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The telecommunications industry has been resilient amidst the coronavirus pandemic. While majority of industries have been nearly crippled by the COVID-19 outbreak, MTN Nigeria and other network providers have been experiencing a hike in voice and data revenues, but this gain seems to have little or no impact on investors' confidence as the share price of Y'ello continues to drop in the second week of Nigeria easing its lockdown.
Although MTN Nigeria's current stock price is still higher than what it attained in most of April 2020, but with the continuous fall, the company seems to be heading in that path. Last week, MTN Nigeria stocks had risen despite the announcement that the lockdown - which had made many Nigerians depend on telcos for entertainment - will be lifted.
The day the lockdown began to ease, May 4, 2020, MTN Nigeria's share price increased, hitting N116 per share from N112 per share of April 30, 2020. The stock price rose further, reaching N120 per share the next day, and remained flat till May 8, 2020, when the price dropped back to N112 per share.
It remained flat until it dropped further to N111.60 kobo on May 12, 2020. The stock price of MTN Nigeria continued on a downhill path, hitting N110 per share the next day and it has remained flat entering May 14. Today, the stock opened at N110 per share, but it dropped lower after closing at N109.5 kobo per share, The drop in the network provider's share price followed an impressive result released for Q1 2020.
Result not having an impact on stock
AllNews had reported that MTN Nigeria generated N74 billion for data revenue within the first quarter of 2020, rising from N46.4 billion. MTN Nigeria recorded growth in its Voice revenue, posting N194 billion for the three months period ended March 31, 2020. This is a climb when compared to the corresponding period in 2019 when the network provider grossed N182.4 billion. MTN Nigeria's total revenue peaked at N329 billion in Q1 2020, a staggering increase when compared to the N282 billion in the corresponding period of 2019.
The drop in MTN Nigeria's stock performance shows the impressive financial result for Q1 2020 isn't a confidence booster for the investors, as the stock was priced lower than it was sold last week. While the stock form seems unbothered when the lockdown began easing on May 4, the case is different in the second week.
Investors' confidence might have been dragged down by the resumption of business activities by companies that were initially operating a work-from-home program. With employees and companies resuming, the demand for data and airtime will drop when compared to the demand during the lockdown. It reduces the essence of network providers that have gained more from the COVID-19 than most businesses.
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