Airtel Africa (LSE:AAF) isn’t the FTSE 100‘s most famous name. But it’s been making headlines as the blue-chip share index’s greatest riser in the year to date.
At 144.9p, Airtel Africa’s share price has risen an impressive 23.7% since 1 January. It shot up 9% on Thursday (30 January) alone thanks to an upbeat response to its latest financials.
So what’s all the buzz about? And can the FTSE firm continue its northwards march?
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A booming market
A blend of low market penetration, rising disposable incomes, and rapid population growth is supercharging telecoms and financial services demand in Africa. And Airtel has shown it has the tools to capitalise on this opportunity.
The company — which provides voice, data, and mobile money services across 14 African nations — saw revenues at constant currencies rise a whopping 20.4% in the nine months to December, to $3.6bn, it announced today.
Customer numbers grew 7.9% between April and December, to 163.1m. And data usage per customer increased by 32.3%, to 6.9 gigabytes, as smartphone adoption continued to rise.
The volume of data and mobile money customers rose 13.8% and 18.3% respectively over the nine months.
Revenues were boosted by Airtel’s sustained investment across its markets. Data capacity rose by just over a fifth between April and December.
Good and bad
It wasn’t all sunshine for Airtel during the period, however. Turnover continues to be impacted by adverse currency movements, and more specifically currency devaluations in Nigeria, Malawi, and Zambia.
At actual currencies, sales dropped 5.8% in the nine months.
But largely speaking this was another rock-solid statement from Airtel. With currency pressure beginning to moderate, and demand for its services still rocketing, the future looks bright for the FTSE firm.
Analyst Neil Shah of Edison Group notes that “with sustained investment in network expansion, a growing customer base, and rising data and mobile money penetration, Airtel Africa remains well-positioned for long-term growth“.
This could pave the way for further significant share price gains. Airtel shares have almost doubled in value over the last five years.
Attractive value
After this year’s stunning gains, Airtel Africa trades on a pumped-up price-to-earnings (P/E) ratio of 31.7 times for this financial year (to March 2025). This could, at first glance, suggest limited price upside, at least in the near term.
But look a little closer and the business actually seems to offer real value. For the new year beginning in April, it’s P/E slumps to 10.6 times, beginning in April. This reflects City expectations of a 198% earnings jump.
What’s more, its price-to-earnings growth (PEG) ratio is just 0.1 for the upcoming fiscal period. Any reading below one implies that a share is undervalued.
It’s important to remember that earnings forecasts are known to miss their mark. If this happens, a share price can fall sharply in value.
While this is a risk, Airtel’s strong momentum and substantial structural drivers suggest it’s in good shape to meet — or potentially even exceed — analyst estimates. I fully expect the FTSE firm’s share price to continue its long-term ascent.
