Telecommunications

Vodacom vs MTN vs Telkom: highs and lows on the JSE

Staff Writer

 ·8 Oct 2013

South Africa’s telcos have faced a year of highs and lows on the JSE as the telecoms space in the country has seen some major happenings since the start of 2013.

On Friday (4 October) Icasa gave notice of the publication of its new draft call termination regulations, outlining a glide path for the next three years to reduce the cost to telecommunications operators of terminating a call on another network.

The new plans from Icasa include asymmetric rates for mobile operators which have a market share lower than 20% – greatly befitting Telkom‘s mobile arm, as well as Cell C, but negatively impacting larger operators such as MTN and Vodacom.

Telkom

Telkom’s rise

On Tuesday (8 October) Telkom’s share price climbed to its highest point in 2013, trading at R27.62 by close of trade on the JSE.

A climb of over 5% came after group CFO, Jacques Schindehutte acquired just under R6 million worth of the company’s shares on Wednesday (2 October), and a further 4% rise was seen after Icasa announced the new termination rate plan.

Sentiment surrounding Telkom has taken an upbeat turn in the year so far, as CEO Sipho Maseko continues to address the company’s ills of the past, with promises of a turnaround in strategy and business at the telco.

Telkom opened the year at R16.93, and to-date, the telco has seen a 63% rise in its share price, having dipped to a trade low of R11.34 during the course of year. This places Telkom’s market cap at just over R14.38 billion.

MTN

MTN arena

South African mobile operators, MTN and Vodacom have also had an interesting year.

MTN has been hit with a number of controversies during the course of 2013, but also a number of successes.

A report into allegations made by Turkish network operator, TurkCell, against MTN’s operations in Iran, cleared the mobile company of any wrong-doing in the matter. The case was subsequently dismissed in the USA where TurkCell had laid charges against MTN, and ultimately dropped by the Turkish operator.

However, in the past few months, MTN has conducted a number of investigations into its own business in South Africa, and as a result, a number of executives had been dismissed.

Thanks to the company’s strong international operations, despite a dip in local subscribers, the company has growth, and its share price has reflected that growth, accordingly.

Following Icasa’s new termination rate announcement, MTN’s share price suffered, losing close to 6% of its value.

MTN opened the year with a stock price of R176.99, and to-date has boosted its share price 6.87% to R188.55 – quite far off from its 52 week trade high of R202.34 – giving the telco a market cap of R354.87 billion.

Vodacom

Vodacom performance

On 1 October, Vodacom confirmed reports that it had entered into exclusive discussions to acquire 100% of South African telecoms provider, Neotel.

The deal, which would be the largest for Vodacom this year if it goes through, could be valued at as much as R10 billion rand ($994 million) according to a report in Bloomberg.

Through acquiring Neotel, Vodacom would be gain access to thousands of kilometres of fibre and extremely valuable spectrum, currently held by the telco.

This, according to Vodacom’s CEO Shameel Joosub, would allow Vodacom to offer fixed-line services and to boost its mobile offerings for businesses and consumers – and effectively make the company a direct competitor to Telkom.

Vodacom is also set to gain from the windfall from a US$130 billion deal between its parent company, Vodafone and its US subsidiary, Verizon Wirless, which saw the former sell its stake in the business.

However, despite the generally positive year, on the back of the announcement that mobile termination rates would be cut further, Vodacom’s shares have sunk to R113.37.

The company started the year at R126.20, meaning that, to-date, the company’s shares have declined by 9.64% on the JSE, giving the company a market cap of R168.69 billion.

Taken from Bloomberg, 8 October 2013

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