South Africa has a healthy telecoms industry with several major players worth billions of rand.
The battle for the top spot has been fiercely fought between South Africa’s biggest mobile operator — Vodacom — and Africa’s leading mobile network — MTN — over nearly three decades.
While it is listed on the JSE, MTN has benefited from substantial growth in countries outside South Africa in recent years — primarily in Nigeria, its biggest market.
Despite having fewer subscribers in South Africa than Vodacom, MTN is worth more — with a market capitalisation of R244.58 billion by the close of markets on 21 August 2023.
The market capitalisation of listed companies is calculated using their share prices and the number of issued shares.
At the time of publication, MTN’s share price was R126.99 — 2.8% lower than at the start of the year. In comparison, Vodacom’s share price had fallen by nearly 11% from R124.47 to R110.09.
In addition to being the most valuable company by market cap, KantarBrandZ reckons MTN is the third-most valuable overall brand in South Africa. Vodacom ranked in a close fourth spot.
The only companies with higher brand value were banks — FNB and Standard Bank — which placed 1st and 2nd, respectively.
Aside from its solid financial performance in the first half of the year, MTN’s data network has also continued to be faster than Vodacom, according to research by Analytico.
An assessment of mobile network call quality also had MTN scoring highest.
At the time of publication, Vodacom was worth about 6.6% less than MTN — with a valuation of R228.56 billion.
The operator recently also received a boost to its business from its takeover of Vodafone Egypt, but has struggled with relatively stunted growth in South Africa.
2023 has been a tough year for mobile services revenue in South Africa across all operators.
Load-shedding has knocked network uptime and reliability and requires increased capital expenditure for backup power, while rising inflation placed pressure on consumer spending.
South Africa’s third-biggest operator — Telkom — has additional concerns.
Telkom is in deep financial trouble — with flat revenue and rapidly increasing costs — as evidenced by its free cash flow and net debt.
Its share price has slumped by over 16% since the start of the year to reach R26.77, putting its market cap at R13.7 billion.
At one point in July 2022, MTN had valued the company at R30 billion and offered to buy it for R60 per share.
MTN withdrew from discussions when Telkom tried to simultaneously entertain talks with Rain about a potential merger. Its negotiations with Rain ultimately led to nothing.
Blue Label Group is the fourth most valuable listed telecoms company, which holds a 49.5% stake in Cell C.
Figuring out Cell C’s value alone proved impossible.
Blue Label last valued the country’s fourth-biggest mobile operator at R3.1 billion in February 2023.
This estimation can be called into serious question as the entire Blue Label Group’s market value currently stands at R3.09 billion, and Cell C was still technically insolvent at the time of its valuation claim.
Investors and financial experts have also questioned Blue Label’s transparency over Cell C’s financial situation.
While it has radically reduced capex by decommissioning its physical network infrastructure, revenue has continued to decline.
There are also several privately-owned South African telecoms companies that are not listed on the stock market.
The major players include fibre network operator Maziv — which consists of fibre-to-the-home provider Vumatel and backhaul fibre network Dark Fibre Africa — and mobile network operator Rain.
These companies are valued based on an assessment of their assets, potential growth, and several other factors.
However, like the Cell C valuation, these assessments should be thoroughly scrutinised and not taken at face value.
The table below summarises South Africa’s biggest telecom companies’ share prices, market capitalisation, and valuations.
|Biggest telecoms companies in South Africa — August 2023|
|Company||Share price as of 21 August 2023||Market cap/Estimated valuation*|
|Maziv (Vumatel + DFA)||n/a||R44 billion*|
|Blue Label Telecoms||R3.38||R3.09 billion|
|Huge Group Limited||R2.34||R403.79 million|
|TeleMasters Holdings Limited||R1.00||R57.48 million|
|*Rain and Maziv are not listed companies, and their valuations come from an estimation of their worth reported in their respective parent companies’ financial statements. As such, they should be carefully scrutinised.|