MTN’s reign as South Africa’s largest mobile operator by market value is under threat, as it tries to dig itself out of a $5.2 billion hole in Nigeria.
Vodacom, the country’s largest operator by subscriber base, is bearing down on its beleaguered adversary, following stellar interim results reported on Monday, which saw the company’s share price advance ever closer to that of MTN.
Many analysts have had their reservations about Vodacom in the past, citing growth concerns under the watchful eye of its parent company, Vodafone.
Vodacom’s operations include networks in South Africa, Tanzania, the Democratic Republic of Congo, Mozambique, Nigeria and Lesotho.
MTN, meanwhile, has been somewhat of a darling for investors given that it has operations in 22 countries in Africa and the Middle East.
On Monday, MTN group reported that its CEO, Sifiso Dabengwa, resigned as chief executive due to ‘prevailing circumstances occurring at MTN Nigeria’.
On the 26 October, it emerged that the Nigerian Communications Commission (NCC) imposed a fine equivalent to US$5.2 billion on MTN Nigeria.
This 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.
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.
Group active customers increased 6.8% to 65.1 million, while total active customers reached 33.7 million in SA, with 1.6 million net customer additions in the first half there.
Vodacom has seen its share price advance R23.20 or 18% over the past year, and by R60.70 or 67% over the past five years, to a near all-time best of R152.02 achieved in April.
The group closed at R150.70 on Monday evening, with market cap of R224 billion.
MTN saw its shares plummet to a low of R142.50 on 2 November, before recovering slightly by close of play on the JSE on Monday, to R160, after Bloomberg reported that the company was close to negotiating a heavily reduced fee.
MTN has seen its share price fall by 30% – or R70 – over the past year, thanks mainly to its recent slump. Over a five year period, the company’s shares are up R24 or 18%.
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 R295 billion.