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Afrinvest Sees Fortunes in MTN, Airtel Stocks

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Analysts at Afrinvest (West Africa) Limited have made case for investing in the shares of MTN Nigeria Plc and Airtel Africa Plc, saying their current prices are undervalued.

Afrinvest Sees Fortunes in MTN, Airtel Stocks

In report , Afrinvest said the telecommunications sector in Nigeria remains the fastest growing, the most resilient and the largest contributor to the economy’s growth.

They noted that despite this, the sector is not at its full capacity yet, given weak broadband penetration at 37.8 per cent and the huge prospects for mobile money under the right regulatory framework.

They noted that these opportunities drive their optimistic outlook for the sector despite weak macroeconomic conditions.

According to the analysts, the major pressure point for the industry has been regulation, with NCC’s heavy regulatory fines and policies to ensure fair competition restraining the growth of some major players.

“ Similarly, regulation has restricted the expansion into other business lines with strong prospects such as financial services, unlike in markets like Kenya and South Africa. We believe the speed and flexibility of regulation would shape the trajectory of growth and investment in the sector,” they said.

They noted MTNN and Airtel Africa Plc have market share of subscribers at 37.3 per cent and 27.2 per cent respectively.

The two companies have also continued to invest in telecommunications infrastructure to boost capacity and deliver superior services to customers, with annual capital expenditure of about N617.4 billion and N580.7 billion respectively over the past three years.

“With regulators loosening previously rigid rules and providing to telcos an even better opportunity to deliver financial services, we see another pathway for strong growth reminiscent of historical levels in the medium-term. The immediate worry is the unprecedented economic crunch brought by the COVID-19 pandemic worldwide, which could affect 2020 earnings. However, the industry is expected to remain resilient as the digital economy has boomed during the lockdown implemented to fight the pandemic,” Afrinvest said.

It said that in its analysis shows that that MTNN (10.6x) and Airtel Africa (4.0x) are undervalued with an average P/E multiple of 7.3x compared with BRICS markets such as Brazil (11.6x), Russia (13.3x), India (13.4x), China (48.5x) and South Africa (12.5x).

“Put together with our positive outlook for the sector over the medium-term, we believe the opportunity is attractive. Based on our valuation of MTNN and Airtel Africa Plc, we arrived at a target price (TP) of N147.67 and N419.53 per share respectively, compared to N115.00 and N328.70 in that order as at yesterday.

 


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Investing in Innovation Africa Shifts Focus to Growth-stage Startups in Response to US Aid “stop-work” Directive

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Investing in Innovation Africa (i3), a pan-African initiative for startups building the future of healthcare supply chains, has made a pivotal change to its third cohort selection to prioritize the immediate support for between five and seven growth-stage companies building the future of pharmacy care in Africa.

Funded by the Bill & Melinda Gates Foundation and sponsored by MSD, Cencora, Endless Foundation, HELP Logistics, Sanofi’s Global Health Unit and Chemonics, i3 is dedicated to facilitating the commercialization of promising early- and growth-stage companies.

Selected startups receive introductions to leading potential customers in industry, donor agencies and governments, grant funding, and tailored investment readiness support from leading accelerators Villgro Africa, IMPACT Lab, Startupbootcamp Afritech, and CcHUB.

This comes in response to the United States (US) State Department’s “stop-work” directive for foreign aid issued on January 25, which is anticipated to impact the distribution of essential medicine in Africa’s healthcare supply chains.

The order highlights and intensifies the need for locally-driven, market-creating approaches to health product distribution and service delivery across Africa.

 


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Fidelity Bank to Launch Dedicated SME Hub for Small Businesses and Creative Entrepreneurs

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Fidelity Bank, a leading financial institution, has announced the imminent launch of its dedicated physical facility for Small and Medium-scale Enterprises (SME) and entrepreneurs in the creative sector.

Mrs. Nneka Onyeali-Ikpe, MD/CEO, Fidelity Bank Plc

Mrs. Nneka Onyeali-Ikpe, MD/CEO, Fidelity Bank Plc

Known as the Fidelity SME Hub, the multipurpose facility features training halls, meeting rooms, networking spaces, podcast rooms as well as music, photography and content production studios.

“For nearly four decades, Fidelity Bank has been at the forefront of supporting small businesses in achieving their potential and driving the nation’s economy. During this time, we have recognized that SMEs require more than just financial assistance. This realization has led to the implementation of various non-financial initiatives tailored to support this sector.

“The Fidelity SME Hub is our latest non-financial solution for SME growth. The facility is designed to foster innovation, collaboration, and capacity-building -vital elements necessary for strengthening Nigeria’s SME ecosystem and driving economic growth”, commented Dr Nneka Onyeali-Ikpe, Managing Director/Chief Executive Officer, Fidelity Bank Plc in a chat with journalists recently.

