Is Airtel Africa heading for delistment from NGX? Some analysts think so! As parent company buyout minority shareholders Airtel can’t trade itself, say analysts
RECENT AC TIVITIES on the shares of Airtel Africa listed on the Nigerian Exchange (NGX) is raising concerns about a possible movement to the exit door of the local equities market by the telecommunication and mobile money giant. And analysts are not shying away from thinking that this plan is being executed in a rather subtle way even if some are wont to describe it as ruthless.
Business A.M. sources within the analysts community told of their concerns over the move by Airtel, with some of them emphasising that it is more likely that the wireless carrier will delist its shares from the local bourse soon, since Airtel Africa cannot and will not trade itself. Their prediction comes with the completion of the buyout deals by Airtel, which strongly now suggests the telecom giant may be on a possible ride to delist from the Nigerian Exchange.
Analysts at Cordros Capital have also stated in their recent valuation report for the telecoms sector, that “Airtel enjoys a better valuation above MTN Nigeria Plc – the industry’s leader in the telecommunication segment.
“While Airtel Africa purchased back its shares from Nigeria, MTN Nigeria is deepening its retail base by selling to Nigeria additional 575 million shares, accounting for 2.8 percent of the planned sell-down of the group holdings in the local operation,” they noted.
Last Thursday Airtel Africa announced the completion of the minority shareholding buyback of its Nigerian subsidiary, Airtel Networks Limited, for the total consideration of N61 billion in buyout deals equivalent to $147 million using an exchange rate of N415.07 to the dollar.
In the most recent regulatory filings by the compaBEARISH ny, the 8.22 percent minority shareholding, which the company acquired, brings Airtel Africa’s total holdings to 99.96 percent ownership over its largest subsidiary. It would be recalled that the company had on October 4, 2021, announced its intention to embark on the minority shareholding buyback in its Nigerian subsidiary, where it sought to buy back the 8.26 percent minority shareholdings at an offer price of N55.81 per share.
Assuming all minority shareholders decided to tender their shares, the total consideration was estimated to be N61.24 billion and equivalent to $148.1 million using an exchange rate of N413.38 to the US dollar. This represented an open offer to all shareholders.
A critical look at Airtel Africa’s half-year 2022 financial statement filed to the Nigerian Exchange Limited, shows the telco reported that foreign exchange had an adverse impact of $31 million on revenue and $17 million on underlying EBITDA, as a result of the devaluation of the Nigerian currency, while its largest exposure was to the Nigerian Naira, and one percent devaluation, which has a negative impact of $16 million on revenues, $9 million on underlying EBITDA and $7 million on finance costs.
Furthermore, Airtel reported that during the first six months of the 2022 trading year, there was a year on year decline in the customer base of 3.6 million due to the implementation of new “Know-Your-Customer” (KYC) requirements in Nigeria, which included a temporary halt to new customer activations.
New activations have been permitted in regulatory approved outlets since the end of April 2021.