The cellular phone company has ditched its gung-ho approach and is opting for wiser investments
To get a sense of the merits of a ruthless pursuit of returns and the reduction of risk, take a look at MTN Group.
For years, MTN was the darling of investors, grinding out double-digit profits and doling out dividends after building operations in more than 22 countries where demand for its services was booming thanks to negligible fixed-line networks. And there were many more examples that called into question the company’s appetite to take extraordinary risks.
Judging by the MTN share price performance so far in 2021, it is safe to assume that investors have taken notice of CEO Ralph Mupita’s efforts, which prudently balance risk and return in the pursuit of profits, to restore MTN as a must-have in fund managers’ portfolios. Shares in the company have surged by nearly two-fold so far in 2021, making it one of the best-performing stocks on the JSE, and far outpacing its closest rival, Vodacom, which has notched up just over 10%.
The commercial logic of mobile money is not in dispute. More than a decade ago, Safaricom launched M-Pesa, a mobile money service whose success convinced investors and executives across emerging markets that the industry’s next growth path was in financial services. Nigeria, with a population three times the size of Kenya and where about 60% of the population do not have bank accounts, is a pot of gold for MTN.
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