Another year has gone by and sentiment around MTN Group (OTCPK:MTNOY) is as good as it has been in quite a while. CEO Ralph Mupita has proven that he and his management team can deliver on a number of value-creating moves without dropping any balls across this pan-African telco provider’s vast business footprint (272M subs). Better still, the company’s relationships with regulators seem to be on better footing, while economies across Africa are benefiting (to varying degrees) from higher export commodity prices and waning burdens from the pandemic.
The good and bad of MTN Group as a stock is that valuation is driven so much more by sentiment around emerging markets (Africa in particular, naturally) than underlying financials. I thought the shares were exceptionally cheap a year ago, but they had been that way for some time. In the last year, though, sentiment has shifted significantly, driving the ADRs up more than 100%.
I continue to view these shares as undervalued and capable of delivering double-digit annualized returns for some time, largely on the back of strong growth in higher-value data and fintech services. This is a harder stock to recommend to casual investors, though, as there are a lot of moving pieces to track and sentiment on emerging markets can swing so wildly.
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