Battered by a bad year in Nigeria, South Africa’s MTN has lost the title of Africa’s most valuable telecommunications company to its rival Vodacom.
At market close on Thursday (May 12), MTN’s market capitalization was $15.8 billion, trailing behind Vodacom’s $16.4 billion, reported Bloomberg. This year is the first time Vodacom overtook MTN since 2009, the year Vodacom first listed its shares. Hinting at what was to come, Vodacom very briefly surpassed MTN on April 8 and May 6.
MTN’s shares have weakened by 32% since October last year, when news broke that it had been slapped with a record fine by Nigerian regulators. The Nigerian Communications Commission fined MTN $5.2 billion for failing to disconnect unregistered SIM cards, which pose a public security threat.
The fine was later revised to $3.9 billion, but the issue has yet to be resolved, while senior executives were forced to step down. Nigeria is home to MTN’s largest subscriber base, with 62.5 million users. Even before the fine, MTN had to adjust it’s growth forecast in Nigeria, with the company reporting earnings lower than expected. During that same time, Vodacom gained 12%.
“The problem is all the uncertainties hanging over MTN’s head,” Irnest Kaplan, a telecommunications analyst at Vunani Securities, told Bloomberg. “The market needs to know who the next CEO will be, but most importantly the market needs to be updated on the fine negotiations and if there has been any progress. Markets do not like uncertainty.”
Vodacom, a subsidiary of the UK telecommunications giant Vodafone, is South Africa’s largest mobile phone operator with 33.7 million subscribers. It operates in five other African countries, with 61 million subscribers in total.
MTN’s growth has come from beyond the borders of its South African base, with the group’s bright yellow logo present in 16 other African states other. MTN also operates in the Middle East and Afghanistan, with a global subscriber base of 229 million users and about 168 million in Africa.