MTN interim results have been met with disdain by market participants as the share trades nearly 5% lower shortly after the release.
Some of the salient features of the results release are as follows:
- Group Revenue +9.7%
- Service Revenue +10.2%
- Data Revenue +26.7%
- Basic headline earnings per share (HEPS) 215c (231c in comparative period of last financial year)
The drop in HEPS has been attributed to interest relating to the Nigerian regulatory fine, hyperinflation and the impact of foreign exchange losses.
While earnings before interest, tax, depreciation and amortisation (ebitda) margins were realised ahead of consensus estimates, markets are perhaps disappointed with the company’s interim dividend offering, which has been reduced to 175c per share from 250c in the prior year’s comparative six-month period.
The group has now guided that it will look to list MTN Nigeria before the end of 2018, where previous guidance had suggested the listing by the end of July 2018. Expectations for the Nigerian listing are for a market cap valuation in the region of $5bn.
The recent announcement from MTN that it had signed an agreement to sell Cyprus telecoms to Monaco telecoms, should be realised in the next financial quarter. The net sale amount is set at €260m and is to be paid in cash up front. The deal is part of MTN’s decision to focus exclusively on its operations in Africa and the Middle East. Monaco Telecom (the purchaser) will be allowed to use the MTN brand for another 3 years for a commercial fee.
MTN trading activity
The sharp drop in the MTN share price has seen it as the share most heavily traded by IG Clients on the day (8 August 2018).
The general IG Client trading interest on the day of decline has been to buy into the near-term weakness. Whether or not the decision to buy into today’s short-term weakness will prove fruitful remains to be seen.
The double-bottom pattern highlighted with the
blue “W” has failed in its prediction that the share price trend for MTN was
reversing from down to up. This failure to reverse trend is highlighted by the
price trading through the low at 10 900c. The next support target favoured
from the downside move is now considered at 10 460c. A bullish bias to
trades on the MTN share price would only be considered should the stock move
return to close above the 11 400c-level.
Shaun Murison is a market analyst at IG.