Our opinion on the current state of MTN-GROUP(MTN)MTN is a leading emerging market mobile operator, serving 290 million people (including 29 million in South Africa) in 19 countries across Africa and the Middle East. MTN's three largest subscriber bases are in Iran, Nigeria, and South Africa. Generally, companies supplying a mobile service have faced very stiff competition and declining voice revenue. The sharp increase in data usage has, to some extent, mitigated this change, but these companies remain quite risky. MTN is especially risky because of the political risk in Iran and Nigeria.
MTN is working with Sanlam to offer insurance products to its clients in the hopes that "fintech" will become a major part of its business. The goal is to turn MTN into a "...digital operator with a major focus on the fintech, digital, enterprise, and wholesale business areas." MTN has rolled out its mobile money services in both Nigeria and South Africa. It is currently offering these services in 14 out of the 21 countries where it operates, and it has 41.8 million mobile money customers. It is trying to increase that number to 60 million. MTN has now listed on the Nigerian stock exchange.
On 13th January 2023, MTN received an assessment from the Ghanaian tax authorities that it owed $773 million (about R13.3 billion). This is seen as a "shakedown" of a wealthy international company by a cash-strapped national government—similar to what happened in Nigeria. The company announced that Mastercard would take a R100 billion stake in its fintech business and partner with it to expand that business.
In its results for the six months to 31st December 2024, the company reported data revenue up 21.9% and fintech revenue up by 28.5% in constant currencies. Headline earnings per share (HEPS) fell by 68.9% and total subscribers increased by 2.2% to 290.9 million. The company said, "Active data subscribers increased by 7.7% to 157.8 million - Mobile Money (MoMo) monthly active users (MAU) increased by 0.9% to 63.1 million - Data traffic increased by 32.6% to 19 459 Petabytes (PB) - Fintech transaction volumes increased by 15.3% to 20.3 billion."
Clearly, the company is being impacted by the volatility in the Nigerian economy, which has been a large part of its business. The share was falling from its cycle high in March 2022. We recommend applying a downward trendline from that peak and waiting for a clear upside break before investigating further. That break came on 7th December 2024 at a price of 9289c, and the share has since moved up to 11519c. It was added to the Winning Shares List (WSL) on 14-1-25 at 9729c.
