Airtel Africa Buys Back Shares to Reduce Debt and Cut Costs
Airtel Africa, Nigeria's second-largest mobile network operator, has initiated a significant share buyback program. The company has purchased 8.6 million ordinary shares from Citigroup Global Markets Limited, with the first tranche worth $50 million completed between March and August 2024. This move aims to reduce Airtel Africa's share capital, lower debt obligations, and operational costs.
The latest transaction with Citigroup involved the repurchase of 487,985 ordinary shares at a weighted average price of £103.94 ($131.70) per share. The buyback program, set to run for 12 months, is part of a broader plan initiated in February 2024 to achieve the same objectives.
Airtel Africa's CEO, Segun Ogunsanya, attributed the decision to launch the share repurchase initiative to the company's substantial cash flow generation. Despite facing challenges in maintaining profitability due to macroeconomic factors, particularly in Nigeria, the board believes repurchasing shares is an attractive use of capital given the company's strong long-term growth outlook.
The company's financial statement for December 2023 showed a 21.96% drop in revenue, largely due to the decline in the value of the Nigerian naira and its impact on Airtel's conversion rates. To mitigate high operating costs, Airtel Africa has taken steps such as outsourcing a significant portion of its tower operations to IHS Towers.
The second share buyback program, aiming to repurchase 8.6 million ordinary shares, is scheduled to end by November 18, 2025. This strategic move by Airtel Africa is expected to strengthen its financial position and improve operational efficiency, despite the ongoing challenges in its largest market.
