African cell service provider MTN Group (OTCPK:MTNOY) has continued to struggle, but the primary sources of the struggles continue to be largely beyond the company's direct control. Although the company's financial performance since my last update has been decent, the ADRs have fallen by another third, hurt by further erosion in the value of the rand (around 16%), worries about the company's dollar-denominated debt, and ongoing struggles in the South African market.
While MTN Group's ADRs do look undervalued, the same can be said for other emerging market telcos like Turkcell (TKC) where investor concerns have more to do with macro and currency risks than company-specific execution. Although I believe the strategic priorities outlined by the company are sound, the lack of a near-term dividend, and the ongoing operational challenges in certain markets remain meaningful issues.
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