Company Background

MTN Ghana Limited (“the Company” or “MTN”) is a telecommunications service provider operating in Ghana since 2006 following the acquisition of Investcom. The Company is a subsidiary of MTN Group, a leading telecom operator in Africa and Middle East with over 217million subscribers. MTN has become a household name and a market leader in Ghana in both voice and data segments of the telecommunications industry as well as mobile money services.

MTN is offering 35% of its issued shares to the public in an IPO at a price of GHS 0.75 per share. Offer opened on May 29, 2018 and closes on July 31, 2018.

Investment Highlights

Leading Telecom Provider and Industry Pacesetter: MTN is the market leader in the telecom industry in Ghana with 47.6% market share of voice, 56.5% of data and 93.9% of mobile money market. The Company has the widest coverage and presence in all 10 regions and has over the years been recognized for excellence in the industry with various awards to show. In 2017 alone, the Company received 24 awards from 8 different organisations/awardees. MTN has over the years been the leader of innovation in the industry, setting the pace for other market players. MTN was the first telecommunications operator to operate GSM in Ghana, provide mobile money services, launch 4G LTE services, and to successfully implement cardless mobile wallet ATM withdrawal covering 20% of ATM outlets in Ghana.

Strong Brand Equity: MTN has a strong brand name both globally and locally and this has given the company unfeigned customer loyalty as well as a leverage for winning new businesses.

Future Growth Prospects: Expected growth of an average of 10% per annum in the number of data users in Ghana from 2017 to 2020. With a strong focus on mobile money offering, MTN expects to grow the number of wallets from the current 11.6 million to 15 million in 2020 and increase revenue contribution of MoMo from 13.6% to 20% within the same period.

Good Financial Performance: Over the past 5 years the Company has recorded a CAGR of 18.4% in Revenue. EBITDA margin of 40.8%, 40.9% and 39% in 2015, 2016 and 2017 respectively shows strong and sustainable profitability. This is essential especially as competition is expected to heighten with its attendance pricing challenges. MTN has a strong cash position with free cash flow of GHS 589 million (December 2017)

Experienced Management Team: The management of MTN has extensive experience and knowledge in the telecommunications industry. The CEO was named the CEO of the Year at the AfricaCom Awards 2016.

Recommendation

We recommend the purchase of MTN shares based on the following:

1. MTN offers an investment opportunity in the telecom industry which is thriving and expected to grow further on the back of mobile money, digital and data sales.

2. The shares are fairly priced at GHS 0.75 relative to the valuation of MTN Group, SA.

3. Investors should have a medium-long term objective for investing in MTN shares

How to Purchase MTN Shares

Visit Bullion Securities Limited office at The Octagon, Suite B904, Accra

Or Call us on +233 (0)54 011 3508