Investors have remained bullish about MTN Nigeria stock since the telco giant listed its shares on the Nigerian Stock Exchange (NGX) in 2019, as robust earnings validate the positive sentiment on the stock.
Market participants who had bought MTN stock in May 2019 at a listing price of N90 will have magnified their portfolio as the shares now trades at N206.0 as at close of trading by 2:00 pm in Lagos on Friday.
Over the last four years, the company’s stock has outperformed banks who are reeling from a punitive regulatory and unpredictable macroeconomic environment that squeezed net interest margin.
It is important to note that MTN Nigeria is a safe haven asset, where investors can park their money and go to bed in the time of economic headwinds.
For instance, while firms capitulated to the COVID-19 crisis that undermined earnings and cash flows, the telco giant was in a profit growth spurt, as a sit-at- home order by the government to curb the spread of the virus accelerated demand for data.
Interestingly, the reopening of the economy and relaxation of social distancing that underpinned business activities and helped the country exit a second recession in less than six years in 2020 was a boon to MTN Nigeria.
MTN stock jumped from N94.51 on March 9, 2020 to N185.14 as at December 25, 2020.
While stock looks expensive, trading at a P/E ratio of 10.25, such valuation could actually be cheap if the company continues to grow rapidly which will drive the share price upwards.
There is always a reason behind every successful business and investors are allured to the stock because of the returns they are getting in the form of dividend payment.
It dished out a N174.42 billion dividend to shareholders in 2021, and the yield stood at 6.38 percent.
The future of the telco giant is bright as it continues to invest in network infrastructure with a view to giving customers world class service delivery while contemporaneously magnifying share of the Nigerian market.
Mafab Communications Ltd and MTNN emerged the two successful winners of the 3.5 gigahertz (GHz) spectrum auction for the deployment of Fifth Generation (5G) technology to support the delivery of ubiquitous broadband services in Nigeria.
The telco firm paid $273 million for the 5G spectrum to the Nigerian Communication Commission (NCC).
MTNN increased its market share of active subscribers to 50.8 percent in December 2021 from 49.30 percent in 2020, in a country of over 206 million people with huge number of young people and approximately 195 million total subscribers(as per NCC’s numbers, out of which 134 million (as per MTN Group’s estimates) are active subscribers.
Analysts say the company’s revenue would get a boost from the approval in principle it had been granted by the central bank for its MoMo payment service bank (PSB).
Little wonder analysts have BUY ratings on MTN stock with upside potentials.