MTN Nigeria Plc has experienced a significant rebound in the equities market, with its stock surging by 21% within two days.
This recovery follows a challenging period marked by earnings struggles and market selloffs. Investor sentiment turned positive after the company successfully renegotiated tower lease agreements and localized its loans, reducing exposure to foreign exchange losses.
The company’s share price jumped from N200 to N242 last week, lifting its market capitalization to over N5 trillion—a valuation level not seen in a long time. This marks a 42% recovery from its November 2024 low of N170 per share. The rally gained momentum with the approval of a telecom tariff hike by the Nigerian Communications Commission (NCC), which raised hopes of improved revenue.
In Q3-2024, MTN’s earnings showed a return to profitability due to cost savings from tower lease renegotiations. Analysts noted an improvement in the company’s EBITDA margin from a low of 31.9% in Q2-2024 to 37.6% in Q3-2024. However, the overall 9-month earnings report still highlighted significant losses caused by currency devaluation and unwinding of USD-denominated obligations.
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MTN Nigeria has been proactive in addressing its financial challenges. The company raised capital through its N250 billion Commercial Paper Issuance Programme, issuing multiple series of commercial papers that were oversubscribed. This strategy helped improve working capital and boosted investor confidence.
According to market analysts, the performance of the company is expected to improve in the future. Revenue growth projections for 2024 have been revised upward, with expectations of a 29.2% increase driven by higher average revenue per user (ARPU) and sustained data demand. The EBITDA margin for 2024 is forecasted to range between 35% and 37%.
Despite the stock’s strong recovery, challenges remain, including ongoing foreign exchange losses and compliance with regulatory requirements. However, analysts believe that continued strategic initiatives, including telecom tower lease renegotiations and debt localization, could sustain the upward momentum.
