MTN Group Still Offers Huge Potential - But That's Never Been The Issue

 

MTN Group (OTCPK:MTNOY) is the sort of stock that will make you seriously question whether stockpicking is worth the time and energy. This company should have so much going for it, including a leading mobile service footprint across much of Africa and a fast-growing mobile money business, but results over the years have never lived up to the potential.

Some of the challenges are outside of the company’s control, including government ineptitude and corruption, macroeconomic challenges, and shocks like the COVID-19 pandemic. Other issues, like a weak competitive position in South Africa, should be more within management’s power to control but nevertheless linger on.

I remain bullish on MTN Group’s leverage to data traffic growth and mobile money growth, as well as its leverage to overall population and economic growth in Africa. That bullishness has to be tempered, though, by certain realities – there’s work to do in South Africa, the company has had contentious relationships with several governments, and Africa as a whole is a continent that investors have been waiting to see blossom for close to 50 years now.

MTN shares look undervalued even with exceptionally high discount rates and what should be reasonable, if not conservative, growth assumptions. Management is also pursuing some very sound operational strategies. Whether the macro and political environments will cooperate is a separate issue, though, as is the question of whether sentiment will meaningfully improve.

 

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MTN Group Still Offers Huge Potential - But That's Never Been The Issue