Kalkine : Can This FTSE 100 Telecom Stock Outpace the S&P 500 and FTSE Indexes?

Highlights

• Airtel Africa has recorded one of the strongest five-year performances among FTSE 100 constituents.

• The company operates across multiple African markets with a focus on telecom and mobile money services.

• Forecast earnings growth positions it at a relatively low valuation based on future expectations.

Listed on the London Stock Exchange under the ticker (LON:AAF), Airtel Africa is a telecommunications and mobile money company operating in multiple countries across the African continent. As part of the FTSE 100 index, its performance over the past five years has surpassed that of the broader UK benchmark and even the S&P 500 index in the United States. While the S&P 500 has experienced a near doubling during this period, Airtel Africa’s growth has exceeded that pace by a substantial margin.

Strong operational footprint across key African markets

The company delivers voice, data, and mobile money services in over a dozen African nations. It serves more than a hundred million customers, establishing a substantial footprint in regions with high demand for digital connectivity and financial inclusion. Airtel Africa’s core service offerings cater to both urban centers and underserved rural communities, positioning it well within its market scope.

Recent financial performance and forecasts

For the financial year ending in late March, the company disclosed revenues approaching five billion US dollars, with earnings per share reaching the mid-single digits in cents. In the upcoming two fiscal periods, external estimates indicate earnings per share could more than double, reinforcing a growth trend from the recent post-pandemic cycle.

Its current market valuation, when compared with earnings forecast for the next full fiscal cycle, reflects a relatively low earnings multiple, suggesting that its pricing may still be modest in relation to its income generation. The company's scale, combined with its customer base and digital financial services expansion, has contributed to this trajectory.

Comparative performance within the FTSE 100 index

Airtel Africa ranks within the top performers of the FTSE 100 over the past five years, alongside notable names across industries such as aerospace, financial services, and energy. While the FTSE 100 index itself recorded a lower percentage gain over the same duration, individual components like LON:AAF delivered substantially higher appreciation. The telecom firm stands out for both its geographical reach and growth momentum.

Sector dynamics and valuation perspective

Operating within a sector often influenced by infrastructure investment and regulatory environments, Airtel Africa continues to expand its mobile money offerings alongside core telecommunications services. The growing demand for digital financial platforms and mobile broadband access across African markets provides a favorable environment for its ongoing commercial activity.

At present, the stock trades on a valuation basis that remains below several international peers when measured against forecast earnings. The current pricing reflects expectations based on publicly available projections, without pricing in a premium for growth despite the expansion in service uptake.

Position within global equity discussions

As global equity discussions often spotlight US-based entities, especially those linked to advanced technology sectors, listings such as LON:AAF in the FTSE 100 index can occasionally go unnoticed. Nonetheless, companies like Airtel Africa have demonstrated that strong operational fundamentals and a broad customer base in emerging economies can drive significant returns. In the broader context of international benchmarks like the S&P 500, select FTSE stocks have proven capable of outpacing gains, particularly when backed by earnings growth and sustained service expansion.