Once upon a time mobile operators made massive profits that grew at an accelerated pace. But times have changed, prices are down, SMS is almost obsolete and smart phones killed phone calls. The future is data, pure data and lots of it.
Vodacom results today highlight that future. Data revenue grew 19.7% while data traffic up 43.2%. Selling more data but at lower prices. I remember paying R2 for a MB, that's R2,000 for a GB. Now I get 2 GB included in my monthly contract with only 100 minutes and SMS (still too much) whereas two years ago my contract came with 75 MB of data.
The trick is the mobile operators need to transition to being essentially utilities selling data, lots of it at massive margin because once the infrastructure is in place data is very cheap (free?) for the carrier.
Between MTN and Vodacom MTN has more growth while Vodacom is more ex-growth, a dividend yield investment. But both are trying to resist being just utilities and we see this in the US with Verizon buying both AOL and Yahoo at an attempt at diverse revenue streams. It may work but my interest is these stocks will only be renewed once they are just a utility.