Airtel Africa Share Price (AAF)

91p worth a tranche. GL all

"FINTECH FRENZY: Tap Into Africa's Mobile Money Boom".

In the 'what to buy' section Airtel Africa is described as "one of the purest plays on the market". The other LSE option mentioned was Wise.

Swings and roundabouts of inflation and currency have many different sides that have opposing viewpoints,but, increasing numbers using the products cannot hide the direction of the company...Well up.....and consistently up...A bargain at this market cap....

The Naira is down another 3% this week.

Today, you now only get £485 for 1,000,000 Nigerian Naira. At the start of the current financial year this figure was closer to £1,760.

So as we enter the new Financial Year, conversion of the Dividend, (which is declared in USD) and any of the various calculations that one might use to calculate Enterprise Value, (which we trade in GBP), is now diluted to one quarter of what it was 12 months ago.

I appreciate that Nigeria makes up only about 35 -40% of the Groups overall operations, but it should also be borne in mind that in the first 6 months of the current year, 12 out of the other 13 African nations in which Airtel have a presence also experienced a currency devaluation; with three of these (Zambia, Kenya and Malawi), being between 10 and 20%. Only the Central African Franc provided a token Re-valuation to counteract the other 13.

Airtel is a great business, and has delivered sustained growth in their year on year financial performance over the 6 /7 years that I have been invested. Ever expanding coverage, more services, and a mobile banking capability is great if you are a customer paying in Naira, or an employee being paid in Naira, or a supplier invoicing in Naira.

Yes, Nigeria might be the fastest growing economy in Africa, and Yes, the population may double over the next 25 years, but the fact remains that, going into FY '25, the returns on our investment (be it dividends, or Valuation of the Enterprise, which translates into share price), is now calculated at just c25% of the exchange rate that it was a year ago, on what is the cornerstone network in their portfolio.

Usually, when it comes to selling I am hopeless at converting intuition, into action. But in the case of AAF, in the past week I have sold c85% of the c50k shares that I had.

Have I been too rash?

The one possible saving grace is that the Dividend cover has been 3x., and this may be enough to afford what will be part year effects of the recent devaluations, - but for the year that is just about to start, it will be this time next year, before we know whether the full effect has been priced into an SP of c95p.

According to Bloomberg, Nigeria's economy grew faster than anticipated in the fourth quarter of 2023 so, with regard to Airtel, we can only hope that the bad news has now been priced in. No shortage of internal issues in Nigeria though.