MTN share price at multi-year highs after Q3 results

The MTN Group Ltd share price is testing its highest levels since 2016 following the release of its third quarter and nine month (to September 2021) results.

Revenue and earnings growth robust

The group’s service, data and fintech divisions saw revenue growth of 19.1%, 34.5% and 35% respectively for the year to date. Group Earnings Before Interest Depreciation and Amortisation (EBITDA) benefitted from improved margins to grow by 24.1% against the prior year’s comparable period.

Subscriber growth weak

Net subscriber growth of only 200 000 was a soft remit over the reporting period. The figure was adversely affected by a 1.4m decline in Nigerian subscriptions on the back of revised registration requirements from regulators within the region. The subscriber issue in Nigeria is expected to abate with MTN forecasting a return to growth in the current operating quarter (Q4 2021)

Nigerian operations primary contributor to growth

Despite the inherent subscriber issue, MTN Nigeria continues to drive revenue growth for the group with data from the region adding 51.3% and fintech 54.7% over the reporting period. Digital revenue produced exponential growth (82.3%) on increased adoption of the groups platforms, most noteworthy being the ayoba messaging service which now boasts an active user base of 2.9m.

MTN continues to restructure its portfolio

A summary of recent and ongoing portfolio optimisations for the group are as follows:

• The IHS Towers business has since the reporting period listed on the NYSE (18m ordinary shares at $21)

• MTN remains the majority shareholder of IHS (85 176 719 shares) and MTN SA is currently finalising a passive tower infrastructure transaction

• The IPO (initial public offering) of MTN Uganda on the Ugandan Stock Exchange (USE) started on the 11th of October 2021 will run up until the 22nd of November 2021

• MTN has announced its intention to proceed with a public offer for sale of up to 575 million shares in MTN Nigeria, by way of a bookbuild to institutional investors and fixed price to retail investors

• MTN exited Syria, by way of abandonment in August 2021

• MTN continues to look at an exit strategy for the Yemen and Afghanistan operations

MTN – Technical Analysis

MTN results have helped produce a sharp rally out of oversold territory, with the gap higher (grey area) highlighting the short term bullish momentum in play. The short term move aligns with the longer term uptrend and sets channel resistance at 15550 as the next upside resistance target from the move. Traders who are long might consider using a close below gap support at 13850 as a stop loss indication for the trade.

In Summary:

• MTN results have shown strong revenue growth in the group’s service, data and fintech divisions

• Earnings have further benefitted from improving EBITDA margins

• Subscriber growth was negatively affected by regulation in Nigeria

• Nigeria was the primary driver of revenue and earnings growth

• The MTN Group continues to optimize and restructure its portfolio

• The share price of MTN looks to be aggressively continuing its longer term uptrend at present