Airtel Africa‘s (LSE: AAF) the second-best performing stock on the FTSE 100 this year, second only to gold miner Fresnillo. Since last Christmas, it’s up over 200%, meaning a £10,000 investment would have skyrocketed to over £30,100 today. With regular returns like that, an investor could retire early!
But aside from a few rare outliers like Rolls-Royce, that kind of growth doesn’t happen often. And it seldom happens consistently for several years in a row. Which has me asking myself: should I buy more Airtel Africa shares, or take profit before an ‘inevitable’ correction?
I’m still kicking myself for selling my Rolls shares too soon, so I won’t make that mistake again. Rather, let’s take a long, hard look at the company’s financial position and figure out exactly what’s going on.
A new year ahead
It’s fair to say that Airtel Africa’s heading into 2026 with significant momentum, following a remarkable turnaround in 2025. In the first half, net profit surged 375% and revenue grew 26% to $2.98bn. A lot of this growth follows a strategic pivot towards data services and mobile money (Airtel Money), which has proven highly successful.
The Money segment now accounts for 21% of group revenue and transaction volumes, reaching $193bn annually. It even has plans for a fintech arm IPO in early 2026, which could unlock further value and provide capital for continued expansion.
That’s probably the strongest argument for continued growth in 2026. But there’s more!
Africa not only has low digital penetration but also a rapidly growing, youthful population. This equates to a long runway for subscriber and revenue growth. Network investments, including 98.5% 4G coverage and early 5G rollouts, put Airtel in a unique position to capture an increasing demand for data services.
On the flip side?
Africa’s long been a region offering a wealth of untapped opportunity — but with that potential reward comes notable risks.
Currency fluctuations in Nigeria are an ongoing issue that can affect reported earnings, along with political instability. Africa’s also a challenging region to work in, with regulatory uncertainty already delaying the company’s fibre network rollouts in some areas.
But my main concern is Airtel’s high valuation. With a forward price-to-earnings (P/E) ratio of 30, it’s going to be hard to find room for more growth. Even Fresnillo’s forward P/E’s lower than that, suggesting analysts expect gold demand to outpace Africa’s data needs in 2026.
My verdict
While I remain optimistic about the company’s long-term prospects, I’d be surprised to see this exceptional rally continue into 2026. Admittedly, I say that while acknowledging that Rolls-Royce did exactly that in 2024 and again this year.
But past performance is no indication of future results — especially that of two vastly different companies. Looking at Airtel’s valuation, a mild correction in 2026 is quite possible — so I wouldn’t expect another 200%+ year.
Still, for long-term investors keen on exposure to Africa’s exploding data market, I think Airtel Africa’s one of the most compelling options to consider. I’d be very surprised if it didn’t enjoy significant growth in the coming decade, making any small decline in 2026 nothing more than a blip on the radar.
