Tuesday, October05, 2021 / 05:15 PM / by CSL Research / Header Image Credit: Business Today

Recently, Airtel Africa, the second-largestmobile operator in Africa by active subscribers, announcedplans to buy back the 8.27% minority shareholdings in its subsidiary,Airtel Networks Limited (Airtel Nigeria). Details from the offer documentrevealed that Airtel Africa is offering N55.81 per share, which by implication,results in a total consideration of N61.24bn (c.US$148.1m at an exchange rateof N413.38/US$) should all minority shareholders sell their shares. At acurrent price of N715.00/s, Airtel Africa Plc is the third most capitalizedstock on the local bourse. While we expect further announcements, we believe itmay conduct the share buyback program in tranches given the sizable transactionamount.

Airtel Africa has its footprints in 14 Africancountries, including Nigeria, Niger, Kenya, Congo, etc. The company offers twoprimary services, telecommunications (mobile voice and data) and mobile money.By the number of countries, the company has its largest base in East Africawith a presence in 6 countries. Nevertheless, Nigeria is Airtel Africa'slargest single-country market. This lends credence to the 40% revenuecontributed by Airtel Nigeria to the Group revenue as of Q1 2022, trailed byEast Africa (35%). In essence, Nigeria remains an attractive market for it toexpand its presence.

In terms of ownership structure, Airtel Africa heldthe majority shareholding of Airtel Nigeria at 91.7% with the rest held byminority shareholders as of Q1 2022. In effect, the proposed transaction showsAirtel Africa will have full control and ownership of its subsidiary, AirtelNigeria. This allows the Group company to promote its 'Win with' strategy tooffer extensive and affordable solutions to customers. Meanwhile, OlusegunOgunsanya, who formerly was the CEO of Airtel Nigeria, assumed the role of theGroup CEO and MD on 1 October 2021. Given his stint and exceptional trackrecord at the subsidiary company, we believe he is well capable to drive thecompany to its destination.

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