August 4, 2026/Cordros Report
In this note, we update our outlook for AIRTELAFRI for 2027E following the release of the company’s Q1-27 results. We forecast sustained growth across revenue (+24.0% y/y), EBITDA margin (+75bps y/y to 50.0%) and EPS (+93.0% y/y to USD0.36). Our view is predicated on (1) sustained momentum in data, with usage per customer projected to rise by 13.7% y/y to c.10.1GB per month, (2) a steadily expanding customer base (voice net adds: +18.1 million | data: +12.5 million), and (3) operating leverage as cost-efficiency initiatives hold. Accordingly, we raised our target price to NGN6,782.60 (Prev.: NGN4,362.49), reflecting improved earnings expectations. However, with the stock having largely priced in the stronger outlook, our implied upside narrows to 16.9% from the current market price of NGN5,801.40, leading us to downgrade our rating from “BUY” to “HOLD”. We also forecast a total dividend per share of USD0.08 for 2027E (Dividend yield: 1.8%). Based on our estimates, AIRTELAFRI trades at a 2027E P/E of 12.0x and an EV/EBITDA of 5.4x vs MEA peer averages of 16.1x and 6.1x, respectively.
Topline and margin gains to lift earnings: For 2027E, we project a 24.0% y/y growth in AIRTELAFRI’s revenue to USD7.95 billion driven by a 9.8% y/y expansion in the total customer base to 201.61 million (net adds: +18.1 million) and an 11.0% y/y uplift in ARPU to USD3.44. We forecast broad based gains across core segments: data (+25.6% y/y), voice (+8.9% y/y), mobile money (+35.1% y/y) and other revenue (+18.9% y/y). Data will remain the main growth driver, with the share of the group revenue expected to reach 40.0% (2026FY: 38.5%) reflecting rising smartphone adoption and higher data consumption per customer. We also expect broad based revenue growth across operating regions – Nigeria (+22.0% y/y), East Africa (+25.9% y/y) and Francophone Africa (+23.1% y/y), driven by expanding subscriber bases (Nigeria: +9.0% y/y | East Africa: +9.2% y/y | Francophone Africa: +12.4% y/y) amid firmer ARPU trends (Nigeria: +15.1% y/y to USD2.80 | East Africa: +6.7% y/y to USD2.39 | Francophone Africa: flat at USD3.40). On profitability, we estimate a 75bps y/y expansion in EBITDA margin to 50.0% with topline growth expected to outpace total expenses (+22.1% y/y). Finally, we forecast a 60.7% y/y growth in PAT in 2027E. Meanwhile, EPS including NCI is forecast at USD0.36 (2027E-2031E CAGR: +13.9%), while DPS is forecast at USD0.08 (2026FY: USD0.07).
Sustained deleveraging to strengthen the balance sheet: AIRTELAFRI’s leverage position is expected to improve further in 2027E, with net debt to EBITDA and net debt to equity forecast to ease to 1.4x and 1.3x, respectively, (2026FY: 1.8x and 1.7x, respectively) before trending further to 1.3x and 1.0x by 2028E. Similarly, interest coverage is expected to strengthen to 3.4x in 2027E (2026FY: 2.4x) reflecting a growing earnings base alongside a largely stable debt profile. Taken together, we expect stronger debt servicing capacity, enhanced financial flexibility, and a more resilient balance sheet.
Valuation: Our target price is NGN6,782.60/s, derived from a 50/50 blend of DCF and sector relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN8,298.92/s) and FCFE (NGN4,157.86/s) estimates, assuming a 14.7% WACC, 24.4% CoE and 4.0% terminal growth rate. Similarly, our multiple based FV was derived from a blend of EV/EBITDA (NGN6,870.96/s) and P/E (NGN7,802.66/s) estimates, utilising MEA peer averages for both factors (6.1x and 16.1x, respectively) as multipliers.