Lunar Capital Weekly Roundup
| Index / Fund / Rate | Start of Year | Last week | This Week | % change YTD |
|---|---|---|---|---|
| JSE ALSI | 73 723 | 68 327 | 65 089 | -11.71% |
| NASDAQ Composite | 15 833 | 11 635 | 11 452 | -27.67% |
| S&P 500 | 4 797 | 3 899 | 3 863 | -19.46% |
| Prime Lending Rate | 7.25% | 8.25% | 8.35% | 13.79% |
| Lunar BCI WW Flexible Fund | 165.68 | 144.63 | 141.63 | -14.52% |
| USD/ZAR | 15.96 | 16.90 | 17.08 | 7.02% |
| EUR/ZAR | 17.95 | 17.21 | 17.23 | -4.01% |
| Brent Crude | 77.86 | 107.08 | 102.60 | 31.77% |
Source: iress
Company and Market News
On Friday, 15 July 2022, MTN announced that they were in talks with Telkom, to acquire the entire share capital of Telkom in return for shares in MTN, or a combination of a cash pay-out and shares in MTN.
The mobile market in South Africa is primarily made up of 4 players: Vodacom, MTN, Telkom, and Cell C. For the period ended 31 March 2022, MTN had a total of 34.5 million subscribers in South Africa and Telkom had 16.9 million subscribers. For the most recent quarter, the mobile subscription Average Revenue per User (ARPU) for MTN was R93.26 and R89.94 for Telkom
Vodacom has the biggest share of customers in South Africa (45.4 million customers) with an ARPU of R90. And Cell C had 12.9m subscribers in South Africa (the lowest market share.) Cell C have not disclosed their ARPU.
If the MTN-Telkom deal goes through, MTN would significantly be able to close the gap between itself and Vodacom in the South African mobile market. MTN would also have further access to the fibre and other ICT (information and Communications Technology) markets. However the deal would still need approval from the competition commission. We are not sure whether the approval will go through. The outcome of the deal would likely result in 2 players (MTN and Vodacom) controlling more than 80% of the mobile market in South Africa.
The share price for MTN remained flat for the week and the share price of Telkom increased by 16.6%. Below is table comparing certain metrics of MTN with Telkom.
| Company | Market Cap at end of week (R’bn) | Total Assets at Year End (R’bn) | PE at end of week | ROE |
|---|---|---|---|---|
| MTN | 267 | 366 | 13.70 | 5.29% |
| Telkom | 22 | 66 | 7.34 | 7.73% |
Source: iress
Disclosure: Vodacom and MTN are held in the Lunar BCI Worldwide Flexible Fund.
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