Research archive for MTN

MTN yesterday decided to unleash a release which calls for the immediate dismissal of the Turkcell US claims, check out the official release: MTN dismisses Turkcell US claim. They use some pretty strong and colourful language, well I thought so anyhow, the first part and last part I think is most important. Here is a copy/paste. "... the US court does not have jurisdiction over the subject matter of Turkcell's claim, because Turkcell has not alleged a violation of the law of nations as required under US law for the sort of claim Turkcell is seeking to bring... " AND " ... the US court lacks personal jurisdiction over MTN and its subsidiary, MTN International..., which is also named in the US action. MTN and MTN International both lack sufficient contact with the United States to be subject to the jurisdiction of the US court." MTN are suggesting the US courts dismiss the case, Turkcell will respond to this motion by mid August. I hope that I have used the correct legal terminology.

Ah shame, poor Facebook, the stock got crushed last evening, falling to an all time low, if you count ten or so trading sessions as all time. Did you spot the picture of the Zuck on honeymoon eating McDonald's? His poor new wife is taking a beating in the Chinese press, not that I think they care. Perhaps not. Anyhow, they are in Rome (or perhaps were), spotted by the paparazzi, if the company achieves its objectives then their privacy settings on the web would be about the only thing that they could ever protect. But getting a sense of the guy, I think he knew that a long time ago. I "like" him, if not on his Facebook page, then at least as an innovator. Whilst GM might have pulled their advertising, other companies, including the small business kind might have made progress through targeting specific groups. I will still maintain that the known Facebook universe is far more valuable in the future WHEN they manage to monetise their audience in a bigger way. Not if, but when.

And now for something completely different, using the words of Monty Python's Great Flying Circus from the movie with that title. MTN released a notification from their AGM yesterday, with I guess a month extra subscriber details. Because the AGM release is covering the first four months of the year to end April, it might well have included an extra month if we had waited for the numbers towards the end of next week. The weaker currency is having a positive impact of course, but the group also reported strong growth in South Africa (which is part of Africa), Iran (yes, that place) and Ghana. I like Ghana, although I have sadly never been there. One day. Price competition in Nigeria impacted their growth rate, this was and still is expected to crimp margins over time. So far the company has bought back nearly a percent of all the shares in issue (0.9 percent) and the company maintains that they will have that 70 percent payout ratio. The Iran versus Europe and the US sanctions issue continues to be "managed" whilst the Turkcell claim is thought to be baseless. The stock actually did alright and continues to trade at attractive levels. Trading currently less than 11 times forward earnings and with a forward yield of around seven percent, that looks attractive to me. I suspect the discount applied to the company is twofold, one, geographical risk and two, margin compression worries. We continue to add them to our portfolios.

MTN produced subscriber numbers on Friday, and finally there was good news for only I guess the second time this year for the stock, or so it seems anyhow. These are numbers for the first quarter to end March. And the number is, (drum roll), 170 573 000. That is right, 170 and a half million people, which is now more than the population of Nigeria. Only just, because the Wiki listed population of Nigeria is 170,123,740 folks, which is the worlds seventh most populous country. Nigeria in fact, in these numbers, is 25.1 percent of the overall MTN subscriber base. So, without thinking too hard, one in four Nigerians on are the MTN network, 42.899 million folks. The next biggest market for them is Iran (where MTN has a 49 percent stake in Irancell), which has 36.831 million subscribers. Next is South Africa, 22.735 million subscribers. Together, these three markets make up 60 percent of the overall MTN subscriber base. The only other country with more than 10 million subscribers is Ghana with 10.394 million subscribers.

OK, many people have been asking us, when do we sell MTN, what do we do now, dump them and run, and so on. Paul sent an email yesterday to a client on one of these concerns, here we go, we will share it with everyone:

Yesterday Turkcell filed a lawsuit against MTN in the Washington Federal court attaching documents that throw a lot of very extreme allegations towards the telecommunications company whose public relations have been squeaky clean up until now. Now, I am not an investigative journalist so I don't have the time to follow up on all the leads of what seems to be a massive scandal with much finger pointing and dirty deeds involved. Mandy Weiner could write a book on it.

