While MTN’s shares remain within touch of recent record highs, an analyst believes that without its judicial burdens, the operator’s share price could be closer to R180.
MTN was on the front foot in early trade on Tuesday (4 November), up R1.85 or 1.12% to R167.74, having added R2.26, or 1.38%, to R165.89 (intraday best R167.73) on Monday. This was a tad off an all-time best of R172.67 reached on December 13.
The All-Share index slipped marginally to 38,050 points on Monday, with technology stocks losing 2.37% to 33,480, while telecoms gained 1.05% to 79,982 points.
The analyst at PSG Konsult said that MTN’s problems in Iran – the group’s third largest market by revenue, and second largest in terms of subscribers – continue to hold the company back.
He said that, as long as the group is unable to repatriate funds from Irancell (49% owned by MTN) due to sanctions imposed by the US and several of its allies, the company would continue to underperform.
Less event risk like the happenings in Iran, including a legal dispute with Turkcell over its license in the country, could potentially see MTN reaching R180 per share, he said.
MTN’s market cap exceeds R312.5 billion, with a price/earnings ratio of 14.5, and a generous dividend pay-out policy in recent years.
Vodacom, meanwhile, added 79 cents in the morning session to R118.79, having lost ground on Monday, with an analyst citing some profit taking after the group also tracked MTN to trade at record highs in recent weeks.
Vodacom hit a fresh all-time best figure of R122.49 on the JSE on November 23, having reported an 8.4% rise in revenue for the six months ended September 2012, to R34.43 billion.
The analyst also noted that recent rumours regarding a potential tie-up between Bharti and Cell C could have a negative effect on Vodacom. More so than MTN, given the former’s high reliance on South Africa, with local service revenue accounting for R23.8 billion of a total R29.68 billion in the most recent interim results.
Vodacom, like MTN, has also delivered very attractive dividends in recent times, and has an even better P/E ratio of 15.23, with a market cap of R175.58 billion.
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