Surprise valuations for South African telecoms companies

Rain and CIVH (Vumatel and DFA) are more valuable than Telkom, and Afrihost has a higher valuation than Cell C.

These are among the surprises when looking at the official valuations of the biggest telecommunications companies in South Africa.

Vodacom, with operations in South Africa, Tanzania, the DRC, Mozambique, Lesotho and Kenya, is South Africa’s most valuable telecommunications company with a market cap of R226 billion.

MTN, which has retail offerings in 21 countries and enterprise services in 23 countries, ranks second with a market cap of R106 billion.

One would expect Telkom, which has the most extensive fixed-line network in South Africa, to rank third, but this is not the case.

Community Investment Ventures Holdings (CIVH) and Rain have higher valuations than Telkom’s market cap.

CIVH, which owns Vumatel and DFA, is valued at R18.5 billion, while Rain is valued at R15 billion – higher than Telkom’s market cap of R13.4 billion.

Telkom’s assets include millions of subscribers, the country’s largest fibre network, and an extensive mobile network.

Telkom also has more spectrum than Rain, it owns properties across the country worth billions, and it has a strong foothold in the corporate telecoms market.

It is therefore surprising that Telkom has a lower valuation than both CIVH and Rain when its assets dwarf both these companies.

Blue Label Telecoms, which owns 45% of Cell C, has a market cap of R3.33 billion. However, the company values Cell C at nil.

Blue Label, through its wholly-owned subsidiary The Prepaid Company, acquired a 45% stake in Cell C in August 2017 for R5.5 billion.

It was initially upbeat about the mobile operator’s prospects, but the mountain of debt and operational problems weighed on both Cell C and Blue Label’s share price.

Less than two years after the acquisition, Blue Label impaired its investment in Cell C to nil, where it remains to this day.

When looking at fibre infrastructure players, Seacom is valued at R3.03 billion while Metrofibre is valued at R1.59 billion.

On the ISP front, Afrihost is the most valuable service provider with a valuation of over R2.5 billion.

The table below provides an overview of the valuations of South Africa’s top telecommunications companies.

South African Telecoms Companies
Company Measure Market Cap/Valuation
Vodacom JSE market cap R226 billion
MTN JSE market cap R106 billion
CIVH Remgro valuation R18.5 billion
Rain ARC valuation R15.0 billion
Telkom JSE market cap R13.4 billion
Blue Label Telecoms JSE market cap R3.33 billion
Seacom Remgro valuation R3.03 billion
Afrihost Internal valuation R2.50 billion
Metrofibre ARC valuation R1.59 billion
Webafrica Internal valuation R300 million
Cell C Blue Label valuation R0

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Surprise valuations for South African telecoms companies