(Reuters) – South Africa’s MTN Group (MTNJ.J) expects first-half sales to double, beating analyst estimates, the company said on Friday, sending its shares up more than 7%.
The telecoms sector has experienced a spike in network data traffic as millions of South Africans were forced to work and entertain themselves from home after the government imposed a lockdown from the end of March to curb the spread of the new coronavirus.
However, the country’s largest mobile operator by subscribers also benefited from foreign-exchange gains, it said without elaborating.
The group estimates headline earnings per share (HEPS), which strips out certain one-off items and is the main profit measure in South Africa, to be up at least 195 cents at more than 390 cents for the six months to June 30, against analyst expectation for HEPS of 271 cents.
Shares in the company jumped 7.7% to 64.49 rand by 0801 GMT, on course for their highest daily gain in three weeks.
“The market was very worried about the slightly high levels of debt at MTN and potentially the impact of the coronavirus, but it looks like they are tracking well ahead of the numbers that we were expecting,” said Nadim Mohamed, a partner at First Avenue Investment Management.
Taking into account a price-to-earnings ratio of less than 8 times, with a strong dividend, the stock is potentially undervalued, he added.
The company, which reports results on Aug. 6, also said it expects an increase of at least 140% in first-half earnings per share, which include gains on the disposal of the ATC Uganda and ATC Ghana tower joint ventures.
Rival Vodacom Group (VODJ.J) on Thursday reported a 7.6% rise in first-quarter group service revenue, buoyed by strong demand for voice, data and financial services in South Africa during the lockdown.