August 14, 2025/Cordros Report
In this note, we update our 2026E outlook for Airtel Africa Plc (AIRTELAFRI) following the release of their Q1-26 financial results. The company delivered robust performance during the period, posting revenue growth of 22.4% y/y, EBITDA margin expansion of 276bps y/y to 48.0%, and a sharp EPS increase of 18.32x y/y. Following our review, we raise our target price by 11.7% to NGN3,930.47/s (previously: NGN3,519.61/s) and maintain our “BUY” recommendation. The upward revision to our valuation is driven by a 173bps y/y uplift in our EBITDA margin forecast to 47.9%, underpinned by an anticipated 21.0% y/y increase in revenue — supported by sustained pricing momentum and modest currency translation gains in select markets — relative to projected total expense growth of 17.0% y/y. As such, we now forecast an EPS of USD0.18 (+205.7% y/y) and total DPS of USD0.09, implying a 6.5% dividend yield. On our updated estimates, AIRTELAFRI is trading at a 2026E P/E of 7.9x and an EV/EBITDA of 3.7x.
Earnings outlook strengthened on margin gains: We project aggregate revenue growth of 21.0% y/y (prev: +19.7% y/y), primarily driven by an upward revision to our Francophone Africa forecast (+10.7% y/y; prev: +7.6% y/y), supported by favourable currency movements in the region. This uplift offsets downward adjustments to our Nigeria (+39.4% y/y; prev: +53.1% y/y) and East Africa (+5.9% y/y; prev: +6.9% y/y) projections, both reflecting lower ARPU assumptions (Nigeria: USD2.38 vs. prev: USD2.55 | East Africa: USD2.10 vs. prev: USD2.12). At the segment level, we expect broad-based expansion across all major revenue lines—data (+21.4% y/y), voice (+10.5% y/y), mobile money (+52.4% y/y), and other revenue (+16.8% y/y). This growth is underpinned by a 6.8% y/y expansion in the total customer base to 177.66 million (data subs: +10.7% y/y to 81.28 million | mobile money subs: +8.8% y/y to 48.54 million) alongside a blended ARPU of USD2.47 (+12.1% y/y). We now estimate a 173bps y/y expansion in EBITDA margin to 48.0%, driven by stronger revenue growth that more than offsets the upward adjustment to total expense growth forecast (+17.0% y/y; previously: +16.6% y/y). We also anticipate a 6.5% y/y reduction in finance costs, supported by a more stable currency environment in operating regions. Overall, we forecast EPS growth of 205.7% y/y to USD0.18 (previous: +144.9% y/y to USD0.15).
ROE recovery expected to outpace historical trend: We view 2026E as a clear inflection point for AIRTELAFRI, with ROE projected to recover to 21.2%, well above the recent troughs of 2024FY (-3.9%) and 2025FY (11.8%) and comfortably exceeding five-year (2020FY – 2025FY) average of 12.1%. Over our forecast horizon (2026 – 2030E), we expect ROE to average 23.6%, marking a structural uplift in capital efficiency. The recovery is anchored by robust topline growth, EBITDA margin gains, reduced FX-related losses, and a sharp rebound in net profitability. In our view, these tailwinds positions AIRTELAFRI to restore shareholder returns to levels not seen since its peak years, reinforcing our positive medium-term outlook.
Valuation: Our target price is NGN3,930.47/s, derived from an 80/20 blend of DCF and sector-relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN4,425.99/s) and FCFE (NGN3,347.38/s) estimates, assuming a 16.3% WACC, 26.7% CoE and 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN4,114.07/s) and P/E (NGN4,097.17/s) estimates, utilising Bloomberg’s MEA peer averages for both factors (5.3x and 14.6x, respectively) as multipliers.
