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MTN Group Still Offers Huge Potential - But That's Never Been The Issue

Apr. 04, 2021 7:55 PM ETMTN Group Limited (MTNOY) Stock2 Comments
Stephen Simpson profile picture
Stephen Simpson


  • MTN Group has credible drivers to build shareholder value, including ongoing growth in high-margin data and mobile money services, as well as an ongoing asset rationalization program.
  • Regulatory and macroeconomic challenges have long been a problem, and that remains the case: Repatriating cash from Nigeria remains difficult and Ghana has imposed competition-boosting measures that hurt profitability.
  • MTN Group shares look substantially undervalued on discounted cash flow and relative multiples, but operational, regulatory, and macroeconomic challenges are always going to be present.

MTN Group (OTCPK:MTNOY) is the sort of stock that will make you seriously question whether stockpicking is worth the time and energy. This company should have so much going for it, including a leading mobile service footprint across much of Africa and a fast-growing mobile money business, but results over the years have never lived up to the potential.

Some of the challenges are outside of the company’s control, including government ineptitude and corruption, macroeconomic challenges, and shocks like the COVID-19 pandemic. Other issues, like a weak competitive position in South Africa, should be more within management’s power to control but nevertheless linger on.

I remain bullish on MTN Group’s leverage to data traffic growth and mobile money growth, as well as its leverage to overall population and economic growth in Africa. That bullishness has to be tempered, though, by certain realities – there’s work to do in South Africa, the company has had contentious relationships with several governments, and Africa as a whole is a continent that investors have been waiting to see blossom for close to 50 years now.

MTN shares look undervalued even with exceptionally high discount rates and what should be reasonable, if not conservative, growth assumptions. Management is also pursuing some very sound operational strategies. Whether the macro and political environments will cooperate is a separate issue, though, as is the question of whether sentiment will meaningfully improve.

FinTech And Data Remain Power Potential Drivers

I’m quite bullish on the prospects MTN Group has in both its core service business and in its fintech (mobile money) operations.

The biggest opportunity within the core service opportunity is in data. Growth in data consumption has been a major profit driver for most service providers around the world (SK Telecom (SKM) perhaps offers the best

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).

Analyst’s Disclosure: I am/we are long MTNOY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

I have a hard time getting my mind around how cheap some of these developing world wireless companies are.

T-Mobile USA has 102 million customers and is valued at $270 billion, or $2700 (approx) per customer.

MTN has 270 million customers and is valued at around $18 MM (EV), or around $66 per customer.

Obviously a US customer paying around $75 a month for cell service is more valuable than a developing world customer paying $12 a month.

BUT-- the US is a mature wireless market, while the wireless opportunity in Africa is still young, and also features enormous fin tech opportunities that are not available to US carriers.

So I see MTN as very risky due to the nature of the markets they serve, but there is also a very large reward if things go right.
thank you for the article. i got in around $3 and am patiently waiting for dividends to come back. was there any date set? tia
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