MTN shares up on peaceful Nigerian poll

MTN shares up on peaceful Nigerian poll

MTN’s share price was boosted on Wednesday as investors cheered the results of the largely peaceful election in Nigeria, its biggest market by revenue and customers. The stock rose 5.85% to close at R217.

Nigeria’s main shares index soared to its biggest daily gain this year and bond yields dropped after Muhammadu Buhari’s victory in a presidential election that passed without disruption.

The main index closed 8.3% up at a nearly three-month high on Wednesday.

“The peaceful conclusion of the election has allayed the fear of foreign investors about the market,” Ayodeji Ebo, head of research at Afrinvest, said.

Farai Mapfinya, head of equities at JM Busha, saw MTN’s rise as a rerating because it was priced for a chaotic outcome, which did not happen. He said MTN was trading at a 35% discount to the market while Vodacom was at 25%.

Momentum Asset Management’s Wayne McCurrie said the peaceful elections may have pushed the share price higher but it did not really change the outlook for MTN in Nigeria as the oil price was still low and the naira weak. The Nigerian economy is still reliant on oil.

He said talk that the new government may be a lot more lenient with interconnection fees would bode well for the group as margins were being squeezed in SA due to the drop in mobile termination fees, “but unless the oil price goes up, the fundamentals for MTN in Nigeria will remain weak”.

This year MTN is spending R8.8bn on infrastructure in Nigeria as it hopes to add 4.8-million new users to its current 59.9-million. Sales in MTN Nigeria rose 12% to R54bn in the year to end-December.

MTN operates in 21 other countries including Iran, Sudan, Ghana and Syria.

Investors are also watching talks on Iran’s nuclear programme. MTN has 44-million subscribers in Iran and cannot repatriate money due to US and European Union sanctions. Mr McCurrie said if the talks were successful and sanctions were lifted, it would be a boost for the economy and MTN.

Meanwhile, MTN SA is reported to have agreed to outsource its retail operations to Brightstar. MTN said on Wednesday it had not concluded any contract and it would be premature to comment.

Source: Reuters

Categories: Business News

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