MTN interim results, Mastercard acquisition, analyst ratings and price targets

Key Takeaways:

1. MTN Group has reported strong financial performance in the first half of its financial year, with adjusted headline earnings per share (HEPS) surging by 25%
2. Service revenue for MTN Group has grown significantly, driven by a 24% increase in data services revenue and a 22% increase from fintech services.
3. MTN Group has seen a 4% growth in subscribers.
4. MTN Group has made strides in the digital economy by increasing the number of active data users by more than 7%
5. Mastercard's strategic investment of $5.2 billion in MTN's FinTech business highlights the increasing relevance of technology and digital payments in the financial landscape.

MTN Group Interim results

MTN Group has reported strong financial performance in the first half of its financial year, with adjusted headline earnings per share (HEPS) surging by 25% to 749 cents and adjusted return on equity (ROE) growing by one percentage point to 24.4%.

Service revenue experienced significant growth, driven by a 24% increase in data services revenue and a 22% increase from fintech services.

MTN also saw 4% subscriber growth compared to the previous year, now boasting an active base of 292 million. This growth is said to be attributable to lower data rates and improved access to broadband services.

The company has made significant strides in the digital economy by increasing the number of active data users by more than 7% to nearly 140 million and reducing the average effective rate per megabyte by over 22%.

Mastercard's strategic investment in MTN Group's FinTech business:

Mastercard is acquiring a minority stake in MTN's FinTech business for a significant amount ($5.2 billion). This highlights the increasing relevance of technology and digital payments in the financial landscape. This also demonstrates the growing recognition of the potential of FinTech companies by traditional financial institutions.

MTN's FinTech business is regarded as a game-changer in the industry, offering innovative solutions that are driving the future of mobile payments. Mastercard's partnership with MTN aims to further enhance the capabilities of the FinTech business and position MTN as a leader in the FinTech landscape.

This investment by Mastercard underscores the importance of strategic investments in the rapidly evolving FinTech sector. Traditional financial institutions are increasingly acknowledging the potential of digital-first companies to reshape the financial industry.

By acquiring a minority stake in MTN's FinTech business, Mastercard is strategically positioning itself to capitalize on the growth and potential of the FinTech sector, particularly in emerging markets. This investment signifies Mastercard's confidence in the future of FinTech and its recognition of MTN's role in driving its growth.

Broker ratings

A Refinitiv poll of ten broker / analyst ratings, suggest a consensus hold (as of 16^th August 2023) on the MTN Group. The price target mean from the poll suggests a long-term fair value for the company at 15578c per share.