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, offering relative stability through economic cycles due to its essential 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 constrained consumer wallets, South African sentiment is beginning to improve once more.

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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.

Furthermore, the South African mobile market has seen improved pricing discipline, and competition appears rational, particularly in the prepaid segment.