Located at the heart of Lagos, the Fidelity SME Hub will provide entrepreneurs with networking and stakeholder engagement initiatives as well as access to industry experts and mentors for hands-on guidance and business advice. A key feature of the facility is the Creativerse, a well-equipped space for entrepreneurs in the creative industry.

The bank has also announced the launch of dedicated courses to be hosted at the SME Hub in areas such as Financial Management & Investment Readiness, Digital Transformation & Technology Adoption, Marketing, Branding, and Business Growth Strategies. Furthermore, a fully-fledged creative academy will be established to cover courses on Music Production, the Business of Music, Website Design & Development, Mobile Videography, Disc Jockey and Photography. To see a comprehensive list of available courses or to apply, please visit https://www.fidelitybank.ng/smehub/.

Explaining further, Onyeali-Ikpe said, “Beyond empowering small businesses, the Fidelity SME Hub will also serve to bolster our non-oil exports drive as we empower SMEs to increase their contribution to Nigeria’s non-oil GDP thus supporting government’s economic diversification drive. Through our investment in Creativerse in particular, we anticipate that content creators will unlock new revenue streams in entertainment, digital media, and arts, an industry already contributing 2.3% to GDP.”

Ranked among the best banks in Nigeria, Fidelity Bank is a full-fledged customer commercial bank serving over 8.5 million customers through its 255 business offices in Nigeria and the United Kingdom, as well as through digital banking channels.

The bank has garnered multiple local and international awards, including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, Best Payment Solution Provider Nigeria 2023, and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards. It was also recognized as the Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023 and the Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.


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Investing for growth By Engr. Gbenga Adebayo

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The Nigerian Communications Commission (NCC) has made the vital decision to allow Telecom companies to increase their tariffs for the first time in more than 12 years. It was a brave decision that should be recognised and commended.

All the customers of our member operators are understandably disappointed that they will have to pay more to stay connected. We recognise that. We know that Nigerians have been through a series of even more substantial price increases in other sectors like fuel and power.

That is why it is so important for us to set out why the tariffs need to go up, how the revenue from the price increases will be used and how long it is going to take us to deliver the improvements that our customers will be able to see and appreciate.

The telecom sector is capital-intensive. It requires constant investment to maintain the infrastructure that we use to deliver connectivity, ensuring that we can deliver the quality of service that our customers demand and continue to upgrade to the latest technologies like 5G.

In 2024, the telecoms sector faced a perfect storm. The need for our member operators to continue to invest in their infrastructure remained, but the cost of operating their networks increased significantly. In isolation, that might have been manageable, but it followed 12 years of progressively increasing costs during which they could not increase prices.

Despite that, the telecoms industry has continued to grow. We have been able to expand voice connectivity, introduce world class data services and diversify into value added services like payments and platforms. But at some point, something had to change if we want to have the digital economy we all know Nigeria deserves.

While we have continued to invest, we were not able to do so at the speed and scale that we would have liked to ensure we deliver service quality at the levels we want, or to roll-out the products we want our consumers to have access to. In 2024, the significant losses across the industry meant that investment slowed considerably to a level that would be simply unsustainable for Nigeria going forwards.

The process of securing the price increases was a long and deliberate one, under the strong leadership of President Bola Ahmed Tinubu, the NCC and the Minister of Communications and Digital Economy, Dr. Bosun Tijani. It was a process that sought to find the right balance that unlocks investment, while minimising the impact on consumers. Our collective goal has been to enable the investment needed to give Nigerians the best service, while continuing to do so at a price that is as competitive as possible from a global perspective.

The 50% increase is a reflection of this, and it is important to assess how this compares to our regional contemporaries. Following the increase, the cost of 1GB of data in Nigeria will remain lower than it currently costs in Kenya, Ethiopia and South Africa and will be just 9.5% of the cost of 1Gb in the USA. Nigeria will continue to have low-cost connectivity that enables the broadest possible access.

Following the decision, all our member operators will now be able to activate investment plans that will drive improved quality of service, new technologies and expanded reach. But the impact of this will not be felt immediately. It is not something we can just switch on. We cannot address a protracted period of under-investment overnight. The supply chain for the telecom industry is global and competitive. The hardware required must be fabricated by the original equipment manufacturers, shipped to Nigeria, cleared and installed, and this needs to happen at a large scale.

Following the tariff increase, the acquisition, importation and installation of the equipment can now begin. All our member operators have planned for this moment. We know what to do.

The journey to improved service delivery, more advanced technical solutions and a better customer experience has started. The progress Nigeria has made in the growth and development of the digital economy can, and will continue, and the potential to drive social and economic transformation is incredible. We believe in that vision, and the government does too. They have recognised its strategic importance and demonstrated the leadership required to put us on the path to progress.

All hands are now on deck!

Engr. Gbenga Adebayo is the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON).

 

 

 

 

 

 


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