While MTN has been besieged by a slowdown in emerging markets, where it has a substantial presence, as well as a hefty fine in its Nigerian operations, Vodacom has cantered ahead, buoyed by its steady performance since listing in 2009. In the past year, MTN's share price has dropped 44.39%. It has lost an estimated R294bn in value since October. The company is now valued at about R244bn. In the same period, Vodacom's market capitalisation has risen 13.54%, valuing the company at about R249bn.
A Cape Town-based analyst, who cannot be named in line with company policy, said MTN's share price had lagged Vodacom's in the past six years, as MTN's earnings were perceived to be riskier.
"Vodacom has increased drastically. As much as MTN has fallen behind, Vodacom has powered ahead. MTN is not anywhere near its all-time highs, but Vodacom just hit its own highest levels last month. The timing of the data is just a coincidence," the analyst said.
Vodacom shares traded at their best level yet on 28 April, reaching R170.55 per share. Neither the failed deal with Neotel, nor the legal battle concerning the 'Please Call Me' concept, has seriously hindered the share-price run. When the firm announced the end of its MPesa offering, which had largely failed in SA, the share price rallied.
"Vodacom's investment in the reach, quality, and efficiency of our networks is a fundamental point of differentiation. We firmly believe that this advantage has played a significant part in offering better value to our customers," Vodacom spokesman Byron Kennedy said. "In the past five years, we accelerated our network investment to approximately R50bn, having spent R70bn over the past two decades."
Vestact analyst Sasha Naryshkine said a combination of factors were at play for MTN, causing already skittish investors to scatter. "Emerging markets are sloppy at the moment and subscriber numbers in their main operations - SA and Nigeria - have been muted. MTN also doesn't have a parent company like Vodacom does to shield them," Naryshkine said.
Vodacom is majority-owned by England-based Vodafone.
Naryshkine said the single most pressing issue for shareholders, though, was the fine imposed on MTN Nigeria by the Nigerian authorities. In October last year, the Nigerian unit was fined $5.2bn for failing to deactivate about 5 million unregistered subscribers. The Nigerian Communications Commission later reduced the fine to $3.9bn.
MTN said it was still engaging with the regulator to see if the fine could be reduced further. So far, the company has paid a 'good faith"' payment to the federal government of $250m. "There's also uncertainty about leadership at MTN," Naryshkine said. When the Nigeria unit was penalised, Sifiso Dabengwa resigned as CEO and former MTN chairman Phuthuma Nhleko was brought in as an acting CEO.
Source: Business Day
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