MTN Group cashes in on oil supply concerns amidst Russian-Ukraine conflict, as shares skyrocket   

3 March 2022: MTN shares in Johannesburg escalated by 5.3% on wednesday to reach their highest ever in almost seven years. The rally in oil prices amidst the Russian invasion of Ukraine might not good news for a lot of countries, but it is a bonanza moment for Nigeria, which is Africa’s largest producer of oil and MTN’s biggest market.

The stock has seen a constant uprise in the past four days, also supported by recent positive earnings updates from MTN’s locally listed units in Ghana and Nigeria, where it jumped 2.8% w/w and 1.5% w/w respectively.

MTN “has been putting out a good set of results across different markets over the past few weeks,” said Greg Davies, a money manager at Cratos Capital in Johannesburg. “The share is getting a further push from uncertainties caused by the current Russian-Ukraine war, and what that means for oil supplies.” 

Oil prices at the highest in almost a decade could improve the prospects of success in talks to ease sanctions on Iran, holder of the world’s No. 2 natural gas and No. 4 crude reserves, Davies also said. MTN has had a hard time repatriating funds from the major market owing to the restrictions related to the country’s nuclear power development.

The MTN management team has strategized well in key countries, said Peter Takaendesa, head of equities at Mergence Investment Managers in Cape Town. “We expect MTN to resume paying dividends as gearing keeps reducing and their rest of Africa operations contribute more cash to the group as repatriation is looking better for now.”

MTN investors will also greatly benefit from the company’s exit from Syria and Yemen as part of their derisking program which includes their progress on the sale of some assets said John Davies, a senior analyst at Bloomberg Intelligence. “This progress may deliver a dividend above the median consensus of 3.50 rand a share when it reports next week.”

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