Airtel Africa is reported to have made a significant purchase of its own shares, acquiring 8.6 million ordinary shares from Citigroup Global Markets Limited. This acquisition is part of a broader, strategic share buyback plan that Airtel Africa initiated on March 1, 2024. Under this plan, the telecommunications giant has committed to buying back shares amounting to $100 million over the course of the subsequent 12 months.
The objective behind this buyback program, as articulated by Airtel Africa, is multifaceted. Firstly, the company intends to reduce its share capital through this mechanism. This reduction is expected to have a domino effect, leading to a decrease in the company’s debt load. Additionally, there is an anticipation of a subsequent decrease in the operating expenses of the company—a move that could further stabilize its financial standing.
As part of the process, Airtel Africa has made it clear that any shares repurchased under this initiative will be taken out of circulation permanently through cancellation. The cancellation of shares results in a reduced number of shares available on the market. Consequently, the value of the shares held by the remaining investors will increase proportionally, meaning they will possess a greater equity stake in Airtel Africa. This increased ownership could likely lead to richer returns from future dividend distributions because the dividends would be distributed among a smaller pool of shares.
In addition to benefiting shareholders, Airtel Africa also sees this program as a way to consolidate its control and authority over the company’s operations. With fewer shares publicly traded, the company’s decision-making process could become less diluted, allowing for more decisive and potentially more effective corporate governance.
Airtel Africa has assured that the execution of this share buyback will be in full compliance with the established terms and conditions specified in their contractual arrangement with Citigroup. This indicates a careful and deliberate approach to the share repurchase, ensuring that it aligns with legal and financial regulations. Such prudence is indicative of Airtel Africa’s commitment to good corporate practices while it seeks to strengthen its balance sheet and market position.
Airtel Africa has taken further steps to enhance shareholder value through a share repurchase program that was agreed upon by its shareholders. At the company’s general meeting on July 4, 2023, the shareholders consented to the buyback of up to 375,815,150 ordinary shares, providing the company with the authorization to proceed with the repurchase strategy.
This share buyback is structured to occur in two distinct phases. The initial phase involves an expenditure of $50 million and is scheduled to span a period of seven months, extending from March to August 2024.
In one of their recent buyback transactions, Airtel Africa successfully repurchased 487,985 ordinary shares directly from Citigroup. These shares were bought at a weighted average price of £103.94, equivalent to $131.70, per share. This transaction forms a part of the broader strategy to manage the company’s share capital judiciously.
Segun Ogunsanya, the Chief Executive Officer of Airtel Africa, provided insight into the reasoning behind the share buy-back initiative. According to Ogunsanya, the decision to embark on this program was taken in light of the substantial revenue that Airtel’s businesses had accrued. He emphasized that from the perspective of the board, reallocating capital towards the buyback of its shares was a compelling option, given the Group’s optimistic outlook for sustained growth in the long term.
However, like many companies operating in Nigeria, Airtel Africa has not been immune to the economic upheavals in the region. The company’s financial reports for December 2023 showed a downturn in revenue, which was largely attributed to the devaluation of the Nigerian naira affecting the company’s exchange rates.
In response to these challenges and in an effort to mitigate rising operational expenses, Airtel Africa has taken strategic measures which include the outsourcing of several tower operations. The company’s Nigerian subsidiary has transitioned this segment of its operations to IHS Towers, a move that is likely aimed at optimizing costs and enhancing operational efficiencies.
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