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MTN 6 month numbers - hurt by Nigerian fine

MTN Group reported numbers for their half year to end June this morning (Friday morning). It has been a tumultuous time for the mobile operator, lurching from one problem to the next, Iran and the hyperinflation (and sanctions, inability to externalise money), Nigeria and the whopping (if not borderline stupid) fine, price wars in the local market. There is a time when one questions the thesis over and over.

Hindsight is better than Maverick and Goose's flying skills (C'mon, you know you loved that movie), it would have been better to own Vodacom. And Telkom at some level. Water under the bridge, the price you see in front of you today reflects the ability of the business in the future, as reflected by the shareholder base at this point.

It is far easier to report back on a business when the stock price does well. Too often, the chattering classes draw conclusions between share price performance and the company. Including on whether the quality of the management team is good or not.

As a result of having incurred a hefty fine from the Nigerian authorities (whether they called their bluff or not is another matter), and huge loss of value for the asset management community, suddenly casts a negative light on the management team. With an element of righting that wrong, management ultimately is where the buck stops. Sifiso Dabengwa fell on his sword, Chairman Phuthuma Nhleko took over the reigns and more recently the management team has been strengthened with a quality team that looks distinctly like the colour of investment banking (and deal making).

The fact that data continues to grow sharply (at the expense of voice and by extension EBITDA margins) is a testament to management's willingness (and shareholders to part with the capital) to aggressively roll out the infrastructure in order to meet quickly changing handset requirements (Capex spend was R13.77 billion). Mind you, this is definitely not a company specific thing.

I saw an astonishing moving .gif the other day, from a tweet, of the populations of Nigeria and the USA over the coming decades, as well as the decades past. This is how #Nigeria will overtake the US as the world's 3rd most populous country (Currently 7th).

That is all very nice to suggest that population projections result in ARPU increases in a hurry. The currency has being weighing heavily and I am sure that many investors are getting impatient. We will continue to evaluate the results and provide shareholders with the feedback and guidance they deserve.


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