Telco shares surge as operators increase spend to meet demand for connectivity, data centres and new technologies like AI.
As artificial intelligence and other emerging technologies fuel growing demand for connectivity and computing capacity, telecoms companies are increasing their infrastructure investment to capture this growth.
Peter Takaendesa, chief investment officer at Mergence Investment Managers, says that, taking total returns into account, which includes share price performance and dividends paid over the past five years, the telecoms index has returned a gain of about 97%. However, Takaendesa says it’s also important to note that the telecoms sector has underperformed other domestic-earning sectors, such as banks and retailers, that have outperformed the JSE All Share Index over the same period. He explains the index is playing catch up after the negative impact of currency devaluations in the rest of Africa on Vodacom and MTN.riding
Vodacom CEO Shameel Joosub said in the company’s results for the year to March that “over the past five years, we continued to invest significantly in infrastructure and expect to spend more than R20 billion in capital expenditure in the new financial year”. PwC’s report showed that 5G subscriptions will more than quadruple from 1.79 billion in 2023 to 7.51 billion in 2028, with its share of total mobile subscriptions more than tripling, rising from 18.8% in 2023 to 64.1% in 2028.
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