MTN Ghana, the dominant player in the country's telecommunication industry, has seen a significant surge in its net earnings and assets value over the past five years, bolstered by its durable competitive advantage. The company's monopoly-like environment has allowed it to either sell more or charge more for its services, leading to a consistent growth in net earnings and asset value.
From 2018 to 2022, MTN Ghana's net earnings grew from GHS 754.6m ($65.7m) to GHS 2.85bn ($248.2m), marking a 277.68% increase. During the same period, the company's assets value rose from GHS 4.21bn ($366.6m) to GHS 22.06bn ($1.92bn), an increase of 423.99%. This growth compares favorably with the company's liabilities, which also increased but at a lower rate from GHS 1.80bn ($156.7m) in 2018 to GHS 16.35bn ($1.42bn), indicating a rise of 808.33%.
The Return on Equity (ROE) for MTN Ghana also saw a steady rise from 39.31% to 53.54% over the five-year period. The company's shares listed on the Ghanaian bourse witnessed a 100% increase in share price gain within the first five years of its IPO in September 2018, driving the market capitalization of the equity from GHS 9.7bn ($844.7m) in 2018 to GHS 18.43bn ($1.60bn) at end-2022.
The company's Gross Profit Margin (TTM) stands at an impressive 84.6%, significantly higher than the median Gross Profit Margin (TTM) of both global telecom companies at 49.89% and those operating in frontier markets at 57.73%. This figure indicates that MTN Ghana has performed better than almost half of telecom companies around the world and slightly more than half of telecom companies in frontier markets over the past twelve months.
Similarly, MTN Ghana's Net Profit Margin (TTM) is recorded at 27.62%, outperforming most telecom companies in frontier markets and around the world.
MTN Ghana's market share of the industry has steadily increased from around 46% in Q4 2015 to 66.6% at end-2022 with total subscriptions of 26.61 million out of the industry-wide subscriptions of 40.04 million.
However, MTN Ghana's dominant position faces potential risks due to its designation as a Significant Market Player (SMP) by Ghana's telecom regulator, the National Communications Authority (NCA). The implementation of SMP measures by NCA could negatively affect MTN Ghana's competitive advantage and impact its profitability.
Despite these short-to-medium term concerns, MTN Ghana is expected to regain industry dominance in the long term due to its innovative product/service offerings that attract subscribers.
Given its market dominance and increasing profitability, investors are encouraged to include equities/shares of MTN Ghana in their investment portfolio for significant returns in capital appreciation/gains and higher dividends over a long-term horizon.
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