Vodacom share price is now worth more than MTN
MTN continued to lose ground in early trade on Wednesday (18 November) amid an ongoing crisis within its operation in Nigeria, which has led to the axing of the operator’s chief executive.
In all the carnage, Africa’s biggest mobile operator has seen its share price slip below that of its biggest rival in South Africa, Vodacom.
Less than 15 months ago, MTN traded at a peak of R260, with Vodacom at half that (R130).
Fast forward to Wednesday morning on the JSE, and MTN has dwindled to R139.42, while Vodacom is up to R149.18 – not far off its best price of R152 achieved in April.
MTN’s share price has declined by 38% or R86 over the past year,while Vodacom is up 16%, having added R20 over the same period.
The culprit for MTN’s demise is largely a multi billion rand fine imposed on the group by the Nigerian Communications Commission (NCC).
On the 26 October, it emerged that the NCC imposed a fine equivalent to US$5.2 billion on MTN Nigeria.
The fine relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers who were disconnected in August and September 2015 and is based on a fine of N200, 000 for each unregistered subscriber.
The debacle, and MTN’s subsequent handling of events led to Sifiso Dabengwa stepping down as chief executive, with former boss Phuthuma Nhleko assuming responsibility for the company.
Nigeria is MTN’s largest operating unit, with more than 55 million customers, generating revenue of R54 billion at the end of 2014.
In South Africa, MTN has just under 30 million customers, generating revenue of R39 billion, while Vodacom has 33.7 million customers generating R62 billion annually.
Vodacom’s operations include networks in South Africa, Tanzania, the Democratic Republic of Congo, Mozambique, Nigeria and Lesotho, with a total subscriber base of 65.1 million.
MTN, meanwhile, has 231 million subscribers in 22 countries in Africa and the Middle East.
South African subscriber market share at November 2015
On Monday MTN noted that the NCC agreed not to impose a $5.2-billion fine on the company until ongoing discussions had been concluded.
The deadline for payment of the fine was set for 16 November 2015, having been imposed in August.
News emerged on Tuesday however, that the Nigerian authorities would not reduce the $5.2 billion fine, leading to a further rout for the group on the local exchange.
Vodacom has since reported strong interim results – a 7.8% rise in operating profit to R10.2 billion for the six months ended September 2015.
Revenue for South Africa increased 5.1%, while international operations’ revenue grew 12.6%, representing 21.3% of group revenue.
Forbes valued MTN Group as the 395th largest company in the world in a report in May 2015, with a value of $34.5 billion. MTN’s market cap has since dwindled to R257 billion, with Vodacom up to R220 billion.
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