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Johannesburg - Analysts are predicting better-than-expected growth for telecommunications group MTN Group [JSE:MTN] in the second half of 2010 and investors are expressing a renewed enthusiasm in the company as it begins to provide business services in African markets.
Industry analyst at Frost & Sullivan, Spiwe Chireka, said that confidence in MTN was certainly not due to its South African operations.
"We haven't seen any interesting developments in South Africa in the past three or four months and MTN's business offering is having teething problems," she said.
"But West Africa is a key area of interest and looks most promising. MTN is dominating in Nigeria where its market share has increased since March. The launch of MTN Business Nigeria is also expected to ruffle some feathers in that market," said Chireka.
She said that MTN has an advantage over its competitors in Nigeria from a business services perspective as it owns its own infrastructure and is able to accommodate lower prices.
"We're expecting phenomenal growth from this unit," said Chireka.
MTN has launched its first converged services offering in Cote d'Ivoire, which Chireka also describes as promising.
"This combines broadband and voice services in a way that we haven't seen elsewhere in the region and is something MTN is expected to spread to the other markets it operates in," she said.
According to Chireka, there are "no fireworks" expected from its East African operations, but its UUNET Kenyan subsidiary, which deals with business services, will be a focus in that territory.
New rival
"There are lots of multinationals now moving into East Africa. MTN Business is a key area of growth in that region, but West Africa will continue to dominate," said Chireka.
She also expects MTN to come up against increasingly formidable competition from India's Bharti Airtel as it makes its way into Africa through its acquisition of Zain. The Airtel brand will be rolled out before the end of the year, replacing Zain completely.
"Bharti will introduce the truly low-cost Indian model to African markets and this will have an interesting effect, but Zain has not been spending in line with MTN and Bharti will have some catching up to do," said Chireka.
Overall, Chireka said MTN is in a healthy position.
Vestact's Paul Theron said current interest in MTN reflected his company's previously stated expectations.
"We are at the perma-bull end of the swimming pool, so we assume higher subscriber growth, higher ARPUs (average revenue per user) and more data sales. Much of this is speculative and based on the idea that smarter devices and new applications equal happy customers, paying them more every month," he said.
However, Theron said current rand strength is having an impact on profits from outside South Africa.
"But remember that earnings are one thing, and the share price is another. If global risk appetite rises MTN will be one of the first stocks to go up, even if these numbers are indifferent," said Theron.
The introduction of an interim dividend from MTN, announced at its year-end results in March, has also piqued investor interest and is helping to establish MTN as a higher-yielding stock.
- Fin24.com
Industry analyst at Frost & Sullivan, Spiwe Chireka, said that confidence in MTN was certainly not due to its South African operations.
"We haven't seen any interesting developments in South Africa in the past three or four months and MTN's business offering is having teething problems," she said.
"But West Africa is a key area of interest and looks most promising. MTN is dominating in Nigeria where its market share has increased since March. The launch of MTN Business Nigeria is also expected to ruffle some feathers in that market," said Chireka.
She said that MTN has an advantage over its competitors in Nigeria from a business services perspective as it owns its own infrastructure and is able to accommodate lower prices.
"We're expecting phenomenal growth from this unit," said Chireka.
MTN has launched its first converged services offering in Cote d'Ivoire, which Chireka also describes as promising.
"This combines broadband and voice services in a way that we haven't seen elsewhere in the region and is something MTN is expected to spread to the other markets it operates in," she said.
According to Chireka, there are "no fireworks" expected from its East African operations, but its UUNET Kenyan subsidiary, which deals with business services, will be a focus in that territory.
New rival
"There are lots of multinationals now moving into East Africa. MTN Business is a key area of growth in that region, but West Africa will continue to dominate," said Chireka.
She also expects MTN to come up against increasingly formidable competition from India's Bharti Airtel as it makes its way into Africa through its acquisition of Zain. The Airtel brand will be rolled out before the end of the year, replacing Zain completely.
"Bharti will introduce the truly low-cost Indian model to African markets and this will have an interesting effect, but Zain has not been spending in line with MTN and Bharti will have some catching up to do," said Chireka.
Overall, Chireka said MTN is in a healthy position.
Vestact's Paul Theron said current interest in MTN reflected his company's previously stated expectations.
"We are at the perma-bull end of the swimming pool, so we assume higher subscriber growth, higher ARPUs (average revenue per user) and more data sales. Much of this is speculative and based on the idea that smarter devices and new applications equal happy customers, paying them more every month," he said.
However, Theron said current rand strength is having an impact on profits from outside South Africa.
"But remember that earnings are one thing, and the share price is another. If global risk appetite rises MTN will be one of the first stocks to go up, even if these numbers are indifferent," said Theron.
The introduction of an interim dividend from MTN, announced at its year-end results in March, has also piqued investor interest and is helping to establish MTN as a higher-yielding stock.
- Fin24.com
