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ARE OUR TELCOS STILL A GOOD INVESTMENT?

April 21, 2024
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VODACOM vs MTN vs TELKOM

 

I read a fascinating article recently about a shake-up in the Telco space that is inevitable. I link the article here

 

https://businesstech.co.za/news/trending/669787/big-shake-up-for-companies-like-mtn-telkom-rain-and-vodacom-expert/

 

Most South African investors have at least one of the listed telcos in their portfolios. Growth has significantly slowed down in these companies over the past decade and they would need to innovate to survive the next few decades.

 

Although Vodacom is still the most expensive stock, it also has the most positive variables in their favour, especially a very strong balance sheet and healthy dividend yield.

 

MTN has the highest debt levels, because of heavy investments into infrastructure. The high revenue growth and gross profit margin have assisted in the stock remaining relatively flat over the past 5 years, despite the rest of the industry bleeding in share price growth.

 

Telkom performance was poor in the past financial year with the share price giving  many investors sleepless nights.

 

While we can't predict what these companies will do over the next 5 years, it will be important to watch how they innovate and stay relevant to investors, both local and abroad.


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