DCF Studio

    AAF.L · LSE · Communication Services

    Airtel Africa Plc

    Also onConsensus Drift

    Implied value per share

    GBp 741.88

    Market price

    GBp 316.40

    Implied upside

    +134.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.7466

    AdjustedReports in USD, trades in GBp. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 741.88+134.5%
    Exit multiple
    GBp 356.67+12.7%
    Market price
    GBp 316.40

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 6.9bnUSD 7.3bnUSD 7.8bnUSD 8.4bnUSD 8.9bn+6.9%
    EBITUSD 2.2bnUSD 2.4bnUSD 2.5bnUSD 2.7bnUSD 2.9bn+6.9%
    NOPATUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.2bn+6.9%
    Add depreciation & amortisationUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+6.9%
    Less capital expenditureUSD -1.3bnUSD -1.4bnUSD -1.5bnUSD -1.6bnUSD -1.7bn+6.9%
    Less increase in working capitalUSD -279.6mUSD -298.8mUSD -319.4mUSD -341.3mUSD -364.8m+6.9%
    Free cashflow to firmUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+6.9%
    Discount factor0.96720.90480.84640.79180.7407-
    Present valueUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bn-0.0%
    Present Value Of The ForecastUSD 5.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.642Reported 0.465, pulled toward 1.0 (Blume)
    Cost of equity8.03%Risk-free + beta x equity risk premium
    Cost of debt6.50%Implied cost of debt of 12.7% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationUSD 11.5bn64.2% of capital
    Total debtUSD 6.4bn35.8% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC6.90%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 9.94

    86% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 2.3bn
    Less reinvestment at g/ROIC (10.0% of NOPAT)
    USD -231.7m
    Capitalised
    USD 2.1bn
    ROIC (reported)
    25.0%
    Terminal value, undiscounted
    USD 48.7bn
    Terminal value, discounted
    USD 36.0bn
    Enterprise value
    USD 41.8bn
    Less net debt
    USD 5.5bn
    Equity value
    USD 36.2bn

    Exit at 5.4x EBITDA

    Value per shareUSD 4.78

    75% of EV

    Terminal value, undiscounted
    USD 23.3bn
    Terminal value, discounted
    USD 17.2bn
    Enterprise value
    USD 23.0bn
    Less net debt
    USD 5.5bn
    Equity value
    USD 17.4bn

    Spread between methods: 70%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.90%14.5316.7419.8624.6232.78
    5.90%10.7511.9213.4315.4618.33
    6.90%8.389.089.9411.0112.40
    7.90%6.767.217.748.389.16
    8.90%5.575.886.236.657.13

    Outlined: this model. Green text: above today's price of 4.24. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.9%-10.1%-17.0pp
    EBIT margin32.4%16.3%-16.1pp
    Discount rate6.9%11.0%+4.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.