Scancom PLC (MTN Ghana):  A high-performing yet undervalued stock on the GSE

By: Dela AGBO

MTN Ghana (MTNGH) has established itself as one of the most robust and consistent performers on the Ghana Stock Exchange (GSE).

With a strong track record of revenue growth, increasing market share, and consistent dividend payments, the stock remains a compelling investment opportunity.

However, despite its impressive performance, MTN Ghana’s stock remains undervalued, presenting a significant opportunity for investors seeking both capital appreciation and dividend income.

MTN Ghana: A leading force in telecommunications

MTN Ghana is the country’s largest telecommunications provider, offering mobile, data, and financial services to millions of Ghanaians.

Established in 1996, the company has played a pivotal role in transforming Ghana’s digital landscape. With over 28.5 million mobile subscribers, 17.5 million active data users, and 17.2 million Mobile Money (MoMo) users, MTN Ghana remains the industry leader.

Financially, MTN Ghana has demonstrated strong growth, reporting a 34.5% increase in service revenue to GHS 17.9 billion in 2024, while profit after tax rose by 35.9%.

The company continues to reward shareholders with attractive dividends, making it one of the best-performing stocks on the Ghana Stock Exchange.

Committed to innovation and expansion, MTN Ghana aims to lead the digital revolution in West Africa by enhancing network infrastructure and promoting financial inclusion through MoMo.

With its solid market position and continuous investment in technology, MTN Ghana remains a key player in Africa’s telecommunications industry.

Historical Dividend Performance

MTN Ghana has been one of the best dividend-paying stocks on the GSE. Below is the historical dividend data since the IPO date:

The average annual dividend growth rate from 2019 to 2024 stands at 35.49%, demonstrating the company’s ability to consistently reward shareholders.

Financial Performance & Growth Prospects

MTN Ghana’s financial results for 2024 indicate strong and sustained growth across multiple metrics:

• Mobile Subscribers: Increased by 6.5% to 28.5 million
• Active Data Subscribers: Increased by 13.7% to 17.5 million
• Active Mobile Money (MoMo) Users: Increased by 12.8% to 17.2 million
• Service Revenue: Increased by 34.5% to GHS 17.9 billion
• EBITDA: Increased by 31.3% to GHS 10.2 billion
• Profit Before Tax: Increased by 35.9% to GHS 7.6 billion
• Total Capex: GHS 4.4 billion
• Direct & Indirect Taxes Paid: GHS 8.6 billion

These figures highlight MTN Ghana’s ability to generate consistent revenue and profit growth, reinforcing its status as a strong long-term investment.

Stock Price & Valuation

Despite its solid financial performance, MTN Ghana’s stock is currently trading at around GHS 3.20 per share, significantly below its fair value when considering its earnings growth, dividend payments, and market dominance.

Future Share Price Projections

MTN share price at the beginning of the year 2025 at GHS2.50 and assuming a 50% average annual growth rate, the estimated share price for the coming years is:

If MTN Ghana continues on its current growth trajectory, the stock price could double within the next five years, making it an attractive buy at current levels.

Future Dividend Projections

Given its historical 35.49% dividend growth rate, we project the following dividends:

This means investors can expect increasing dividend payouts, ensuring both capital gains and income generation.

Key Findings and Future Projections for MTN Ghana Shares

Dividend Growth Analysis

1. • MTN Ghana’s dividends have consistently grown over the years, with an average annual increase of 38.49% from 2019 to 2024.
   • The most recent dividend payout in 2024 totaled GHS 0.305, a 35.56% increase from 2023.
   • Projected dividends for the next three years, assuming a 20% annual growth rate, are:

Investment Outlook: Why MTN Ghana is a Strong Buy

• Consistent Revenue Growth: The Company has maintained high revenue growth, driven by increased mobile, data, and MoMo subscribers.
• Attractive Dividend Yield: MTN Ghana has one of the best dividend yields on the GSE, making it a preferred stock for income-focused investors.
• Undervalued Stock Price: Trading at GHS 3.20 but expected to fall a bit after the record date, the stock is significantly undervalued, offering an opportunity for strong future returns.
• Market Leadership: With nearly 70% market share in Ghana’s telecom industry, MTN Ghana enjoys a competitive advantage.
• Resilient Business Model: Despite macroeconomic challenges such as inflation and currency volatility, MTN Ghana continues to execute a solid strategy.

Conclusion

MTN Ghana remains one of the best-performing and undervalued stocks on the Ghana Stock Exchange. With strong financials, consistent dividend growth, and future price appreciation potential, it presents an excellent opportunity for investors. Long-term investors should consider accumulating MTN Ghana shares at current levels to capitalize on future capital gains and dividend income.

Pension Fund Managers and other institutional investors should strongly consider adding MTN Ghana shares to their portfolios. With its consistent dividend payments, strong financial growth, and dominant market position, MTN remains one of the best-performing stocks on the Ghana Stock Exchange (GSE).

However, investors should conduct a thorough portfolio suitability assessment to align their investment objectives with MTN’s stock performance. It is advisable to consult with professional investment advisors like EcoCapital Investment Management limited to determine if this stock fits within their risk tolerance and long-term strategy.