Don’t be shocked about MTN, it’s always been a bit gung-ho
Operator seems to relish plunging into the most risky markets, so Nigerian hiccup should come as no surprise
The shocked response to MTN’s latest run-in with regulators seems a little misplaced given the group’s long-term strategy of going into markets where most others fear to tread. Over the years it’s been difficult not to suspect that MTN relied on the US State Department travel advisory site for ideas on where to seek investment opportunities.
It’s not just one or two countries that MTN has boldly ventured into. Neither is it a case of MTN operating in once-stable countries that have unexpectedly got caught up in political and economic turmoil.
Afghanistan, Syria, Yemen, South Sudan and Iran have all got substantial MTN operations. They also happen to be five of the 11 countries the State Department has classified as Level 4 in terms of travel advisory. (The classification system predates President Trump.) Level 4 is the highest and most aggressive advisory level issued by the department and those who are determined to travel are advised to draft a will and designate appropriate insurance beneficiaries and/or power of attorney.
Over the years this bold strategy has generally worked in MTN’s favour and has helped to underpin strong earnings growth. But every so often it bites and reminds investors why caution is not always to be scoffed at.
Ironically other than Iran, which suffers from US policy, it hasn’t been the Level 4 countries that have caused MTN most concern. Benin, which has a remarkably safe Level 1 tag, has had its MTN challenges as has Cameroon, which like SA enjoys a Level 2 categorisation. And then there’s Nigeria, which scores a Level 3 from the state department and has been something of a nightmare for MTN shareholders in recent years.
These sturdy investors may even have forgotten what a dream it was before that.