Our opinion on the current state of MTN

MTN is a leading emerging market mobile operator, serving 290 million people (including 29m 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 been faced with 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 41,8m mobile money customers. It is trying to increase that number to 60m. 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 $773m (about R13,3bn). This is seen as a "shakedown" of a wealthy international company by a cash-strapped national government - similar to what happened in Nigeria. In its results for the six months to 30th June 2023 the company reported service revenue up 16,5% and headline earnings per share (HEPS) up by 7,1%. Total subscribers increased by 3,6% to 291,7m. The company said, "Our business continued to grow in a challenging trading environment, with data traffic and fintech transaction volumes up by 18.5% (up 35.0% excluding JV’s) and 37.3% respectively". The company also announced that Mastercard would take a R100bn stake in its fintech business and partner with it to expand that business. In an update on the 3 months to 30th September 2023 the company reported service revenue up by 9% and total subscribers up by 1,8% to 290,1m. The company said, "MTN maintained a resilient performance in the first nine months of 2023, as inflation remained elevated across our markets, with an average blended rate of 17.3% year-to-date (YTD) compared to 14.2% in 2022". MTN now trades on a P: E of 8,03 - which looks like good value to us. Technically, the share has been moving sideways since October 2022 and looks ready for an upside break.