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The Airtel Africa (LSE: AAF) share price surged almost 10% this morning after interim results revealed a 171% year-on-year increase in profit after tax.
The Q3 2025 report highlighted an exceptional gain of $94m in pre-tax profit due to currency appreciations in Tanzania and Nigeria. Net profit came in at $133m. For the nine months ending 31 December 2024, it posted a 21% increase in constant currency revenue. However, due to currency devaluations, reported revenue was down 5.8%.
Much of the growth came from strong performance in its Mobile Money division, which brought in 29.6% more revenue (in constant currency).
Despite the strong results, its profit margin slipped 0.5% and basic earnings per share (EPS) fell to 6.2c from 7.1c. Earnings before interest, tax, depreciation, and amortisation (EBITDA) declined 11.9% in reported currency to $1.68bn, attributed to higher fuel costs and lower revenue from Nigeria.
Overall, the results were well received, bringing the share price up to 147p — a 25% year-to-date (YTD) gain.
Growing customer base
Airtel has been going from strength to strength lately after a period of mixed performance in 2023 and 2024. The relatively new listing enjoyed rapid gains in 2021 but faltered after peaking at around 165p in mid-2022.
Now nearing a 30-month high, it may soon breach that price level again.
Customer growth has been strong, up almost 8% this quarter, with smartphone penetration up 44.2% and a 32.3% increase in data usage per customer. It operates in 14 African nations with a majority market share in Zambia, Tanzania, Seychelles, Congo, Niger, Malawi, Gabon, and Chad.
With this morning’s results, it launched a second $100m share buyback, extending the programme announced in December last year. The plan is to repurchase approximately 900,000 shares in the coming 12 months.
Foreign exchange risks
Foreign currency losses remain a key issue for the company, with the devaluation of the Nigeria naira impacting profits in previous years. Over the past two years, the naira has fallen almost 70% against the US dollar.
The decline contributed to an $89m loss reported in its 2024 final year results. In the fourth quarter of 2023, its net margin fell to -9.3% but has since recovered to 1.98%. The potential for further impact from Nigeria remains a risk.
Debt remains another risk affecting the company, having risen a further 7.5% to $5.3bn. The rising cost of fuel has contributed to its debt, as diesel generators power much of its network infrastructure in remote areas. As geopolitical issues continue to drive up the price of crude oil, this may put pressure on the company’s profits going forward.
Challenges ahead
Airtel’s recovery in recent years has been impressive but many challenges remain. Operating in developing countries with volatile currencies is a key risk that needs careful management.
As such, analysts have mixed opinions on the stock, with price targets ranging from a 26.5% loss to a 39.8% gain. On average, a decline of 4.47% is expected in the coming 12 months.
However, with a growing customer base and strong revenue, EPS is expected to reach 22p in 2027 — a nearly fourfold increase. As a shareholder, I have high hopes for the company but remain cautious regarding the economic challenges it faces in Africa.
This story originally appeared on Motley Fool
