Shares in MTN powered higher on Thursday afternoon after it lost to Norway’s Telenor and Qatar Telecom in the race to win one of two potentially highly lucrative licences on offer to build mobile telecommunications networks in Myanmar.
In late afternoon trading, MTN was trading by up by more than 3,5% after trading virtually flat before news broke that it had lost the bid. The surge in the share price, which topped R180 in late afternoon trading – just a few rand shy of its all-time record high set earlier this year – has pushed MTN’s market capitalisation to nearly R340bn.
The reason the share price has performed strongly in the wake of the Myanmar news is because dividend flows will be more secure in the short term, according to a telecoms analyst, who is precluded from talking on the record. If MTN had secured the licence, the analyst says, it would have had to pump an enormous amount of cash into building a network.
“Five years from now, MTN would be paying more dividends [because of the licence], but it would have taken some time for [Myanmar] to become profitable at a cash level.”
On Thursday, MTN told shareholders that it received a notification from Myanmar’s “telecommunications operator tender and evaluation selection committee” informing it that it had not been successful in its bid.
If it had secured a licence, it would have marked MTN’s first foray into Southeast Asia. The South African-listed group already operates in 22 markets across Africa and the Middle East. Its largest markets are Nigeria, South Africa and Iran.
MTN was one of 15 companies shortlisted in April for the potentially lucrative mobile licences in Myanmar, a country emerging from decades of military rule and which has low mobile penetration rates.
The group said in a statement that it was “disappointed to miss out on the opportunity to operate a telecommunications network in Myanmar”. However, it said it was still interested in opportunities in the country, which it considered an “attractive market”. — (c) 2013 NewsCentral Media
