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Monday, March 20, 2023

Airtel Africa eclipses MTN Nigeria’s Valuation First Time Since Listing

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MTN Nigeria was the toast of investors going into its highly sought after listing in 2019, where it garnered a rich valuation and shares were so scarce to buy that even the EFCC had to intervene.

Not anymore it seems.

Airtel Africa has overtaken MTN Nigeria in market capitalization for the first time since both their listings in 2019.

Market capitalization, commonly called market cap, is the market value of a publicly traded company’s outstanding shares. Market capitalization is equal to the share price multiplied by the number of shares outstanding.

MTN Nigeria listed in May 2019, in a N2 trillion naira ($6.54 billion) flotation turning the telecoms company into the exchange’s second-largest stock by market value.

Airtel Africa on its part, listed on the Nigerian Stock Exchange in July 2019, in a N1.36 trillion ($4.4 bln) flotation which turned the telecoms company then into the bourse’s third-largest stock by market value.

The trend had remained largely the same since both listings until this month which has seen the tables turn.

Airtel Africa had a market capitalization of N3.495 trillion on Friday, compared to N3.196 trillion for MTN Nigeria.

The reason for the switch in fortunes is that MTN Nigeria stock has sold off (down by 14.6%) in the past month to N157 per share while Airtel Africa has held steady at N930 per share.

Investors may have soured on MTN Nigeria after it’s not too impressive 2020 Full Year results, sole exposure to Nigeria and its slow growing economy and macro issues, and at the same time betting on faster growth for Airtel Africa (which operates in 14 countries on the African continent), and which just announced a deal to sell a stake that values its mobile money business at $2.5 billion.

It probably doesn’t help MTN that regulatory authorities are also largely keen on protecting the banks in Nigeria by making Telco’s partner with banks on mobile money operations.

Investors should watch this space as the markets are clearly signalling a divergence of fortunes for both firms at least in the medium term.

MTN Nigeria trades at a price to earnings (P.E) ratio of 15.57x compared to Airtel Africa which trades at a P.E ratio of 16.96x.

MTN Nigeria stock has gained 70.5 percent in the past year and sports a dividend yield of 5.99 percent, compared to Airtel Africa which is up 226.2 percent in one year, with a 1.37 percent dividend yield.

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