Directors’ Deals: Entain directors increase holdings

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Entain shares have sunk by about 30 per cent since the start of the year, with sentiment being hit by an HM Revenue & Customs investigation into potential bribery issues at the Ladbrokes and Coral owner’s former Turkish operations. The gambling business has taken a £585mn provision because of the matter. 

The company has also warned about struggling online net gaming revenue (NGR). A third-quarter trading update released at the start of November confirmed that online NGR was down by 6 per cent on a pro forma basis against the same period last year. Total reported NGR rose by 7 per cent in the quarter, helped by strong growth at US joint venture BetMGM. 

Management said the impact on sports margins of “customer friendly results” had hit cash profits in 2023 by around £45mn. It now forecasts low single digit pro forma online NGR growth in 2024. 

A strategic update given alongside the update sought to rouse sentiment with updated medium-term targets. The board wants to get online organic growth back up to a compound annual rate of 7 per cent by 2025, raise its US market share to 20-25 per cent, and expand online cash profit margins to 28 per cent by 2026.

Analysts at Peel Hunt said that “in the short term, pro forma online revenue is likely to decline further”. 

“We expect more investment in BetMGM to be announced in order to achieve the target market share,” the broker said. 

Judging by share purchases made on November 7, Entain directors are feeling bullish about the future direction of the company. Chair Barry Gibson bought £1mn worth of shares and chief executive Jette Nygaard-Andersen picked up £325,000 worth. Non-executive directors Stella David and Rahul Welde, meanwhile, acquired £898,000 and £200,000 worth of shares, respectively. 

The shares trade hands at 14 times forward consensus earnings, according to FactSet, just below their five-year average.

Bharti family dials up Airtel Africa stake

Airtel Africa, the London-listed telecoms company that operates in 14 countries, has many admirers. Alongside an institutional investor base that includes Blackrock and Capital Group, it has attracted investments from private equity firm Warburg Pincus and Qatar’s sovereign wealth fund. 

The company is now Africa’s second-biggest telecoms operator, offering its services to more than 147mn customers. It is majority owned by India’s telecoms giant Airtel and other entities controlled by its founder, Sunil Bharti Mittal, and his family. 

Airtel Africa raised $750mn (£595mn) when it floated in 2019, which valued the business at a little over £3bn. Although the share price plunged at the onset of the pandemic, the consistent stream of profits and cashflow it has generated since means that shareholders who held on have doubled their money in terms of their cumulative return.

However, its shares have pretty much traded sideways for the past two years and despite recently posting a half-year cash profit that was ahead of consensus forecasts, the devaluation of Nigeria’s currency, the naira, in June meant that it suffered a post-tax loss of $13mn. A separate float of shares in its Ugandan business on that country’s exchange also proved a flop, with less than 55 per cent being taken up by investors.

Little wonder, then, that another big investor, Singapore Telecommunications, has been trimming its stake. Singtel last week reduced its holding from 3.9 per cent to below 3 per cent, according to filings. At the same time, Indian Continent Investment, a vehicle run by Sunil’s son, Shravin Bharti Mittal, bought over £57mn worth of shares, increasing its stake by around 1.5 percentage points. According to FactSet, entities controlled by the Bharti family now own more than 68 per cent of Airtel Africa’s shares.