For economic observers, Renaissance Capital, a money management company, has released an update on MTN share price Vis a Vis the devaluation of the naira, the video-on-demand (VOD)/Neotel saga and the outlook for Over the Top Content (OTT) in South African and Sub-Saharan African region, respectively.
The company hinted that the likelihood of MTN share price dropping another 20% from the current level is far-fetched. It believes the benchmark for the assessment of the share price should be based on the naira/rand instead of the dollar/naira; furthermore, it revealed that the market is not accounting for the weakening rand/dollar in offsetting the impact of a recent sharp naira/dollar devaluation. On the issue of VOD/Neotel, the firm believes the transaction (between the two) may be approved, albeit with pro-competitive remedies attached.
Finally, on the issue of the OTT’s (Over the Top Content), Renaissance supports the engagement of Mobile Network Operators (MNO’s) with strategic OTT players not to miss out on potentially material revenue streams.
“We retain our preference for MTN as naira concerns, in our view, are overdone. We maintain our BUY rating and reduce MTN’s TP to ZAR235.9 (from ZAR244.6) on revised NGN/$, ZAR/$ forecasts and our weaker 2H15 projections for Nigeria. We slightly adjust the TPs on our remaining SSA covered stocks to account for the passage of time. On Neotel, we reiterate our view that it is increasingly looking like a 2016 event for Vodacom (VOD) and we discuss the potential impact of OTT in SA, with the rollout of 3G/LTE networks likely to be the enabler of the rapid evolution we expect in OTT services.”, Renaissance Capital says.
Renaissance Capital, founded in 1991 and headquartered in Greenwich Connecticut, is a global provider of institutional research, money management, and index design services focused on newly public companies. A full version of this report can be found here.
