MTN Group pre results

Average Broker Ratings (Institutional View)

MTN remains popular amongst brokers polled by Thomsons Reuters. The long term average rating remains a buy with only three of the thirteen   analysts surveyed considering the stock a sell.

IG Client Positioning (Retail trader View)

The MTN Group remains popular amongst IG clients with 89% of traders holding the stock (as of Tuesday the 7^th of August) expecting the price to rise over the near term. 82% of trading activity in the last week amongst IG clients have been buys, while 62% of the last months trading activity on the stock has also been on the buy side.

Further Considerations

There still remains uncertainty relating to the US sanctioning of Iran and the effects that it will have on MTN’s Irancell and the consequences that will relate repatriation of earnings out of the country.

The company has also announced recently that it would be selling its Cyprus telecoms business for a net sale amount of EUR260m, which 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. The deal looks to complete in Q3 2018 so will not form part of the earnings reported in 1H2018.

The markets will look to see the progress relating to the company’s proposed Nigerian listing which was originally scheduled for July this year. Expectations for the Nigerian listing are for a market cap valuation in the region of $5bn.

Technical view

The share price of MTN, has recently broken out of a double bottom reversal pattern marked with the blue “W” on the chart. The break out suggests a short term reversal in the price trend, from down to up. Since the breakout we have seen the price cautiously retracing as we lead into the results on Wednesday the 8^th of August. The outcome of the company’s earnings release is likely to determine the success or the failure of the double bottom reversal pattern. The success thereof is expectant of a near term move to resistance considered at 11960. The failure thereof is considered should the share price of MTN instead move to close below 11000 (conservative failure level) or the 10900 level (slightly more aggressive failure level).