Vodacom versus MTN – total shareholder returns since listing

Vodacom provided shareholders with a slightly higher annualised return than MTN, with Telkom, Huge Group, Blue Label, and Telemasters a long way off.

Vodacom and MTN were awarded GSM cellular network licences in South Africa in 1993 and launched their first commercial services in June 1994.

The two cellular giants initially slugged it out for market share in South Africa, with Vodacom winning the fight.

However, MTN started to focus on expanding its operations into Africa and the Middle East, while Vodacom remained focused on South Africa.

Vodacom, which Vodafone partly owned, was restricted from competing with Vodafone in Africa, north of the equator.

Vodacom dominated South Africa, while MTN started to build a powerhouse with operations in numerous African countries.

It raises the question of which strategy provided the best shareholder return for investors.

It is not a trivial question to answer because the two companies had very different paths to being listed on the Johannesburg Stock Exchange (JSE).

MTN was listed in 1995, while Vodacom, which used to be 50% owned by Telkom, was unbundled and listed in 2009.

For this article, Daily Investor looked at the total shareholder return – share price growth and dividends – from January 2000 or the listing date if it came later.

The analysis showed that Vodacom achieved an annualised shareholder return of 11%, slightly better than MTN on 10%.

Most of Vodacom’s growth occurred between 2009 – when it was listed at R59.50 per share – and 2017 when it reached a high of over R185 per share.

Since then, Vodacom share price has declined to its current level of under R130 per share.

Although Vodacom shareholders have not enjoyed price growth over the last few years, the company is a good dividend payer, which partly makes up for the sluggish share price.

Most of MTN’s growth happened between listing and September 2014, when the share price peaked at over R260.

It plummeted following problems in Nigeria, and despite a strong recovery following the Covid-19 pandemic, it is currently trading at around half its peak.

Despite their ups and downs, Vodacom and MTN outperformed other telecommunications companies like Telkom, Huge Group, Blue Label, and Telemasters.

Telkom only provided a 6% shareholder return since listing in 2003, while the other companies provided nearly no returns.

The table below provides an overview of the total shareholder return for JSE-listed telecommunications companies.

Telecommunications Shareholder Returns
Company Start Date End Date Total Return Annualized Return
Vodacom May 2009 (IPO) Present 283% 11%
MTN January 2000 Present 856% 10%
Telkom March 2003 (IPO) Present 229% 6%
Huge Group August 2007 (IPO) Present 25% 1%
Blue Label November 2007 (IPO) Present -3% 0%
Telemasters March 2007 (IPO) Present -29% -2%