South Africa’s telco sector: defensive, resilient, and emerging from a rough patch

THE South African telecommunications sector has long been considered a defensive play through economic cycles due to its relatively inelastic infrastructure role and dependable cash flow generation.

- SHMUEL SIMPSON

Despite macroeconomic headwinds, regulatory pressures, and currency volatility in recent years, telcos have continued to provide essential services with relatively low churn.

Following a challenging period marked by rising input costs, volatile African currencies, and sentiment is beginning to improve.

Optimisation, stabilisation, pricing, momentum, and operational efficiency are laying the groundwork for cautious optimism across the sector.

Vodacom, Egypt Stabilising, Local Market Rational - but Limited Upside

Vodacom enters 2025 with a more balanced geographic exposure, thanks in part to its acquisition of a 55% stake in Vodafone Egypt.

While this market was initially challenged by currency devaluations and inflation, there are signs that macro conditions are stabilising, potentially unlocking earnings upside from the operation.