How much money you would have if you invested R1,000 in Vodacom, MTN, and Telkom in 2015

South Africa’s three largest mobile operators have seen their share prices drop substantially over the last decade. Vodacom dropped the least, followed by MTN and Telkom.

Vodacom, MTN, and Telkom are South Africa’s three largest network operators. The first two have widespread operations across the African continent.

Despite MTN, Vodacom, and Telkom still being among South Africa’s most valuable and recognisable companies, their share prices have significantly declined over the last decade.

Telecommunications companies are widely seen as ex-growth due to the decline in voice revenue and the pressure on data revenue.

After they launched, charging R2.50 per minute was commonplace, and these companies were printing money as their client bases grew.

However, as the Internet started to gain traction, mobile operators’ voice revenues came under fire. Smartphone applications like WhatsApp were a dagger to the heart for them.

WhatsApp decimated person-to-person SMS revenue, and voice calling became an online application through improved VoIP services.

Users increasingly turned to free mobile applications like WhatsApp to send messages and make calls over the internet.

They primarily use data plans instead of traditional call charges, leading to a decline in the operators’ primary revenue stream.

While mobile operators’ data revenue rapidly increased, voice revenues came under severe pressure, forcing them to drop prices.

Globally, unlimited voice calling is typically added to data products, which shows that voice calls are now seen as an add-on product.

In South Africa, MTN has already started to do the same through its SuperFlex products, which bundle unlimited voice calls to data packages.

To add fuel to the fire, mobile operators must invest billions in their networks each year to keep up with the latest technologies and ensure they can cope with increased data demand.

These companies are looking for new revenue streams, which include fixed-line services like fibre-to-the-home and fintech products.

Although these new revenue streams show good growth, they are not close to compensating for the lost voice revenue.

Vodacom’s share price performance

Vodacom, which strongly focuses on South Africa, is the best performer despite its share price dropping by 12.5% over the last ten years.

This means that R1,000 invested in Vodacom a decade ago would now only be worth R875 today if dividends are excluded.

It should be noted that Vodacom is highly cash-generative and an excellent dividend payer, which should be considered.

Vodacom CEO Shameel Joosub said in December 2024 that the group’s execution of its strategy should ensure that it delivers its medium-term financial targets.

He added that currency market stability, especially in Egypt, is expected to bode well for the group in the near future.

Joosub added that the group’s performance over the quarter was positively impacted by the accelerated growth in South Africa’s prepaid market and strong performances in Egypt and Tanzania.

MTN’s share price performance

MTN’s share price has declined by 46.9% over the last decade. This means that R1,000 invested in 2015 would now be worth R531.00.

The devaluation of the Nigerian Naira, the company’s biggest market, has severely damaged the group’s performance over the last year.

In a trading update for Q3 2024, MTN CEO Ralph Mupita said that the group navigated a challenging macro environment over the first nine months of the year.

Although the Nigerian Naira continued to depreciate and had a material impact on the group’s results, it was far less volatile on a sequential basis in Q3 than in preceding quarters.

Nigeria’s 48.7% decline in group service revenue caused the MTN Group’s service revenue to decline by 18.5% from R156 billion in Q3 2023 to R127 billion in Q4 2024.

MTN’s earnings before interest, taxes, depreciation, and amortization (EBITDA), before once-off items, dropped by R45 billion, a 35% decline from the R70 billion seen in Q3 2023.

Speaking with Business Day TV, Moxima Gama, a technical analyst at The Money Hub, said that MTN is relatively attractively priced, with the company seeing some strong recent gains.

She added that the company has the potential to trade up to R199.30, which would see it claw back a large part of the stock price drop over the last decade.

Telkom’s share price performance

Telkom‘s share price has fallen by 52.7% over the last ten years. This means that R1,000 invested in 2015 would now only be worth R473 per share.

Despite the troubled performance of the partly state-owned company’s share price over the last decade, Telkom’s performance has been relatively strong recently.

In a trading update for the third quarter that ended 31 December 2024, the group said that its mobile subscribers increased by 21.6% to 24 million.

The mobile business focused on increasing customer numbers, managing device and roaming costs, and expanding mobile network coverage to migrate traffic onto its network.

Revenue for the period was up marginally by 0.9% to just under R11 billion. Earnings before interest, taxation, depreciation and amortisation (EBITDA) grew 28% to R3 billion.

Speaking with Business Day TV recently, Roy Mutooni from Sanlam Investments said Telkom offers value to deliver returns to the patient investor.

Mutooni noted that the group is selling its tower business, Swiftnet, and the cash from the move will benefit the group’s balance sheet.

He added that the group does not have to invest heavily in Openserve as it is already a dominant player in the fibre field.

Telkom is also growing mobile service revenue by high double digits, much better than its main competitors, Vodacom and MTN.

Despite a recent increase in the stock’s share price due to improved financials, it was not enough to undo the group’s serious decline over the last decade.

Vodacom vs MTN vs Telkom