MTN Group have released results for the full year to end December 2011 this morning. The company has managed to grow their subscriber base for the full year by 16.2 percent to 164.5 million people. Which now means that the total subscriber base is closing in on Nigeria's population of 170 million, that should be breached in the coming months at the next subscriber details release. Revenues for the full year on a constant currency basis were nearly ten percent higher. In Rands, which is where we measure the company, group revenue increased by 6.3 percent to 121.884 billion ZAR. Phew. That is a big number, with Nigeria growing by 4.1 percent, South Africa by 7.7 percent and Iran by a whopping 20.1 percent. Notwithstanding the interconnect fees for all South African operators being much lower, interconnect revenues increased 8.9 percent.

MTN released a trading update on Friday after the market closed, and I must admit, it looked really good at face value. For a company that falls into an industry that is supposedly ex-growth, remember all those numbskulls who were talking about the mobile companies being there. Perhaps in a developed world context where you have a really good fixed line infrastructure, do not get me started on Telkom. MTN are releasing their results this Wednesday, and accordingly have to let Mr. Market know if their results are going to be better or worse by at least 20 percent. And they are, much more actually, here goes:

MTN. It is complicated always with a business that is in multiple geographies, especially as I sometimes say, not exactly places that you would vacation in. One such place that has been under the spot light for a while is Iran. And quite a few folks are getting more than a little agitated about this, Iran are reportedly close to having a handful of bombs of the nuclear kind. That worries other people who have that capability too. MTN has a business in Iran, quite a good one. They beat Turkcell in the last round of the bidding process and as far as I could understand it at the time because they (MTN) were not as excited about having to own 50 percent plus 1 share. Turkcell wanted that. But at the time I think that Turkcell also had a connection to Israel, and let us be honest, the two countries, Iran and Israel are as far apart as you could ever get, in terms of relations. But that aside, MTN pipped Turkcell to the post and their Iranian business is huge.

One of our longest held companies (from the start) reported subscriber numbers yesterday. We are of course taking about MTN. Here is the copy paste from the release:

Talking ton up, out of all the stocks that I have been watching for over a decade, this is perhaps falling into the category of most exciting. MTN have released interim results this morning. Subscribers have ballooned to 152.3 million people, that is now nearly more than any single African country, Nigeria has 155 million inhabitants, so expect MTN to overtake that in the coming months. Perhaps they have done that already.

Some background quickly, a client of ours who is involved in the telecommunications industry, as an analyst (I hope I got that right or he is going to kick my butt) has been having a to and fro with me on the prospects of the mobile companies. His contention is that they are nothing more than utilities who see something different in the mirror. They feel pretty like Maria in West Side Story. Who is not a Jet.

MTN released subscriber numbers on Friday afternoon. Disappointing ARPU (Average revenue per user) number overshadowed a revision upward in their outlook for their subscriber additions this year. I guess not unexpected, call times are cheaper as competition intensifies. We have seen that trend in some African countries, with fierce competition. I am always flabbergasted at how people expect their mobile connections to be top notch all the time. And if not, well then, the networks are rubbish. Useless. Well, let me just say this, twenty years ago the alternative was to find beaten up tickie box phones and hope it worked or was not broken. Inside of those twenty years mobile handset usage has grown from 12.4 million to roughly four and a half billion people.

The rumour doing the rounds right now is that MTN is talking to India's cellular provider Idea, looking to buy a stake of sorts. Idea have rubbished the idea, even though, it was rumoured that in September last year Idea was talking to two companies to sell a stake. The stake in question is owned by the Aditya Birla Group, which owns 47 percent of Idea cellular. The Aditya Birla Group is a massive Indian conglomerate that operates across the region, and even in the developed world. According to the interwebs, the market capitalisation of Idea accounts for one third of the overall group.

We watched the MTN results presentation from the comfort of our own seats here, no free lunches applied here and we could still continue as normal. I am sorry to harp on this point, but why would you go to these presentations other than to feel like you are getting something done, and to try and ask the smartest question. And by my count there were less than ten questions. Come on guys, smash your old ways and get with the program. Download the presentation at work. Watch the show on TV. Ask the investor relations person a question via email.