MTN spurred by Turkcell rumour and dividend yield
South Africa’s largest mobile operator in terms of market cap (R285.4 billion), MTN has surged to its best levels since May 2008 on the JSE on the back of its attractive dividend yield, and amid rumours that its $4.2 billion legal battle with Turkcell may be settled outside of court.
On Thursday (26 July), MTN ended at R151.20 on the local bourse having last traded above R150 on the week of 25 May 2008, before collapsing to a low of R74 by mid-October of that year. MTN opened 2012 at a trading price of R144.50.
MTN’s relatively high exposure to areas outside of South Africa, along with its high dividend yield, makes it an attractive investment for investors, says Christopher Gilmour, analyst at Absa Asset Management Private Clients.
MTN’s annualized dividend yield is at 4.94%.
Analysts at PSG Konsult believe that MTN could be at R160 if it weren’t for the politics surrounding the group.
The group has been sitting under a political cloud in 2012. On March 28, Turkcell filed a complaint against MTN Group in the U.S. District Court of Columbia, Washington DC, demanding $4.2 billion in damages over the awarding of the cellular licence in Iran in 2004.
TurkCell claimed that MTN used political and monetary lures to enhance its relationships and leverage its position within Iran, a claim which the latter party denies.
MTN owns 49% of Irancell, the group that was awarded the second Iranian GSM licence.
On Wednesday (25 July 2012), an analyst told Businesstech that Turkcell may look to settle with MTN outside of court.
MTN and Turkcell declined to comment on the speculation.
Results
In March, MTN Group noted that revenue for the year ended December 2011 increased to R121.9 billion, from R114.7 billion in 2010.
Profit before tax jumped to R37.6 billion (2010: R28.1 billion), while profit attributable to equity holders of the company rose to R20.8 billion, from R14.3 billion before.
Furthermore, headline earnings per share grew to 1,068.6 cents per share, from 760.6 cents in 2010.
MTN declared a final dividend of 476 cents per share.
In the interim period before that, for the period ending June 2011, MTN declared a dividend of 273 cents per share with a total dividend per share for 2010 at R5 per share.
The group also recorded 170.573 million subscribers at the end of March 2012, up 3.7% for the quarter from 164.501 million before.
MTN South Africa contributed 13.3% to group subscribers, and upped its subscriber base by 3.2% for the quarter.
MTN is expected to publish its interim results on 8 August.
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