Sunday, September 16, 2018

Nigeria Once Again Turning The Screws On MTN Group

It wasn’t as if South Africa-based, pan-Africa mobile services provider MTN Group (OTCPK:MTNOY) didn’t already have enough challenges, what with the company fighting for market share and margins with Vodacom (OTCPK:VDMCY) in a weak South African economy, facing renewed sanctions on Iran, and having some challenges in other operating areas. Now the situation has gotten considerably uglier with the government of Nigeria looking to take $10 billion from MTN for what it claims are underpayment of taxes and violations of currency controls.

At this point it is harder and harder to argue for patience with MTN Group. While new management may be able to drive better long-term performance, and the long-term potential of the African market (as a whole) is significant, the issues with Nigeria and Iran are significant and won’t go away quickly. MTN Group is likely trading below, if not well below, a reasonable estimate of fair value, but the risks to the Nigeria business are substantial and that creates significant overall uncertainty as to valuation and long-term potential.

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Nigeria Once Again Turning The Screws On MTN Group

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