MTN GROUP LTD

Finweek English Edition - - HOUSE VIEW -

STILL BE­SET WITH l abour dis­putes, MTN Group, which is ex­pe­ri­enc­ing its f i rst strike i n South Africa since i ts launch in 1994, has bared the brunt of a dis­grun­tled work­force. Its share price has plunged and cus­tomers are be­ing turned away due to a short­age of mo­bile phones. Low pay, in­suf­fi­cient week­end re­mu­ner­a­tion and a lack of trans­port money are key rea­sons why hun­dreds of MTN staff from the call cen­tres and ser­vice branches hit the streets.

The ini­tial de­mand was for a 10% pay raise, a bonus of 16% of their an­nual salaries, and the ter­mi­na­tion of “un­fair” labour prac­tices and the use of labour bro­kers. Work­ers also de­manded a task team be ap­pointed to de­ter­mine which em­ploy­ees have been short-changed by salary ad­just­ments. MTN has of­fered an 8% per­for­mance- r el ated pay r i se, post­poned its an­nual half- marathon char­ity run (planned for 13 June), cit­ing se­cu­rity risks posed by the strike, and ex­panded its Rush Hour bun­dles (ac­cess to 100MB of data for one hour at R10).

Although ne­go­ti­a­tions are on­go­ing, MTN has lost a sig­nif­i­cant amount of its share value and, frankly, this strike saga is now old news. Which means the re­sult should be priced in.

A new buy­ing op­por­tu­nity is wait­ing above 22 300c/share, with a po­ten­tial 100% re­trace­ment to the 25 000c/share prior high. Po­si­tions could be in­creased above 23 800c/share if re­sis­tance is not en­coun­tered, or else a stop loss must be care­fully mon­i­tored. The sec­ondary tar­get would be si­t­u­ated at 27 000c/ share. A re­ver­sal be­low 21 100c/share, from cur­rent lev­els, would negate this near-term bullish call.

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