Research archive for MTN

Righto, loads to get into, let us try and keep it brief and most importantly, let us try and make it informative. Firstly, MTN released a quarterly trading update, which at face value was a little disappointing at first glance. Subscriber growth of 0.9 percent quarter on quarter is not exactly the growth we are looking for. On further inspection, in Nigeria there were 5.1 million disconnections as a result of registration processes (the RICA headaches we had here), 3.4 million of those have subsequently been reconnected. Is there anything more irritating than not being able to use your cell phone? No, there isn't.

MTN first half results were released this morning. The subscriber base is now 231 million across 22 countries. That subscriber base is bigger than any country in Africa, and as a standalone would be the fifth most populous country in the world. In fact, MTN offers services to 3.1 percent of the population of the globe. That is no mean feat for a company that is less than two and a half decades old. Quick check at the key numbers, group revenue decreased 4.9 percent to 69.2 million Rand (0.7 percent lower on a constant currency basis), EBITDA was down 10.1 percent (down 4.2 percent on a constant currency basis) to 30.2 billion Rand. For the half.

MTN had a very patchy trading statement yesterday. It was one of the biggest fallers yesterday after the Trading Statement For The Six-month Period Ended 30 June 2015. They expect HEPS and EPS to be down 10% and 15% due to negative currency swings. The full details will be released in their results on the 5 August but don't worry about the share price. The company is still well positioned to take advantage of the huge demand for data and the lifting of sanctions in Iran will be a nice boost to business going forward. We think that the stock price reaction is reminiscent of Vodacom, somewhat. There is short term margin compression, massive data growth and in MTN's case, massive currency swings.

MTN Nigeria have warned that due to fuel shortages in Nigeria, the network will be "Seriously degraded and customers will feel the impact". MTN run most of their base stations on diesel. Why would Nigeria, who is oil rich run out of fuel? The government has put an artificially low cap on the price of fuel, the result is that it is not profitable to import fuel. Nigeria is shutting down for business thanks to one of its worst fuel shortages

MTN was on a bit of a tear yesterday. Here it is: MTN Group records 227,5 million subscribers. That is quarter on quarter growth of 4.1 million subscribers. MTN is only 21 years old, as a listed business. The company always measures these updates on a quarter on quarter basis, in other words measures the number of subscribers that they had in the reporting quarter versus the prior one, rather than measuring it year on year.

I saw an announcement from MTN this morning, here is the story via Business Wire: Vodafone M-Pesa and MTN Mobile Money Agree to Interconnect Mobile Money Services. It is always going to be about size and scale in this case, the two businesses have to talk to one another to make customers feel like they have choice. Pretty darn good news I suspect, it means that if you want to choose your network in East Africa, you do not have to do it on the basis of whether you have to transfer money to x or y on the same network.

We saw that a successful (lack of violence) election in Nigeria and a passing of the political baton to another political dispensation bring about a positive reaction for those wanting to own MTN shares. I am figuring that a second "peaceful" event (depending on who you are, which is always the case) between the world powers and Iran will lead to a similar type of reaction for MTN. See the FT story: Iran nuclear deal primes market for rising oil exports. Plus, this is also good news for MTN: Iranian Private Businesses Hope for Relief From Easing Sanctions. We shall see MTN during the course of the day, I suspect that they should see "more buyers than sellers" today. Stocks in Iran have had two big days of trade: Iran Nuclear Deal Sends Tehran Stocks Higher. Early in the trading session MTN is up just shy of two percent. The stock is up nearly ten percent in the last six trading sessions.

You will recall that we introduced the MTN results yesterday, just to recap a little with the numbers that are most important, we wrote this in the message yesterday:

MTN results today. This is for the full year to end 2014. They supply a mobile phone service, something that has become essential to our lives and the 223 million people who use their networks. Revenue for the full year is up only 6.4 percent to 146 billion Rand, EBITDA margins increased by 150 basis points, EBITDA increased by 10.2 percent to 65.5 billion Rand. Astonishing. HEPS clocked 1536 cents, up 8.9 percent. The dividend was a record 1245 cents for the year, 800 cents in the second half. Subject of course to a 15 percent withholding tax, that is 680 cents. For the full year that amounts to 1058 cents per share. At a current share price of 211.74 Rand the company trades on 13.78 times price to earnings multiple with a post tax dividend yield of 5 percent. Or just shy, 4.99 percent. We will flesh these out over the coming days.

MTN released a trading update yesterday afternoon that the market received well, the company has unfortunately been impacted by something outside of their control, the falling oil price. MTN does not produce oil, two of their major operations happen to fall in countries that do produce oil however, with government spend expected to be far lower than in prior years and in many cases the government is a big employer. Markets can respond to markets, governments are less nimble, they have different agendas. Back to the trading update, which looked ahead of market consensus: MTN expects an increase of between 5% and 15% (equating to a range of between 1482 cents and 1623 cents) in headline earnings per share ("HEPS") and an increase of between 15% and 25% (equating to a range of between 1679 cents and 1825 cents) in attributable earnings per a share ("EPS")

MTN released their quarterly update for the three months to end September 2014. You can download them here -> MTN Group records 219,2 million subscribers. The highlights points include genuine highlights such as a 2 percent quarter on quarter increase in subscriber numbers, from 214.96 million subscribers at the end of June to 219.19 million subscribers as at the end of September. Data is still on fire, from a growth point of a view, growing 34 percent year on year and now contributes 17.8 percent of total revenues.

The MTN share price has been on a tear recently, post the results on the 7th of August, now just over a month ago. The stock was trading around 220 Rand, on Friday the stock crested 260 Rand. That means that the market capitalisation of the company, according to the balancing forces of the buyers and sellers, is 480 billion Rand. That is nearly half a trillion Rand, something that has taken a public listed company with private innovation across the continent nearly 20 years to achieve. The successes have been huge. I read and hear that government wants to somehow (with what money?) invest 100 billion Dollars (over one trillion Rand) and build a nuclear power base down here. That is a separate story.

Yesterday morning there were numbers out for MTN for their half year ending June 2014. The market clearly liked them as the stock finished 2.8% up. Here are some of the highlights of the interim results, revenue is up 4.1%, data revenue is up 33.1%, margins widened 3.5 percentage points, EBITDA is up 10.6% and the interim dividend is up 20.3% taking the dividend yield to the 5% mark.

Yesterday MTN, Pick 'n Pay and Visa announced that they have joined forces to launch a new mobile money product. The product turns your cell phone into a bank and your cell phone number is your account number. The system will allow you to send money from your cell phone to another cell phone (once they have registered). You will also be able to withdraw or deposit cash at Pick 'n Pay stores, or top up your account with EFT.

Not feeling the market glow yesterday was one of the Vestact firm recommended stocks, MTN, which reported subscriber numbers yesterday. The market liked the numbers like they liked flat and warm ginger beer. In other words not that much. The stock sank 3.76 percent to end the day at 20820 on 1.36 billion Rand worth of value! Yowsers. But to put that into perspective, it is around 35 percent more than usual. MTN trades nearly one billion Rand a day, which is strange when you think that the entire market cap is 389 billion Rand. At that sort of run rate, the entire market cap of MTN turns over in around 20 months worth of trading days, in my narrow minded long term view, that is completely nuts. We have clients who have owned this stock for around 11 years. And it is probably one of those companies that you could own for another decade, as African communication continues to evolve and grow in a data direction.