Airtel has announced that shareholders holding their shares on the NSE, who do not indicate their currency of choice before November 27 will be paid their dividends in naira at N386/$1.
This information was conveyed through a corporate disclosure announcing its interim dividend payments and the currency exchange rates. The disclosure was published on the website of the NSE and signed by the Group’s Secretary, Simon O’Hara.
The company advised in the document that shareholders that hold their shares on the NSE may elect to receive their entire dividend payment in Dollars, while shareholders on the London Stock Exchange (LSE) may elect to receive their entire dividend payment in GBP or USD Dollar.
In light of this, the company submitted that the following currency exchange rate will be applicable in the determination of the interim dividend payment to any shareholders that qualify for and have elected to receive the interim dividend payment.
(READ MORE: Airtel earmarks a total interim dividend of $56 million for shareholders)
Exchange Rate
1 USD = 386 Naira
1 USD = 0.7534 GBP
The company noted that the exchange rate for the Naira amounts payable was determined by reference to the exchange rates applicable to the US Dollar available on 10 November 2020.
What you should know
- The CBN official exchange rate currently stands at N379. The rate has not changed since the 6th of August 2020, when it increased by 5.27% from N360 on the 5th of August to N379.
- Further checks revealed that the exchange rate for the US$/Naira applied by the company appears to be that of NAFEX. The NAFEX rate had opened at N385.83 and closed at N385.67 on Tuesday 10th November. The rate also closed at N385.67 on Thursday 12th November.
(READ MORE: Naira falls across forex markets, demand pressure increases despite huge dollar supply)
What this means
Considering that the CBN rate was N379/$1 the day the decision was made, it may be argued that the N386/$1 proposed by the company is a fair decision on the NSE shareholders of the company. This is because compared with the CBN rate, shareholders gained N6 per dollar on the conversion.
However, compared with the rate at the parallel market, which had opened and closed at N457/$1 on the day the decision was made – Tuesday 10th November, one may argue that shareholders would have wanted more in terms of currency conversion. Viewed from the parallel market exchange rate angle, NSE shareholders may conclude that they lost N71 per dollar on the conversion.
Key metrics
- Airtel Africa Plc’s share price is N489.9, the highest price for a unit of share in 52 weeks is N489.9 and the lowest was N298.9.
- The market capitalisation as at close of business Thursday, November 12 stood at N1.70 trillion.
- The company reported revenues of $851 million in 2020 Q2, $57 million post-tax profits and 1.1 cents Earnings Per Share.
