Volatility in MTN’s share price has seen the counter add more than 42% since its 52-week low just a month ago as investors pile back in on a range of factors, including the publication in two weeks of its year-end results.
From MTN’s recent low of R109,56/share, the counter has added 42,8% to reach a high on Thursday morning of R156,47/share — a massive return for those who bought shares last month.
Its market capitalisation has risen by more than R85bn since its January low.
However, despite the sharp uptick, the telecommunications group’s share price is still down by a third over the past three months after the Nigerian Communications Commission imposed a record-setting 1,04 trillion naira (R80,7bn) fine on the company for failing to disconnect more than 5m unregistered Sim cards in the West African nation.
That fine was later reduced to 780bn naira (R60,5bn) and MTN, which turned to the Nigerian courts in December to challenge the fine, is now engaged in negotiations with authorities to try to end the dispute out of court.
The federal high court in Lagos has given the parties until 18 March to try to settle the matter.
Irnest Kaplan of Kaplan Equity Analysts said a large part of the reason for the strength in MTN’s share price in the past month may simply be because it had entered into deeply oversold territory, driven by investor panic.
“At R109, you could have argued it was incredibly cheap,” he said. “Maybe the market was taking the view that the fine wouldn’t be as bad as previously expected.”
Kaplan emphasised that he has no insight into the negotiations in Nigeria or what their outcome might be.
Sentiment toward emerging markets is also likely to be playing a significant role in the volatility in MTN’s share price, he said. Sentiment toward South Africa turned extremely negative in December after President Jacob Zuma fired his respected finance minister, Nhlanhla Nene, replacing him with the unknown Des van Rooyen. This led to a sharp depreciation in the value of the rand and a massive sell-off of South African equities, including MTN.
“People were scared of investing in South Africa and maybe that has abated slightly,” Kaplan said.
Another factor likely to be having an impact on the share price is the looming year-end results, with analysts revisiting their models for MTN and issuing new research notes to clients, he added. — (c) 2016 NewsCentral Media