Onome Amuge

Airtel Africa shares could see a notable re-rating after CardinalStone Partners Limited raised its target price for the telecoms operator, citing stronger earnings momentum, tariff adjustments in Nigeria, and stabilising foreign exchange markets across its footprint. 

The brokerage lifted its 12-month target price to N3,906.75 from N3,635.78, implying a potential 69.1 per cent upside from the stock’s current trading level of N2,310.50. Analysts led by Samuel Gbadebo reiterated a Buy recommendation in a note to clients dated August 20.

The revised outlook follows a set of strong first-quarter results in Airtel Africa’s 2025/26 financial year. Profit after tax rose to $156 million, compared with $31 million in the same period a year earlier. According to CardinalStone, the improvement reflects a full-quarter boost from tariff adjustments in Nigeria, better foreign exchange dynamics, recovering trends in Francophone markets, and continued capital expenditure that has expanded the operator’s data monetisation capacity.

Nigeria, the company’s largest market, delivered revenue growth of 30 per cent year-on-year to $333 million in Q1 2025/26. The increase was driven by a combination of higher tariffs and rising data usage, underscoring the resilience of mobile demand even in a challenging macroeconomic environment. CardinalStone now forecasts group revenue to grow 16.6 per cent year-on-year to $5.8 billion by the end of the 2025/26 fiscal year, with an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 48.6 per cent.

Foreign exchange stability also played a crucial role in Airtel Africa’s earnings turnaround. The company reported a $22 million net derivative and FX gain in Q1 2025/26, a sharp contrast to the $136 million loss recorded in the prior year’s first quarter and a $179 million loss in the full 2024/25 financial year. This improvement was underpinned by a strategy to reduce foreign currency debt through increased local borrowings, alongside relatively stable Naira and CFA Franc exchange rates.

The reduction in FX losses helped drive down net finance costs to $173 million from $261 million in the comparable quarter of 2024/25. Analysts argue that further stabilisation in African currencies could continue to provide meaningful relief to the group’s balance sheet, freeing up more cash for network investments and potential shareholder distributions.

Airtel Africa’s growth ambitions extend beyond its balance sheet and tariff strategies. The company recently announced a partnership with SpaceX to bring Starlink’s satellite broadband services to its African customers. Management highlighted the benefits of the collaboration, including faster market expansion, improved customer experience through more resilient networks, and cost savings, particularly in hard-to-reach rural areas where fibre deployment is prohibitively expensive. The deal also aims to enhance connectivity for enterprises, schools, health centres and other social infrastructure in underserved regions.

So far, SpaceX has secured operating licences in nine of Airtel Africa’s 14 markets, with applications pending in the remaining five countries. Analysts at CardinalStone described the partnership as a strategic lever for both network expansion and new revenue streams, noting its potential to solidify Airtel Africa’s competitive position in markets where infrastructure rollouts face logistical and financial hurdles.

The upbeat forecast comes at a time of heightened investor interest in African telecoms, which are increasingly seen as beneficiaries of rising mobile penetration, rising demand for data services, and digital transformation efforts by governments across the continent. Airtel Africa, which operates across 14 countries, remains a key player in this landscape, balancing competitive pricing with ongoing network investment.

CardinalStone’s analysts remain confident that the operator’s earnings momentum, coupled with macroeconomic tailwinds from currency stabilisation, position it well for further upside. “We see significant room for re-rating given current valuations and the company’s demonstrated ability to navigate macroeconomic challenges,” Gbadebo and his team wrote.

With investors looking for growth opportunities outside traditional developed markets, Airtel Africa’s performance and its expanding role in bridging Africa’s digital divide, is likely to keep it firmly on the radar of frontier market funds and global telecoms investors.