MTN’s share price down 7%
MTN’s share price has declined 7% since the beginning of January and there are mixed feelings on whether it will rebound to the levels last seen before the fourth quarter of 2015. It suffered major losses since October 2015 after it was slapped with a multibillion-rand fine in Nigeria.
MTN’s share price has declined 7% since the beginning of 2017 and opinion is divided over whether it will rebound to the levels last seen before the fourth quarter of 2015.
The group has suffered big losses since October 2015 after the Nigerian government imposed a multibillion-rand fine on the company.
At that time, its share price was trading at about R180.
Nigeria is the network provider’s biggest market.
MTN’s stock performance has been worse than the JSE’s telecommunications index, which is down 5.34% since January. The sector, which includes Vodacom, Telkom and Blue Label Telecoms, ended 2016 2.78% down.
MTN is set to report its first full-year loss in March largely due to the fine. The expected losses have resulted in the group trading at a negative price-toearnings ratio.
Graeme Korner, portfolio manager at Korner Perspective, said while MTN appeared more driven to gain market share, at least in SA, there were significant challenges. For the share price to rebound there would have to be a turnaround and the new management would have to prove itself.
“We are nervous about all cell operators in SA, due to ARPU [average revenue per user] pressure,” he said.
MTN’s new CEO, Rob Shuter, starts in March, joining a number of new executives that MTN has recruited.
Farai Mapfinya, chief investment officer at Falcon Crest Asset Managers, expected a strong comeback from MTN as factors that had affected the group were nonrecurring.
It had made positive key changes in senior management and the company was set to stabilise and turn its performance around, he said. Although Blue Label and Telkom were the best performers in 2016, MTN and Vodacom remained the biggest with a market cap of more than R220bn each.
But MTN’s normalised earnings are much higher than Vodacom’s and is seen as the preferred stock given its footprint in Africa and the Middle East.
Mapfinya said Vodacom was a safer and stable bet with a strong income and dividend stream, although with limited capital growth upside. “MTN is arguably a riskier turnaround story, but it has more upside potential should management follow through execution of [their] proposed strategy and operational improvement.”
But Korner would not recommend any of the telecoms stocks as the industry was battling to maintain real earningsper-share growth. new position, and we are proud of his achievement and how it reflects on the quality of insurance supervision in South Africa,” said FSB executive officer Dube Tshidi.
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