Airtel Africa has embarked on a significant share repurchase program, acquiring 8.6 million ordinary shares from Citigroup Global Markets Limited. This move is part of a broader strategic plan initiated on March 1, 2024, aimed at buying back shares worth $100 million over the next 12 months.
Objectives of the Buyback Program
The telecommunications giant aims to achieve multiple objectives through this buyback program. Firstly, it intends to reduce its share capital, thereby decreasing its debt burden and potentially lowering operating expenses, which could contribute to stabilizing its financial position.
Permanent Removal of Repurchased Shares
Airtel Africa has committed to permanently removing any shares repurchased under this initiative from circulation through cancellation. This reduction in available shares is expected to increase the value of shares held by remaining investors, potentially leading to higher returns from future dividend distributions.
Consolidating Control and Authority
Beyond benefiting shareholders, Airtel Africa views the share buyback as a means to consolidate its control and authority over company operations. With fewer shares publicly traded, decision-making processes could become less diluted, facilitating more decisive corporate governance.
Compliance and Prudent Execution
The company assures full compliance with the terms and conditions of its contractual arrangement with Citigroup, indicating a careful and deliberate approach to the share repurchase to ensure alignment with legal and financial regulations.
Shareholders’ Approval and Structured Phases
Airtel Africa’s shareholders approved the share buyback program at a general meeting on July 4, 2023, authorizing the repurchase of up to 375,815,150 ordinary shares. The buyback is structured into two phases, with the initial phase involving a $50 million expenditure over seven months, from March to August 2024.
Recent Transactions and CEO’s Insights
In recent buyback transactions, Airtel Africa successfully repurchased 487,985 ordinary shares directly from Citigroup. Segun Ogunsanya, the company’s CEO, cited the compelling option of reallocating capital towards share buybacks in light of substantial business revenues and the Group’s optimistic long-term growth outlook.
Navigating Economic Challenges
Despite economic challenges, including revenue downturns attributed to currency devaluation, Airtel Africa remains proactive. Strategic measures, such as outsourcing tower operations to optimize costs and enhance operational efficiencies, demonstrate the company’s adaptability and resilience.
Source: InnovationVillage