MTN surges on trading update
Shares in Africa’s largest mobile operator, MTN, surged on Wednesday, adding about R7bn to the company’s value on the JSE thanks to a trading update this week that forecasts double-digit earnings growth.
Shares in Africa’s largest mobile operator MTN surged on Wednesday, adding about R7bn to the company’s value on the JSE thanks to a trading update this week that forecasts doubledigit earnings growth.
MTN shares were trading 5.33% higher at 10.50am.
Lester Davids, a trading desk analyst at Unum Capital, said positive sentiment in MTN had been driven by a trading update released by the company late on Tuesday.
In the update, MTN said it expects to report strong growth in earnings for the year to endDecember 2019.
Using new standards, the Johannesburg-based operator said it expects to report growth in headline earnings per share of 30%-50%. Headline earnings per share are expected to be 438c-506c a share for the period, compared to 337c for the prior financial year.
Davids said the trading update may have partially removed some doubts around the growth potential of the company where the main concerns for the business have been geopolitical risk, specifically in Iran and Nigeria, which are two of the group’s major revenue regions, regulatory pressure to reduce data prices, and continued decline of the traditional voice business.
For the year, MTN’s share price is higher by 4.2%.
Davids said the operator is outpacing the broader market, which is flat so far, in line with competitor Vodacom and is ahead of Telkom by 12%.
Last month, the telecoms group said it would invest $1.6bn (about R23.46bn) in Nigeria over the next three years to expand its network and operations.
The operator, headed by CEO Rob Shuter, has experienced some good fortune in the West African country after years of battling with authorities.
The attorney-general of Nigeria withdrew a $2bn tax demand against MTN Nigeria.
The attorney-general had slapped MTN with the bill for backdated taxes in September 2018 but the company argued that the claim was without merit and was outside the authority’s jurisdiction.