MTN tested record highs in early afternoon trade on Monday (1 July), as investors continue to react positively to the group’s failed bid for a telecoms licence in\u00a0Myanmar.<\/p>\n
By 13h00 shares in MTN\u00a0advanced\u00a01.60% or 2.95% to R186.95 on the JSE, with an intraday best of\u00a0R187.17,\u00a0giving the operator a market cap of R350.60 billion.<\/p>\n
The JSE All Share Index climbed 0.69% to 39,850 points.<\/p>\n
Shares in MTN have gained R13 since Thursday (27 June) when it was announced that\u00a0Norwegian operator Telenor, along with Qatari firm Qtel (Ooredoo)\u00a0had been declared the successful applicants for two nationwide telecommunications licence in Myanmar.<\/p>\n
An\u00a0analyst\u00a0at PSG Konsult told BusinessTech: “Investors are looking at the free cash flow MTN produces, now that it wont be spending its capex in\u00a0Myanmar.”<\/p>\n
He noted also that twice in the past MTN has failed to land a deal with India-based telecommunications firm,\u00a0Bharti Airtel, something which he believes was a blessing in disguise as the operator has been struggling in a\u00a0fiercely competitive Indian market.<\/p>\n
“Investors also believe there is still a lot of opportunity for MTN in the market in which it currently operates, especially in Africa,” the analyst said.\u00a0MTN operates in 22 countries\u00a0across\u00a0Africa,\u00a0Asia\u00a0and the Middle East.<\/p>\n
He added that Myanmar would present challenges of its own,\u00a0requiring\u00a0large amounts of capex, with margins not all that attractive.<\/p>\n
Nadim Mohamed, investment analyst and partner at First Avenue Investment Management said that while losing out on a licence in Myanmar\u00a0presented the opportunity to renew corporate value for MTN, investors would likely expect a higher dividend payout.<\/p>\n
“MTN\u2019s operations are highly cash generative and they would possibly be a position to pay a higher dividend a big deal is not in the pipeline,” he said.<\/p>\n
In April, MTN CEO Sifiso Dabengwa said the group\u00a0could spend up to $8 billion on an acquisition.<\/p>\n
\u201cGrowth through M&A is still an important part of our strategy,\u201d he said.\u00a0\u201cAnything between $4 and $8 billion is something that we could look at.\u201d<\/p>\n
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