“It’s a great company, it’s a great story and it’s filled with a lot of things you’ve got to really understand pretty well. It’s become quite a complicated company, obviously with so many companies representing the group and operations all over the show, it becomes quite difficult to keep track of everything,” Kaplan Equity Analysts managing director Irnest Kaplan told CNBC Africa on Tuesday.
“The trading statement they put out was 20 to 25 per cent growth and largely driven on foreign exchange issues and currency translation issues, so one’s got to see what the sort of normalised local currency growth is.”
MTN, which is worth 365 billion rand and operates across 21 countries across the region.
According to Kaplan, the group showed significant growth in December from its South African operation. Its Nigeria operation, however, produced flat results. Its other markets are however growing strongly.
“Nigeria is such a big contributor. Their EDBITA margins have been declining steadily year after year, I think they peaked at about 62 in margin terms, and I think more recently they dipped below the 60. It’s still a fantastic margin,” Kaplan explained.
He added that the while the profit margins for Nigeria in particular are high, their significant investment in the country through its mobile network operating business is enough to warrant such a profit margin.
“For me, they’re transitioning from a higher growth story to a lower growth, higher dividend story, and we’re seeing that a transition over the last two or three years,” said Kaplan.
“The question that these results for me at least will be to keep an eye on the big contributors: South Africa, what’s happening there, and Nigeria, to see if things are flowing down even further, or if they’ve managed to improve the situation.”