Last Update 19 Jan 26

Fair value Increased 5.28%

MTN: Leadership Reset And Brand Strength Will Shape Balanced Execution Outlook

Narrative Update

Analysts have lifted their fair value estimate for MTN Group from R176.89 to R186.22, citing slightly higher projected revenue growth, a modestly lower profit margin profile, and an updated future P/E assumption of 11.49x that reflects recent sector research and valuation resets seen in wider leisure and consumer names.

Analyst Commentary

Recent Street research around MTN Group has focused less on near term trading updates and more on leadership changes, brand strength, and execution risk. Even though the research is framed through broader consumer and leisure names, it feeds directly into how analysts think about MTN Group's valuation multiples and execution in the coming years.

Bullish Takeaways

Bullish analysts highlight MTN Group's association with what they view as a strong consumer brand in its core market, which they see as an asset when assigning a P/E multiple and considering long term earnings power.
Some see leadership changes around MTN as potentially clearing the way for a reset in expectations, similar to how they frame other consumer names. They note that this can support cleaner execution targets and more realistic growth assumptions embedded in valuation models.
There is a view that underperformance in execution since the pandemic leaves room for improvement over the medium term. Bullish analysts factor this into their longer term earnings scenarios without necessarily assuming aggressive top line growth.
Analysts who are positive on the name reference historically low valuation starting points in comparable leisure and consumer companies. They use this as a reference when arguing that the updated 11.49x P/E assumption on MTN Group is not stretched.

Bearish Takeaways

Bearish analysts focus on leadership transitions as a source of execution risk. They point to changes in senior roles that could disrupt commercial momentum or slow decision making at a time when consistency is important for supporting earnings quality.
There is concern that some new leaders may lack deep experience in the most important geographic markets, which raises questions about how quickly they can respond to mature and more challenging regions where demand trends are already under pressure.
These analysts also highlight that weaker recent demand trends in peer consumer names can justify more conservative revenue and margin assumptions. In their view, this caps how high they are willing to set the P/E multiple for MTN Group.
Some remain cautious that expectations for a clean inflection in execution or earnings could prove optimistic. They therefore prefer to keep a margin of safety in their fair value work rather than assuming a rapid shift in performance.

Valuation Changes

Fair Value: Raised slightly from ZAR176.89 to ZAR186.22, reflecting a modest uplift in the central valuation estimate.
Discount Rate: Held steady at 16.73%, indicating no change in the assumed risk profile used in the valuation work.
Revenue Growth: Nudged higher from 12.96% to 13.25%, a small adjustment to the projected top line trajectory.
Net Profit Margin: Trimmed from 16.69% to 16.33%, indicating a slightly more conservative view on profitability.
Future P/E: Increased from 10.77x to 11.49x, pointing to a somewhat higher multiple being applied to MTN Group's expected earnings.

Rapid subscriber and mobile money adoption, along with network expansion, is enhancing customer retention and diversifying growth beyond traditional voice services.
Strategic capital allocation, operational efficiency, and improved market conditions are strengthening profitability, cash flow, and shareholder value potential.
Intensifying competition, regulatory risks, industry commoditization, high CapEx, and macroeconomic volatility collectively threaten MTN's revenue growth, margins, cash flow, and overall profitability.

Catalysts

About MTN Group

Provides mobile telecommunications services in South Africa, Nigeria, South and East Africa, West and Central Africa, and the Middle East and North Africa.What are the underlying business or industry changes driving this perspective?

MTN is experiencing significant subscriber and data usage growth across Africa, underpinned by favorable population dynamics, accelerating digital adoption, and rapidly rising smartphone/data penetration. This is expected to sustain double-digit top-line (revenue) growth as more customers utilize higher-value data and digital services.
Expanding adoption of MTN's fintech and mobile money ("MoMo") platforms, including advanced services such as payments, remittances, and digital banking, is driving non-voice revenue growth, enhancing net margins, and creating long-term customer stickiness.
The company is executing disciplined capital allocation, including strategic front-loading of CapEx in key growth markets like Nigeria and ongoing focus on expense efficiency programs. These initiatives support infrastructure quality and operational leverage, which should benefit margins and free cash flow as investment moderates in future periods.
Ongoing 4G/5G network rollout, selective expansion of fiber and fixed wireless access, and strategic partnerships (including collaboration with non-terrestrial networks) position MTN to capture emerging opportunities in the growing African digital ecosystem, supporting sustainable revenue and earnings growth.
MTN's improved macro, regulatory, and FX landscape in core markets (notably Nigeria and Ghana), combined with a stronger balance sheet, rising cash upstreaming, and potential for increased dividends or future share buybacks, provide further upside to medium-term earnings and shareholder returns.

MTN Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming MTN Group's revenue will grow by 10.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.6% today to 14.7% in 3 years time.
Analysts expect earnings to reach ZAR 41.5 billion (and earnings per share of ZAR 20.87) by about September 2028, up from ZAR 7.5 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.2x on those 2028 earnings, down from 33.9x today. This future PE is lower than the current PE for the ZA Wireless Telecom industry at 24.9x.
Analysts expect the number of shares outstanding to grow by 1.32% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 16.74%, as per the Simply Wall St company report.

MTN Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heightened competitive intensity in South Africa, especially in the prepaid segment, is leading to lower market share and margin pressure, which may require ongoing cost absorption to maintain competitiveness, directly impacting revenue growth and net margins.
Persistent regulatory, legal, and compliance risks-including ongoing legal cases (ATA, Turkcell, DOJ investigation), evolving digital taxation regimes, and complex SIM registration mandates-expose MTN to significant one-off or recurring costs and operational disruptions, which may constrain earnings and profitability over time.
The commoditization of core connectivity services and industry price competition, particularly from MVNOs and OTT services, risks sustained downward pressure on ARPU and top-line growth if MTN is unable to fully offset these trends with data and fintech offerings, potentially eroding group revenues.
High capital intensity and accelerating CapEx, especially in major markets like Nigeria (and selective 5G/FWA/FTTH rollouts), could lead to increased debt and capital allocation challenges, compressing free cash flow and potentially limiting dividend growth or share buybacks.
Exposure to macroeconomic and foreign exchange volatility in key markets (notably Nigeria and Ghana) remains a long-term risk; while recent stability provided tailwinds, any renewed volatility or inability to repatriate cash due to local currency controls or capital restrictions could materially impact consolidated earnings and liquidity.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of ZAR167.111 for MTN Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ZAR230.0, and the most bearish reporting a price target of just ZAR73.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ZAR281.8 billion, earnings will come to ZAR41.5 billion, and it would be trading on a PE ratio of 12.2x, assuming you use a discount rate of 16.7%.
Given the current share price of ZAR139.8, the analyst price target of ZAR167.11 is 16.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

African Connectivity And Fintech Will Unlock Future Opportunities