finally, we forecast AIRTELAFRI’s 2025E EPS at USD0.09 (2024FY: loss per share of USD0.44), factoring in a 39.5% decline in finance costs.
Tariff increase to spur Nigeria’s OpCo recovery: The tariff adjustment, set to take effect in March, is expected to have a marginal impact on Nigeria’s OpCo revenue in Q4-25E. For 2026E, the combined effect of the increase and the relative stability of the naira is projected to drive a 76.2% y/y increase in the OpCo’s revenue, reflecting a 60.0% y/y rise in ARPU to USD2.80 amid an increase in subscriber count (+4.7% y/y to 55.70 million). Over the midterm (2026E-2029E), Nigeria’s OpCo revenue is expected to grow at an average rate of 30.4%, recovering strongly from the slump in 2025E (-29.7% y/y).
Valuation: Our target price is NGN2,730.71/s, derived from a 60/40 blend of DCF and sector-relative valuation estimates. Our DCF FV is NGN2,867.82/s derived from an equal blend of FCFF (NGN3,295.96) and FCFE (NGN2,439.67) estimates, assuming a 20.2% WACC, 30.1% CoE and 4.0% terminal growth rate. Similarly, our multiple-based FV of NGN2,525.05/s was derived from an equal blend of P/E (NGN1,992.03) and EV/EBITDA (NGN3,058.06) multiples, utilising Bloomberg’s Middle East and African peer averages for both factors (14.6x and 4.9x, respectively) as multipliers.
