Analyst Thesis

1. The current price is discounting no value for MTN Nigeria (R27 of the R111 IV), previously was R18 resulting in our positive view on the asymmetric upside. Indeed, most of the WECA valuation is ignored by the market too.
2. MTN's 50% tariff increase aims to protect its profit margins but may also lead to lower consumer spending. To sustain long-term growth and retain subscribers, MTN must carefully balance pricing with affordability to avoid significant customer losses.
3. Due to the sharp devaluation of the naira, this ultimately results in a higher cost of doing business which affects the entire business model and makes it harder to drive margin recovery.
4. Even though Nigeria offers potential advantages, the uncertainty or risk remains high, and there's no known trigger at this moment that would alleviate that risk perception.
5. The asset realisation process needs to continue which should streamline the portfolio, reduce debt and risk, and enhance returns.
6. A significant risk remains MTN’s material exposure to forex. The sum of the parts (SOTP) valuation shows that 23% of the exposure comes from South Africa, and the rest is volatile currencies and inflation exposure.
 
Our research supports a hold recommendation.