MTN Nigeria Records Fresh Rally after Working Capital Raise
MTN Nigeria Plc (Ticker: MTNN) attracted investors’ attention again after the company announced it successfully raised working capital from the debt capital market via commercial paper offers.
In the equities market, the telecom company’s share price rose to N176 on Friday, pricing the stock at about a 45% discount to its 52-week high on the Nigerian Exchange.
In the last seven trading sessions, the telecom stock shows potential to rise again, having gained 3.5% week on week after staying down for a long while. Value hunters began to pay attention to the stock with the expectation that earnings would rebound after the company renegotiated deals and raise working capital.
Demand for MTN Nigeria shares increased last week after the telecom company announced it raised N72.18 billion via commercial paper to support working capital.
Hence, its share price rose to N176 on Friday. The moderate rally pushed the company’s market capitalisation to N3.695 trillion, spread over its 20.995 billion shares outstanding on NGX.
Ticker: MTNN is still trading at a significant discount to its 52-week high. Trading results revealed that MTN Nigeria is about 45% cheap to its peak price.
A number of equity analysts have upgraded their earnings expectations on the telecom giant, with a buy rating due to its upside potential that will afford it an opportunity to claw back losses.
The new deal around its towers and latest debt capital raise is expected to provide a buffer for financing operations, though the company’s shareholders’ funds remain negative.
The telecom became a target for sell-side actors on the Nigerian Exchange following its successive unimpressive earnings performance. A development aided by the devaluation of the naira that caused its FX liabilities to expand sharply.
MTN Nigeria will need huge amount of naira to settle its US dollar and other foreign currency-denominated exposures to third party. To salvage its market value, the management renegotiated US dollar-denominated deals that exposed the company to negative exchange rate fluctuations.
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