Signs Of Progress (And Value) As MTN Group's Turnaround Progresses

Many emerging market telcos have done alright over the past year, though MTN Group's (OTCPK:MTNOY) performance in local currency terms has remained lackluster as management works to set right the many mistakes of past management. The ADRs have performed better, though, and there is still some worthwhile upside here as the company looks to reinvest in its network to drive customer satisfaction and, eventually, revenue and earnings growth.

Read more here:
Signs Of Progress (And Value) As MTN Group's Turnaround Progresses

MTN Group: Light At The End Of The Tunnel, Or Another Oncoming Train?

For those who don't own MTN Group (OTCPK:MTNOY) shares, the experience has been like something out of a Charlie Brown cartoon. You think things are going to be different, that the company is going to push through its execution issues, only to end up flat on your back, looking at the sky, and wondering how you got fooled again and let the ball get yanked out in front of you. Although these shares actually have beaten the S&P 500 over the past year, currency moves had a lot to do with that and the shares are down pretty meaningfully over the last five years (not unusual for an emerging market stock, but still…).

So, now what? MTN Group has new leadership and a new plan, a plan that involves improving network quality, restoring some luster to the brand, and running the business on the basis of sound principles like risk-adjusted returns and ROIC. That sounds like exactly what the company should be doing, and there is significant potential to do better here, but that has to be set next to the risks. Those risks include over-spending on capex (and generating little-to-nothing from it), cutting the dividend, and regulatory and economic risk across its operating footprint.

In a bullish scenario, I could argue for a price in the $12-$13 range, but I can just as easily argue for a bearish scenario in the $8 to $9 range. Given the risk-reward trade-off, today's price seems fair - I believe investors can expect better-than-S&P 500 returns, but the real opportunity will come if and when management restores investor confidence and drives a rerating process.

Read more here:
MTN Group: Light At The End Of The Tunnel, Or Another Oncoming Train?

MTN Group Bouncing From Problem To Problem

Shares of pan-African mobile services provider MTN Group (OTCPK:MTNOY) are down less than 10% from the last time I wrote about the company. And yet, since that time, the company has reached a settlement with the government of Nigeria on a large fine, appointed a new CEO, and begun to make some significant changes to its long-term strategic plans. It's also worth noting that the iShares MSCI South Africa Index (NYSEARCA:EZA) is up more than 15% over the same time period, so MTN Group is definitely getting left behind.

The reasons are many and ought to trouble MTN Group's shareholders. Nigeria's economy remains a mess, the company's competitiveness in South Africa is still less than ideal, the company still has a significant leadership vacuum, and there are new allegations of serious financial malfeasance in Nigeria.

I've significantly cut back my expectations for MTN Group from a modeling perspective, as I believe the company will have to spend more on capex to drive growth, and I have also chosen to model MTN Nigeria separately (and with a significantly larger discount rate). After these changes, my fair value of around $10.50/ADR still leaves meaningful upside for a company leveraged to significant potential growth in subs and ARPU over the next decade and beyond, but "potential" is a dangerous word in investing and investors should approach MTN Group aware of the risks and challenges.

Continue here:
MTN Group Bouncing From Problem To Problem

Seeking Alpha: Currency And Competition Grinding On MTN Group

MTN Group (OTCPK:MTNOY) continues to be an underperforming stock for investors looking for exposure to Africa outside of mining or other natural resources. That the local shares are up a bit since my last update is no comfort at all to ADR holders, as ongoing depreciation of the South African rand has punished performance.

Operationally, I continue to like MTN Group's prospects, though I acknowledge that the company has to up its game in South Africa and faces a host of risks and uncertainties in Nigeria. While I think a long-term perspective can smooth these issues to some extent, and I continue to believe the shares are undervalued, MTN Group's need for both internal improvement and external stability puts in a category suitable only for high-risk investors.

Follow this link for the full article:
Currency And Competition Grinding On MTN Group