MTN Group has generated enormous returns for shareholders under the leadership of Ralph Mupita

MTN Group’s share price topped R200/share on Wednesday, the first time the JSE-listed emerging markets telecommunications giant has touched these levels in nearly seven years.

The shares touched a six-and-a-half year high of R208.33 in late morning trading and were last changing hands at R207 apiece. They’re also now not far away from their all-time of just north of R260/share.

The rally in the value of MTN shares over the past 18 months has been nothing short of phenomenal. Since their low point below R35/share in March 2020 – when investors were panicked about the impact of Covid-19 and plans to put the country into a hard lockdown – the shares have moved relentlessly northward.

In fact, an investment in MTN when the shares were at their lowest point just two years ago would have returned an investor with good timing more than 500% in share value alone. Put another way, a R100 000 investment in MTN then would be worth more than R600 000 now. That almost (but not quite) outperforms an investment in bitcoin over the same period.

The share price surge has also pushed MTN’s market capitalisation up significantly. Market cap, calculated by multiplying the number of shares in issue by the share price, was at R388-billion on Wednesday afternoon, according to Google Finance data. That puts it far ahead of rival Vodacom Group, with a market valuation of R276-billion. Telkom’s market cap is R22-billion, though the company only operates in South Africa and is a distant third player behind Vodacom and MTN in the local mobile market.

Over the past year (to Tuesday’s close), MTN shares have appreciated by 162.6%, while Vodacom has climbed by 18.9% and Telkom has declined by 0.5%. Over a five-year time horizon, MTN has climbed by 56%, while Vodacom has eked out a 1.5% return and Telkom has slumped by 38%.

Various factors

MTN’s share price is being driven higher by various factors, including a reduction in debt at the holding company level, investor faith in the management team led by group CEO Ralph Mupita, strong performances in its key markets, especially Nigeria, and its strategy to exit risky markets. The surging oil price is also seen benefiting the oil-rich Nigerian economy — and, in turn, MTN. This includes a plan to get out of the Middle East and a decision not to bid for an operating licence in Ethiopia, which has been troubled by unrest and which would have cost billions of rand in start-up capital, crimping future dividends.

Also helping the performance is the group’s plan to spin off its fintech and fibre assets into separate businesses and its recent decision to sell some of its South African tower portfolio to IHS Holdings for R6.4-billion.