Hold, but be watchful
MTN Group recently spiked on news that it had finally reached an agreement with the Nigerian regulator to settle a fine, originally totalling $5.2bn, for failing to deactivate unregistered SIM cards. The fine, which led to the departure of MTN CEO Sifiso Dabengwa and senior officials at MTN Nigeria in November last year, will now total 330bn naira (about $1.17bn at official exchange rates at the time of writing) and be paid over three years.
As part of the agreement, MTN will also list MTN Nigeria on the Nigerian Stock Exchange, which will make it the first multinational telecoms group to list in the country.
Settling the fine also paved the way for MTN to appoint new executives following the completion of a review of its governance and management structures, the company said. This includes the appointment of three additional non-executive directors and new executives to “strengthen management, enhance governance and aid strategy in the Group”, it said. Rob Shuter, currently CEO of the European Cluster at Vodafone, will join MTN as CEO in 2017, while Godfrey Motsa, chief officer for consumer business at Vodacom, will join the group as vicepresident for South and East Africa. MTN is also expected to name a vice-president of mergers & acquisitions and strategy, a newly created position, before the end of June.
With the settlement of the fine, the planned listing of MTN Nigeria and the appointment of new executives and directors, MTN’s woes may be culminating. However, MTN must trade through the 15 275c/share major resistance level to positively end its shortterm consolidation – if so, investors could initiate a neutral long. Above 16 120c/share – increase positions aggressively as gains to 17 350c/share could be rapid – thereby ending 20 months of bearishness. Note, if MTN battles to trade above 16 120c/share, it could capitulate back to the 12 150c/share prior low instead.
Sifiso Dabengwa Former CEO of MTN