MTN and Vodacom continue record surge
Mobile operators Vodacom and MTN surged to record levels in afternoon trade on the JSE following recent trading reports which have pleased analysts, and assuaged their concerns over a rising threat from rival operator Cell C.
By 16h00 on Tuesday (13 November 2012), shares in MTN advanced 1.48%, or R2.49, to R170.89 on the local bourse, giving the group a market cap of R321.87 billion. Shares in MTN Group are up from a one year worst figure of R127 in April, which was due to concerns over its legal battle with Turkcell.
Meanwhile, Vodacom advanced 2.15%, or R2.50, to R118.89, adding to a gain of 4.95% on Monday (12 November) following a report on its half year results in which it lifted its interim dividend per share by 36.5%, to 355 cents. The group’s market cap moved to R176.9 billion and its shares are up close on 30% for the year, in line with MTN.
An analyst at Macquarie First South said that the telecoms sector “is pretty hot at the moment” aside from Telkom, for reasons already well-documented.
“Following a solid performance posted by Vodacom yesterday, investors seem to be less worried about the threat posed by Cell C,” he said, adding that it was difficult to tell how well-priced both companies were. “In my view, both are priced to perfection,” he said.
Nadim Mohamed, investment analyst & partner at First Avenue Investment Management, said that one of the reasons for the recent strength in MTN is due to the recent quarterly update where the group raised its subscriber forecast for the financial year – which was a surprise.
On 25 October, MTN Group reported a healthy rise in its subscribers for the period ended September 2012, to 182.7 million across the 21 countries in Africa and the Middle East.
MTN CEO, Sifiso Dabengwa said at the time that a solid operational performance over the quarter had enabled MTN to increase guidance for net additions for 2012 from 21.25 million, to 23.70 million.
“Also, the Turkcell law suit seems to have been put on hold for now. The stock is starting to look fully valued at this level in our view,” Mohammed said.
Mohamed also said that Vodacom’s share price traded similarly because “we have not yet seen any evidence of weakness in the local market as yet”.
However, he warned that the effect of the recent price competition would mostly be felt in the next financial year.
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