Story audio is generated using AI
MTN has added R100bn to its market value in 2026 as investors buy into its growth blueprint, with the telecommunications major on course to be the first industry player to reach the R500bn valuation mark.The group’s share price has outperformed the sector year to date — up more than 30%, having breached the R400bn valuation mark.MTN’s performance is trailed by long-time archrival Vodacom as the two majors outperform their domestically focused rivals, Telkom and Cell C, with improving economic conditions across parts of the continent reviving confidence in the sector.So far this year, MTN has emerged as the clear standout, with its share price rising about 35%. Vodacom has gained roughly 10%, while Telkom has traded largely sideways. Cell C has moved in the opposite direction, falling about 10%.The performance reflects the difference between operators with exposure to higher-growth African markets and those largely reliant on South Africa, where competition remains intense and consumers continue to face financial pressure. Peter Takaendesa, chief investment officer at Mergence Investment Managers, said MTN and Vodacom have outperformed most SA Inc shares on the JSE this year largely because of stronger growth from their rest-of-Africa operations.“The rest-of-Africa operations have recently been in a rare sweet spot where regulators have allowed price increases on telecoms services, while relative currency stability in most of those markets has also contributed to stronger profit growth,” he said.However, Takaendesa noted that both operators have underperformed Airtel Africa over the past 12 months.“MTN and Vodacom have actually underperformed their main rest-of-Africa peer, Airtel Africa, which has delivered a total return closer to 80% in rand terms,” he said.Mish-Al Emeran, equity specialist at Abax Investments, said companies with sizeable African operations have been able to offset the relatively subdued growth environment in South Africa through stronger performances elsewhere on the continent.MTN and Vodacom have actually underperformed their main rest-of-Africa peer, Airtel Africa, which has delivered a total return closer to 80% in rand terms.— Peter Takaendesa, chief investment officer at Mergence Investment Managers“The South African telecommunications industry remains highly competitive, with ongoing pricing pressure, the growing presence of mobile virtual network operators and a consumer base that is under financial strain,” said Emeran.South Africa’s mobile market is considered mature, with limited room for subscriber growth. By contrast, many African markets continue to benefit from rising mobile penetration, growing data consumption and rapid adoption of digital financial services.MTN, which operates in 19 countries, including Cameroon, Rwanda, Sudan, Ivory Coast, Uganda and Zambia, has been the biggest beneficiary of that trend.After several difficult years marked by high inflation, sharp currency depreciation and regulatory uncertainty in key markets such as Nigeria and Ghana, investors are beginning to see signs of recovery.“The market is increasingly recognising the earnings recovery potential embedded in MTN’s portfolio,” Emeran said.“Following several years in which currency volatility, inflation and regulatory uncertainty constrained profitability, the improved operating environment has allowed underlying revenue growth, margins and cash generation to become more visible.”Nigeria remains MTN’s most important market outside South Africa. Following wide-ranging economic reforms and improving foreign-exchange liquidity, investors have become more optimistic about the group’s earnings prospects after a challenging period for the economy.Ghana has also shown stronger operating momentum, supporting expectations of an earnings recovery across MTN’s broader African portfolio.Vodacom, which has a presence in eight countries, including Kenya, the Democratic Republic of Congo and Tanzania, has similarly benefited from geographic diversification. Its exposure to Vodafone Egypt and its stake in Kenya’s Safaricom have helped soften the impact of slower growth in South Africa.“These operations have helped compensate for a softer domestic environment and have strengthened the group’s medium-term earnings growth profile,” said Emeran.In their recent full-year results, both Vodacom and MTN reported strong performances, with the exception of the South African prepaid voice business, which continues to decline. Telkom, meanwhile, remains almost entirely exposed to South Africa.Although the company has expanded its mobile business, grown fibre infrastructure and improved operational efficiency, its growth outlook remains closely tied to a mature market where competition continues to weigh on industry profitability.“Telkom remains fully exposed to South Africa, where the telecommunications market is more mature and intensely competitive,” Emeran said.“Growth is therefore more difficult to achieve, while consumer affordability pressures and pricing competition continue to constrain revenue and margin expansion.”Takaendesa said Telkom’s operational performance has nevertheless been strong.“Telkom has executed very well in the 2026 financial year and has been gaining mobile market share in South Africa, while overall data revenue growth is driving an inflection point for the group,” he said.“The overall South African mobile telecoms market has softened, driven by intense competition and a weaker consumer. Telkom and Cell C-related shares have therefore lagged so far in 2026, albeit still outperforming most other South African consumer stocks, as the market had better options in the large telecoms operators.”Telecoms companies are increasingly focused on growth areas beyond traditional voice and data services. Fintech, enterprise connectivity, cloud services and digital platforms are becoming more important drivers of long-term value. Network operators are also investing billions of rand annually in spectrum, fibre and 5G infrastructure to support growing data usage and maintain service quality.Regulatory conditions have also become more supportive in several markets, with greater policy certainty and more stable tariff frameworks reducing some of the risks that previously weighed on investor sentiment. Takaendesa believes artificial intelligence will create opportunities over time, although the benefits may not be immediate. “AI will initially elevate capital investment and operating costs before telecoms operators see any economic profit, but we believe returns will come over time through cost efficiencies and new revenue streams,” he said.Looking ahead, Emeran believes MTN and Vodacom remain the best-positioned listed operators. MTN has “particularly attractive exposure” to Nigeria and Ghana, while Vodacom benefits from Egypt and Kenya.“These markets offer a stronger medium-term growth runway than South Africa, provided macroeconomic and regulatory stability is maintained.”While Telkom remains an important infrastructure player with valuable fibre assets and opportunities to grow its mobile business, without meaningful exposure beyond South Africa, investors are likely to continue viewing the company as a more defensive investment than a growth stock. Business Times
