Thoughts on MTN going forward

[klapka]

There has been a lot of hoorah over their fine being reduced and then again when it was announced that as the Niara is being free floated and therefore about to devalue this would reduce the fine further. Surely this means MTN Nigeria's earnings going forward will also reduce, in Niara, even less revenue for a company that reports in Rands. The Niara has devalued 20% today and expected to hit 50% soon. Nigeria was 37% of MTN revenue. Am I missing something?

[SimonPB]

nope, the Naira will hurt and that 37% is a low base. It used to be closer to 45% but recently it has been tough in Nigeria .. the only bright light is at least they got an outsider to run the firm and maybe he can clean up the company culture

[suki]

100% agree simon. they have a lot of people refusing to go because they have share from many moons ago.

[klapka]

Yes the shakeup of the board was very necessary. They can only change that cowboy culture from the top. But I won't be going back in anytime soon. Maybe a year a two.

[Preston]

Devaluation will hurt MTN revenue, but if you consider a potential loss of market share in Nigeria (MTN) then the impact of the Naira on revenue is somewhat reduced. I sure the company would have hedged against this risk (omo)

[SimonPB]

you can't effectively hedge a 27% move in one day and MTN don't hedge

[Preston]

I am not talking about a one day hedge or a 27% decline . Surely a risk impact to revenue has already been performed by the company.Management must be really stupid not to do anything . Btw how do you know that Mtn do not hedge?

[Preston]

I am not talking about a one day hedge or a 27% decline . Surely a risk impact to revenue has already been performed by the company.Management must be really stupid not to do anything . Btw how do you know that Mtn do not hedge?

[Preston]

I am not talking about a one day hedge or a 27% decline . Surely a risk impact to revenue has already been performed by the company.Management must be really stupid not to do anything . Btw how do you know that Mtn do not hedge?

[THRESHOLD]

The Nigerian funds are infinitely more valuable than they were a month ago. Everyone knew what would happen when they de-pegged - the black market rate has topped 400 on transactions in the recent past. This is good news. I bought in at mid 130 based on this and will trade this on the long side for a while. Beyond that - well - I don't like Cell Phone companies.

[SimonPB]

we know they don't hedge as they tell us in the annual report (an a hedge for +third of rev would be massive cost) and management are stupid, how else do you get a multi USDbillion fine ?!

[Preston]

@SimonB, Which annual report and which page of the annual report?

[SimonPB]

can't remember, but they online and you can hunt it out

[Preston]

No thank. In the absence of evidence,i do not believe your assertions.

[Preston]

No thank. In the absence of evidences, i do not believe your assertions.

[SimonPB]

that fine, but if I can ask what evidence do you have that they do hedge the Naira ??

[Preston]

I don't. It is an assumption that i used.

[#18]

have you any idea how ridiculous this sounds? Your statement of certainty that they hedge vs your statement of assumption in the very same thread? In any case, those that are worried about Naira devaluation need to understand that the Naira has always carried 2 valuations in Nigeria - 1) official (and never obtainable) government pegged rate and 2) the unofficial widely used rate. Now that they are free floating, the ridiculous pegged rate has fallen away and everyone reverts to what they were all using in the first place. Bu Naira exchange rate is in any case irrelevant, as MTN still needs to be able to repatriate cash out of Nigeria - and this is by far the riskiest aspect of their involvement there, as they need the cash to pay dividends. I think MTN shareholders can expect a dividend cut soon - and this will cause a rerate, if it hasn't happened already.

[Preston]

@skaap, Please do not post just for the sake of posting. Your "troll like" behaviour is becoming very predictable. This is what I wrote “ I sure the company would have hedged against this risk (omo)” .

[Hali]

I see it trading in the 135 - 155 range..for the foreseeable future. No catalysts to take it higher..earnings might..