South Africa: UBS Removes MTN From List of Stock Picks
Africa's largest cellphone company, MTN, has been removed from UBS's list of top telecommunications stock picks due to concern about the effect of SIM card registration requirements in Nigeria.
UBS says it could lead to a sharp fall in revenue this year. UBS's concern is not surprising, given the effect SIM card registration in South Africa, which came into effect last year, has had on MTN, Vodacom and Cell C.
MTN's share dropped as much as R1.99 to R109.11 last week after the move by UBS. According to Bloomberg, a close at this price would be the lowest since May 13.
Bloomberg reported that UBS said that its analysts had removed the stock from its list "following the recent introduction of SIM card registration requirements in Nigeria, which we believe will lead to a sharp reduction in revenue growth for MTN this year and may incur additional costs relating to registration of subscribers and distribution".
In its last quarterly update, issued in October, MTN said its customer base in South Africa had dipped mainly due to the new regulation requiring prepaid users to register personal details.