MTN is Africa’s largest mobile operator and provides voice, data, fintech, digital, enterprise, wholesale, and API services to more than 272 million customers in 19 countries.
In its results for the year ended 31 December 2021, MTN revealed that it had grown revenue to R181.65 billion.
Service revenue grew by 18.3% to R171.8 billion, and earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 23.7% to R80.8 billion.
One of MTN’s biggest strengths and the biggest risk is its geographic diversity across Africa and the Middle East.
The company has broken its operations into five regions.
- South Africa
- South and East Africa
- West and Central Africa
- Middle East and North Africa
The group makes most of its money in Nigeria, followed by South Africa and Ghana.
MTN’s strong foothold in Africa is a valuable asset. However, corruption and political instability associated with the continent are also significant risk factors for investors.
According to the Corruption perceptions index published by Transparency International, Nigeria, Afghanistan, and Sudan are among the world’s top 25 most corrupt countries.
Afghanistan, Nigeria, and Cameroon are also in the top ten high-risk terrorism countries.
MTN has operations in these countries, meaning investors price in the risk. The result is that MTN’s share price trades at a discount.
It is not irrational for investors to be concerned.
Nigeria, for example, has levied huge fines against MTN, which had a big impact on its share price in the past. Problems in Iran have also dogged the mobile operator for years.
While MTN’s operations in Afghanistan, Iran, Sudan, and Cameroon pose a risk, it is Nigeria that investors are most concerned about.
MTN derives a large chunk of its revenue and profit from the country, which is prone to political instability, and its economy is closely linked to the oil price.
Daily Investor created an easy-to-understand chart to make it easy to see in which regions MTN makes most of its money.
The diagram below shows where MTN’s 2021 revenue is generated and how it developed into Net profits.