With MTN’s cellular network acquisitions in emerging markets on hold, analysts say the group can probably be considered a mature business. But there are still opportunities in the business services sector, they say.
MTN told shareholders on Thursday that acquisition opportunities in emerging markets are becoming harder to find.
Instead, the group will focus on cost-cutting and short-term deals that will bring value to shareholders.
MTN’s share price had risen by 4% by lunchtime on Friday following the announcement, with investors looking snapping up shares on the prospect of improved dividends.
BMI-TechKnowledge MD Denis Smit says MTN is mature business. He says the saturation of cellular African market has been coming for some time.
However, he believes there are still opportunities in India for MTN.
Absa Investments analyst Chris Gilmour says MTN shareholders will be getting a good deal through improved dividend flow.
However, he says the group will not provide the same growth shareholders have become used to. “People will wonder where the growth will come from.”
However, Frost & Sullivan industry analyst Spiwe Chireka says MTN’s buying days are not over.
She says the group has positioned MTN Business as a growth vehicle in Africa, and new deals will stem from there.
MTN recently raised R3,5bn in bonds through Rand Merchant Bank and Standard Bank, with no explanation of what this money will be used for.
Chireka says the bonds, coupled with the R8,1bn empowerment deal, makes it look as if MTN is on a fundraising mission.
She says that although there are diminishing opportunities in cellular voice in the emerging markets, there are still opportunities in the business services environment.
According to Chireka, many high-profile mobile businesses, like France Telecom’s Orange, are looking at striking deals with services and Internet businesses.
She says MTN is likely to make similar moves. “These deals won’t be as big as the voice deals, but they will still happen,” she says. — Candice Jones, TechCentral