Airtel Africa, Nigeria’s second-largest mobile network operator, has repurchased 8.6 million shares from Citigroup as part of its share buyback program launched in February 2024.
Goals of the Buyback:
- Reduce Share Capital: This strategy aims to lower Airtel’s overall debt and operational costs.
- Improve Efficiency: By streamlining its capital structure, Airtel can potentially become more efficient.
Financial Reasoning:
- Strong Cash Flow: CEO Segun Ogunsanya cites Airtel’s healthy cash generation as the reason behind the share buyback program.
- Long-Term Growth: The company believes this strategy aligns with its long-term growth prospects.
Details of the Buyback Program:
- Total Value: $100 million over 12 months, starting March 1, 2024.
- Two Tranches: The first tranche of $50 million covers the period from March to August 2024.
- Latest Transaction: Repurchase of 487,985 shares at an average price of £103.94 ($131.70) per share.
Challenges and Solutions:
- Profitability Concerns: Airtel Africa has faced difficulties maintaining profitability due to economic issues in Nigeria, its main market.
- Revenue Decline: Revenue dropped by 21.96% in December 2023 due to a weakened Nigerian Naira impacting conversion rates.
- Cost-Cutting Measures: Airtel has taken steps to reduce operational costs, like outsourcing tower operations.
The share buyback program signifies Airtel Africa’s efforts to improve its financial health by reducing debt and streamlining operations. However, the company still faces challenges related to profitability, particularly in the Nigerian market.
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