South Africa Telecoms: Earnings Anchored by African Operations as SA Growth Stalls: Initiate with MTN>VOD>TKG

Research evidence excerpt

South Africa Telecoms: Earnings Anchored by African Operations as SA Growth Stalls: Initiate with MTN>VOD>TKG

FoundationM

Initiate on South African Telcos: MTN>VOD>TKG

Best growth + re-rating opportunity: MTN is the clearest Africa

growth play with the strongest earnings trajectory, yet still

trades at undemanding multiples (~10.6x 1-yr rolling PE on

Bloomberg consensus).

FX stabilisation in Nigeria and improving African macros drive

earnings translation and upside potential, positioning MTN as

the key macro beneficiary.

Vodacom’s exposure to Egypt (with a high reliance on ME energy

imports, and proximity to ongoing conflict in the region)

increases its risk profile, while MTN is less exposed to ME

spillovers and diesel inflation pressures.

MTN’s mix of high-margin Africa OpCos drives better growth and

returns vs SA‑heavy peers.

Telkom’s legacy copper drag, lower return profile and ongoing

capex requirements limit FCF and dividend growth, capping

valuation upside potential.

MTN Group: WECA‑Led Growth with Improving Returns, SA

a Structural Drag

We initiate on MTN with an Overweight rating and a R245 target price, implying ~17%

upside potential.

MTN is transitioning into a pan‑African growth platform, with earnings increasingly driven

by Nigeria and Ghana. Group service revenue growth is anchored in WECA markets, with

Nigeria providing scale (c. one‑third of revenue and EBITDA) and Ghana emerging as a

high‑quality growth contributor, with revenue share rising above ~20% and EBITDA

contribution expanding into the mid‑20s. Growth in both markets is underpinned by data

and fintech, with Ghana delivering particularly strong ZAR translation due to a more

stable currency backdrop. In contrast, South Africa continues to deliver low single‑digit