Sometimes a FTSE 100 growth share pushes all the right buttons, without ever quite capturing the attention of investors. I’d say that’s the case with telecoms operator Airtel Africa (LSE: AAF). Its shares have had a phenomenal run recently, up 163% in the last year and 327% over five.
Yet, it still doesn’t feel like a go-to growth name among investors. I can’t preach. I haven’t paid it much attention myself. Is it too late to hop on board?
Airtel Africa shares are flying
The rollercoaster keeps racing, with the Airtel Africa share price up 18% in the last week alone, the fastest grower on the blue-chip index. It has a huge market to aim at, as smartphone penetration is still only around the 45% mark. With luck, it should grow along with connectivity.
Q1 2025 results, published on 25 July, showed quartely group revenue jumping 22.4% to $1.4bn. Data revenue surged 38.1% while mobile money climbed 30.3%, reflecting growing smartphone adoption and increased financial inclusion.
Profit after tax jumped from $31m to $156m, boosted by currency gains in the Central African franc. Airtel Africa has also been rewarding shareholders with share buybacks, returning $16.9m.
A customer base of 75.6m data users and 46m mobile money customers shows the scale of the opportunity. Its investment in 4G/5G networks, fibre and digital platforms could make it more than a telecoms operator, potentially turning it into a broader service provider.
Risky FTSE 100 stock
Yet the share price has been volatile at times, and currency risk remains a concern. The Nigerian naira has had a poor decade, shrinking revenues when converted into sterling. Lately though, it’s showing signs of recovery. Debt is another issue, it’s almost doubled to $6.19bn in just over a year, as the group invests heavily in networks and digital services. That’s a problem with telecom stocks, just look at BT Group and Vodafone.
I see Airtel Africa as one to approach with extreme caution today, despite the opportunity. The price-to-earnings ratio is nudging 60, which is even more expensive than the ultimate FTSE 100 blockbuster stock, Rolls-Royce. Any slip in earnings or swing in currencies could spook the market
Too late to jump in?
Consensus analyst forecasts put the one-year share price target just under 225p, around 18% below today’s levels. Most of those forecasts won’t reflect recent rapid growth. But they also highlight a danger when the stock races ahead of expectations.
Of the 12 analysts covering Airtel Africa, eight name it a Strong Buy, one says Buy and three Hold. None recommend selling. That’s a pretty solid endorsement.
I think it’s worth considering for investors willing to take on the risk. Yet as I said, they should be cautious. There’s a real chance of a pullback when a share runs this hot. Maybe consider drip-feeding money in? Expect volatility, be patient, balance this growth opportunity with less volatile holdings. Airtel Africa has had a brilliant run, but new investors are arriving late to the share price party.
