Jonathan Fisher from PSG Wealth and Carmen Mpelwane from Sanlam Investments said MTN offers good value at current levels.
MTN is Africa’s largest mobile operator and provides voice, data, fintech, digital, enterprise, wholesale, and API services to 272 million customers in 19 countries.
The group makes most of its money in Nigeria, followed by South Africa and Ghana.
Jonathan Fisher from PSG Wealth Sandton Grayston said MTN’s pre-close investor update in December, which reflects the year-to-date performance, was very good.
MTN revealed that growth in service revenue for the 11 months to November 2022 was approximately 14.8%.
It represented some acceleration relative to the 14.3% growth reported for the nine months to September 2022.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) margin for the period was slightly lower when compared to the level reported for the September 2022 period.
MTN South Africa’s service revenue growth for the 11 months to November 2022 slowed marginally to approximately 3.2%, down from 3.5% for the nine months to September 2022.
MTN Nigeria, the operator’s biggest region, grew its service revenue by approximately 21.3% in the period to November 2022.
Fisher said the business is resilient, turnover growth is at least going to be in the mid-teens, and return on equity is set to reach 25%.
“The first half headline earnings per share (HEPS) was up 46%. If they can grow full-year HEPS by 30%, it puts them at a level of around R12.87,” he said.
“MTN has also indicated a dividend of around R3.30 per share.”
Fisher said PSG has a sum-of-the-parts valuation of around R218 per share based on different metrics. It indicates significant potential upside for the MTN share price.
Carmen Mpelwane from Sanlam Investments shared Fisher’s view, saying MTN remains very undervalued, especially when looking at the latest numbers from its Nigerian operations.
“The numbers were shaky in certain respects, but margins and guidance were stable, and we will see the unwinding of that value into the stock price,” she said.