MTN losing out to Vodacom
Financial services group Absa Capital says mobile operator, MTN Group, likely lost revenue share to Vodacom in South Africa, with that dynamic likely to continue, Reuters reported.
“Expect 3Q13’s market share dynamics to continue into 4Q13, with MTN losing service revenue share to Vodacom,” Absa Capital told clients in a research note.
“At current (high) valuation levels, we do however see the regulator’s pending MTR decision presenting downside risk.”
Icasa announced in October 2013, that it wants to cut the costs of terminating a call on a mobile network to R0.10 over the next three years.
A termination rate is the money networks pay to each other for connecting a call. MTRs have declined from R1.25 in 2009 to a current price of 40 cents.
If implemented, MTRs would have a negative impact on both Vodacom and MTN.
Absa Capital did however, raise its price target to R222 from R210 and maintained its “overweight” rating for MTN, Reuters reported.
In October 2013, MTN reported lower than anticipated subscriber growth for the third quarter, adding just 233,000 subscribers bringing the total of subscribers to 25.2 million at the end of the quarter.
In November, Vodacom pointed to net connections of 949,000 active customers to 30.14 million for South Africa for the six months ended September 2013.
Shares in MTN advanced in early trade on the JSE on Wednesday (15 January), up 91 cents to R211.16, up 30% over the past year. Vodacom meanwhile, was flat at R130.19, having added 16% over the past 52 week period.
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