Pan-African telecommunications services provider Axian Telecom, part of the Axian Group led by Malagasy businessman Hassanein Hiridjee, maintains strong ratings, backed by its market dominance, growth potential, skilled management, and careful debt management.
Fitch Ratings, a renowned American credit rating agency, notes Axian Telecom’s resilience but mentions challenges. The company’s regional dominance and growing customer base boost its standing, with a seasoned leadership team adept at tackling hurdles.
The company’s growth is promising, with a significant increase in subscribers and active users in data and mobile financial services in 2023. Fitch forecast substantial revenue growth, adjusted for acquisitions in Senegal and Tanzania since January 2022.
However, Fitch points out a key vulnerability, stating that the company relies heavily on countries with sovereign ratings of “B+” or lower for earnings and cash flow, exposing it to market fluctuations. Foreign exchange risks persist, although earnings in currencies pegged to hard currencies offer some protection.
Fitch Ratings’ bullish outlook on Axian Telecom: Key factors driving growth and sustainability
Fitch Ratings’ optimistic outlook for Axian stems from expectations of low Earnings Before Interest, Taxation, Depreciation, and Amortization (EBITDA) leverage, coupled with ongoing EBITDA growth. Despite a phase of substantial capital expenditure, the forecast remains positive due to Axian’s secured funding crucial for supporting operations during such investment periods.
The report highlights Axian’s impressive growth in subscribers, active users, and revenue. Tanzania is projected to be a significant contributor, accounting for approximately 35 percent of revenue and 32 percent of EBITDA in 2023. However, increased capital expenditure, especially in this region, has led to a decline in the Fitch-defined EBITDA margin, dropping to around 34 percent in 2023 from 49 percent in 2021.
Under the leadership of Hiridjee, Axian Telecom has achieved remarkable growth since 2015, ranking as Africa’s seventh-largest mobile operator. To bolster its operations, the company secured a $158.3-million loan from JPMorgan Chase Bank in September 2023, aiming to repay previous investment expenses and efficiently finance future investments for network modernization programs in Tanzania and Madagascar.
