If you invested R1,000 when Vodacom and MTN listed here’s what it would be worth today

Investors who bought R1,000 in MTN shares when the company listed on the JSE would have much more money than those who did the same with Vodacom and Telkom shares.

In addition to their financial performance, the share prices of South Africa’s three biggest mobile networks have been heavily influenced by some of the major developments in the telecoms industry.

Although MTN is the second-biggest mobile network in South Africa when it comes to subscribers and local service revenue, it is the largest operator on the continent.

MTN was also the first of the big three to list on the JSE in October 2002, with an initial share price of R10.50.

Its expansion and subscriber and revenue growth have propelled the company’s share price.

By market close on 24 January 2024, an MTN share was R104.79, 898% higher than when it was listed over 21 years ago.

A R1,000 investment in MTN shares in October 2002 would have been worth R9,980 on 24 January 2024.

South Africa’s largest mobile network — Vodacom — listed on the JSE in May 2009, about six and a half years after MTN.

This happened within months of Telkom disposing of its stake in the company.

The initial price of one of Vodacom’s shares was R56.75, over five times the starting price of MTN’s shares at its listing.

Vodacom’s share price increased to R105.26 by 24 January 2024, an 85.48% increase.

Vodacom has shown steady revenue and profit growth in the 15 years since its listing, in addition to high leadership stability.

While MTN’s share price has grown more over its entire listing period, Vodacom’s has had the edge for the period since its listing.

At the time of Vodacom’s listing, MTN’s share price was around R119. Where Vodacom’s share price has nearly doubled, MTN’s has dropped.

Although MTN’s share price continued to surge a few years after Vodacom’s listing, it peaked at around R260 per share in September 2014.

Investors who bought shares when MTN listed and sold at this peak would have seen returns of over 2,370%.

MTN’s share price dropped dramatically in 2015 due to a $5.2 billion fine imposed by the Nigerian Communications Commission (NCC) late in the year.

That came after MTN disconnected over 5.1 million customers in its biggest market.

Although MTN managed to negotiate the fine down to $1.671 billion by 2016, it has had several run-ins with regulators and authorities throughout Africa that have influenced its share price.

In recent years, MTN and Vodacom’s share prices have regularly switched places as the most valuable telecoms shares on the JSE.

The graphs below compare how Vodacom and MTN’s share prices changed from their initial listings.

Telkom listed less than a year after MTN, with shares priced at R28.20.

Over the next few years, this gradually climbed to a peak of around R183 in October 2007, representing 549% growth.

From late 2007 to early 2008, Telkom’s share price started to struggle.

Part of this was due to Telkom announcing the disposal of its 50% stake in Vodacom in late 2008.

The decision has been called the worst business blunder in South African telecoms history.

Telkom sold its 15% stake in Vodacom for R22.5 billion, based on Vodacom’s valuation of R150 billion.

Therefore, its total 50% stake in Vodacom was worth about R75 billion.

As of 24 January 2024, Vodacom’s market cap was about R218 billion. A 50% stake in the company would have been worth R109 billion.

In addition, Telkom’s own share price trajectory might have looked much better had it focused its investments on expanding its one major strength — fixed broadband.

Instead, it launched its own mobile network in 2010 that has struggled to compete with Vodacom and MTN.

The table below summarises the changes, growth rates, and annual returns of the share prices of Vodacom, MTN, and Telkom.