Our opinion on the current state of MTN

MTN, a leading emerging market mobile operator, serves a vast customer base of 290 million people across 19 countries in Africa and the Middle East, with significant subscriber bases in Iran, Nigeria, and South Africa. The company operates in a challenging environment characterized by fierce competition and declining voice revenue, offset to some extent by the growth in data usage. However, political risks in key markets such as Iran and Nigeria add to its overall risk profile.

To diversify its revenue streams and address these challenges, MTN is expanding into fintech services, partnering with Sanlam to offer insurance products and rolling out mobile money services in several countries. The company aims to become a digital operator with a focus on fintech, digital, enterprise, and wholesale business areas.

Despite its efforts to expand into new sectors, MTN faces regulatory and tax challenges in some markets. For instance, it received a tax assessment of $773 million from Ghanaian authorities, reminiscent of similar challenges in Nigeria. However, partnerships such as the one with Mastercard, which took a significant stake in its fintech business, provide opportunities for growth and innovation.

In its financial results for the year ending December 31, 2023, MTN reported a 6.9% increase in service revenue but a significant decline of 72.3% in headline earnings per share (HEPS). The decline in HEPS may be attributed to various factors, including regulatory challenges and economic volatility in key markets like Nigeria.

With a current price-to-earnings ratio (P/E) of 29.14, MTN's stock appears expensive, especially considering its recent downward trend since March 2022. Investors are advised to monitor the stock closely and wait for a clear upside break from the downward trendline before considering further investment.