Though the year is still pretty new, MTN Nigeria has already emerged as a standout performer on the Nigerian Exchange Group (NGX), with its shares appreciating by 21% since the start of the year. Analysts attribute this wonderful performance to the federal government’s recent approval of a tariff hike in the telecommunications sector.
This marks a significant rebound for MTN Nigeria, which recorded a 24% negative return in 2024. On January 8 and 9, the stock saw back-to-back 10% gains, inciting discussions about the factors driving this upward trend. A similar pattern occurred in early 2024 when the stock hit a peak of ₦295 on January 9, only to reverse course, losing 38% of its value and falling to ₦183 by March 6.
The current rally in its stock is primarily linked to the Nigerian Communications Commission’s (NCC) approval of tariff increases, which had been anticipated since late 2024. Reports suggesting an imminent tariff adjustment initially fueled bullish sentiment, and the official announcement further raised MTN Nigeria’s share price, rising from ₦178 on December 23, 2024, to ₦242 by January 9, 2025. This puts the stock near CardinalStone’s target price of ₦242.62.
CardinalStone’s December 2024 analysis highlighted MTN Nigeria’s return to profitability, even without factoring in the tariff hike. The report credited this to strategic measures such as renegotiating tower lease contracts, which reduced the USD component of its lease agreements from 55%-60% to a more manageable 25%-30%. These efforts have strengthened the company’s financial outlook and set the stage for its current performance.
As of now, the question remains whether MTN Nigeria’s bullish trajectory will persist. Meristem Stockbrokers predicts the stock will continue its upward momentum, noting it is still below their target price of ₦254.22.
