MTN post results technical view

MTN interim results have been met with disdain by market participants as the share trades nearly 5% lower shortly after the release.

The results

Some of the salient features of the results release are as follows:

  • Group Revenue +9.7%
  • Service Revenue +10.2%
  • Data Revenue +26.7%
  • Basic Headline Earnings per share 215c (231c in comparative period of last financial year)

The drop in headline earnings per share have been attributed to interest relating to the Nigerian regulatory fine, hyperinflation and the impact of foreign exchange losses.

While EBITDA margins were realized ahead of consensus estimates, markets are perhaps disappointed with the company’s interim dividend offering which has been reduced to 175c per share from 250c in the prior year’s comparative six month period.

The group has now guided that it will look to list MTN Nigeria before the end of 2018, where previous guidance had suggested the listing by the end of July 2018. Expectations for the Nigerian listing are for a market cap valuation in the region of $5bn.

The recent announcement from MTN that it had signed an agreement to sell Cyprus telecoms to Monaco Telecoms, should be realised in the next financial quarter. The net sale amount is set at EUR260m and is to be paid in cash up front.  The deal is part of MTN’s decision to focus exclusively on its operations in Africa and the Middle East. Monaco Telecom (the purchaser) will be allowed to use the MTN brand for another 3 years for a commercial fee.

MTN trading activity

Most traded_MTN

The sharp drop in the MTN share price has seen it as the share most heavily traded by IG Clients on the day (8 August 2018).

Trading activity_MTN

The general IG Client trading interest on the day of decline has been to buy into the near term weakness. Whether or not the decision to buy into today’s short term weakness will prove fruitful remains to be seen.

The Technicals

MTN_08082018

The double bottom pattern highlighted with the blue “W” has failed in its prediction that the share price trend for MTN was reversing from down to up. This failure to reverse trend is highlighted by the price trading through the low at 10900. The next support target favoured from the downside move is now considered at 10460. A bullish bias to trades on the MTN share price would only be considered should the stock move return to close above the 11400 level.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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