South Africa’s biggest telecoms companies

South Africa’s biggest JSE-listed telecommunications companies have a combined value of over half a trillion rand.

The tussle for the top telecoms dog involves the two biggest mobile networks in the country — Vodacom and MTN.

These heavyweights account for the vast majority of the telecoms industry’s market capitalization and have been trading places as the most valuable telecoms company over the past few years.

Vodacom has the largest number of customers in South Africa, reporting 44.23 million by the end of March 2023. South Africa is also Vodacom’s biggest market.

However, it has a smaller footprint than MTN across the continent.

Although MTN’s local subscriber base trailed Vodacom’s at 35.92 million by March 2023, most of its customers were in other African countries.

MTN had 254.71 million subscribers across the rest of Africa and its Middle Eastern markets, which comprise 18 additional countries.

Vodacom last reported 95.72 million subscribers across the Democratic Republic of Congo, Egypt, Lesotho, Mozambique, and Tanzania.

That means it has less than half the total customer base of MTN.

MTN’s market cap was R241.51 billion at the time of publication, while Vodacom’s was R240.05 billion.

The table below compares the share prices and market values of South Africa’s telecommunications companies.

Listed companies’ total values are determined by their market capitalization, while Rain’s comes from its valuation as reported by African Rainbow Capital Investments. According to its latest financial results, ARC held 20.24% of Rain’s equity at 31 December 2022.

For the most part, South African telecoms shares have not performed well in 2023.

There are numerous reasons for this, including a broader slump in economic performance.

For mobile networks in particular, fairly flat service revenue has been a factor.

Customers have been dealing with surging inflation, putting their expenditure on airtime and data under pressure.

Mobile base stations have also struggled to continue running during load-shedding, which impacts network availability and, ultimately, usage.

MTN appears to have been most resilient to the aforementioned challenges, with its shares trading at close to the same level they were at the start of the year.

Vodacom’s share price has dropped by 6.57%.

However, its challenges are not comparable to those experienced by Telkom and Cell C.

Telkom’s share price has dropped by over 10% since the start of the year, primarily due to its planned R13-billion impairment on Openserve, Telkom Consumer, Gyro, and BCX.

In addition to load-shedding, the company has blamed its troubles on low economic growth, high interest rates, and evolving technological advancements.

It has embarked on a retrenchment process to lower its headcount and cut costs.

Cell C is not directly listed on the JSE, but its performance greatly influences parent company Blue Label Telecoms, its biggest shareholder.

Blue Label’s share price has plummeted the most of any company with a stake in a major mobile network — plunging by more than a quarter of its price at the start of the year.

The main reason for this is the “highly complex” restructuring of Cell C, which saw the company’s debtors take a substantial haircut.

Investors have not been convinced by Blue Label’s assurances that Cell C’s transition to a more purpose-built network player will improve its dwindling revenues and subscriber stagnation.

The graphs below summarise the changes in the share prices of South Africa’s four biggest telecoms companies in 2023.

The units shown in the vertical axis are South African cents.

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MTN — Up 0.44%

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Vodacom — Down 6.57%

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Telkom — Down 10.88%

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Blue Label Telecoms — Down 25.83%

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