MTN now has over 300 million customers (JSE: MTN)
HEPS has increased by more than 10x year-on-year
2025 will certainly go down as one of MTN’s most memorable years. The share price has more than doubled since the start of 2025, while HEPS for the year increased spectacularly – from 110 cents to 1,274 cents.
It wasn’t that long ago that MTN was talking about emergency balance sheet solutions for MTN Nigeria. This is the same group that had to extend the MTN Zakhele Futhi structure to achieve some value for shareholders. Things can change very quickly in markets like Africa!
Management has undoubtedly played a strong role here, but make no mistake – a result like this is only possible when the macroeconomics pull off a solid recovery. With the dollar having weakened and given the African currencies some breathing room, suddenly everything became easier. Dollar-denominated debt became manageable and so did capex expenditure. With countries like Nigeria and Ghana in better financial health, people in those economies spent more on MTN’s services.
When multiple flywheels are spinning, you get results like these.
Speaking of flywheels, total customers grew by 5.6% to 307.2 million. This means incremental growth of 16.3 million customers! Data customers increased by 9.4%, while data traffic was up 27.0% as usage increased. On the fintech side, MTN saw an incredible 37.6% growth in value of transactions. They’ve now exceeded $500 billion in fintech transaction value!
These are serious numbers.
EBITDA increased by 64.0% on a reported basis, or 36.8% in constant currency. That gives you a very good idea of how favourable the currency moves were in this period.
EBITDA margin as reported was up 11.5 percentage points to 43.5%. In constant currency, it was up 5.4 percentage points to 44.5%.
Adjusted HEPS increased by 67%. This is a more reasonable indication of growth than reported HEPS, which enjoyed a more than ten-fold increase as indicated earlier.
Here’s another exciting growth number: free cash flow increased by 345.5% to R26.9 billion!
Group net debt to EBITDA has improved tremendously, dropping from 0.7x to 0.3x.
Holdco leverage remains an important ratio for MTN, as investors surely haven’t forgotten a time when the company couldn’t upstream the cash from African subsidiaries to the mothership to service debt. Holdco leverage improved marginally from 1.4x to 1.3x. USD-denominated debt is 16% of the mix, while the rest is denominated in rand.
Here at home, MTN South Africa managed service revenue growth of 2.0%. The pressure in the prepaid segment remains an issue for the company, although it is certainly good news for consumers to have so much competition out there.
The gigantic elephant in the room is, of course, Iran. The 49% stake in Irancell is a geopolitical hot potato of note, with MTN currently cooperating in a US Department of Justice grand jury investigation. There are also civil lawsuits in the US.
The market seems to be shrugging off these risks. I guess that’s either the dumbest or the smartest approach possible. Only time will tell.
What is your view on this risk?
Optasia (officially: Channel VAS Investments) is growing rapidly (JSE: OPA)
But eyebrows have been raised by a related party deal
Optasia has released results for the year ended December 2025. The company is still fresh in our market, having listed in 2025 and enjoyed a solid rally before being caught up in the Iran-related market sell-off. The stock is now trading at precisely the IPO price!
If you want to understand the company in proper detail, then I recommend referring back to this podcast with Optasia CEO, Salvador Anglada, at the time of the listing.
Optasia facilitated 44% more credit for its partners in 2025 than in 2024. With the take rate increasing on the platform, this drove group revenue growth of a meaty 76% for the year.
Group adjusted EBITDA of $114.5 million represents a 52% year-on-year increase. They are enjoying higher profits per unit of distributed value, suggesting that the economic efficiency of the platform is improving.
If you exclude the listing costs, normalised net income increased by 57.1%. Without those adjustments, HEPS as reported increased by only 9%.
Adjusted free cash flow increased by 41%, with a conversion rate of 39%. Thanks to the cash flow and the equity raise during the year, net debt to adjusted EBITDA improved from 0.99x to 0.11x.
Micro-lending services were the primary growth driver in 2025, contributing 63% of group revenue thanks to an impressive year-on-year increase of 149%. This means that micro-lending is bigger than airtime credit services for the first time. These things ultimately work together though, with airtime credit services as the initial customer touchpoint.
The default rate increased from 0.9% to 1.2%, reflecting the impact of a larger mix of micro-lending services. These products do carry more risk, but they also have a higher yield.
It all sounds interesting, except for the other announcement on the day that drove some less-than-positive commentary on the socials. Optasia announced the acquisition of Finergi, a “small related party transaction” priced at almost R500 million.
R413 million is payable in cash and R84.6 million is payable in shares, so that related party isn’t very interested in coming along for the ride. They seem far more excited about cashing out.
There’s also a contingent earn out payment of R165.9 million, so the total potential deal value is over R660 million!
Finergi allows prepaid electricity meters to function as digital wallets. Credit access when you top up your electricity is a novel concept. I’m starting to wonder if we will be able to take on more debt when we open our fridges one day to get the milk out!
Finergi has active pilots and integrations across Southern, East and West Africa, with another 10 African countries in “commercial conversations” for expansion. They also intend to expand to Asia.
The announcement is full of commentary around total addressable market and all the other arguments used to justify a valuation of over half a billion rand. Sadly, what they don’t appear to have is profit. And I mean, no profits at all.
Even worse, the net asset value is only R24.5 million. This valuation is big on hope, low on track record.
The controlling shareholder of Finergi, Bassim Haidar, is a related party to Optasia. This means that an independent expert needs to sign off on the deal as being fair. Acting in this capacity, BDO thinks that the valuation is fair.
Even without the earn-outs, it’s priced at roughly 20x book value, with no profits to back up the value. I’m not sure that this is the type of deal that investors were hoping to see with the IPO proceeds.
South32 has officially placed Mozal Aluminium on care and maintenance (JSE: S32)
Smelters cost an absolute fortune to run
After sounding the alarm many times along the way, South32 has executed the plan to put Mozal Aluminium on care and maintenance.
They’ve been working for years to secure a sufficient and affordable power supply beyond March 2026 for this asset in Mozambique. It just hasn’t happened, with Eskom (one of the counterparties in the negotiation) as a very different company to deal with these days.
It shows you how much has changed in our country. Mozal Aluminium has the IDC as a 32.4% shareholder, yet it still didn’t automatically get a special electricity tariff.
It does make me wonder why Merafe (JSE: MRF) has been granted discounted tariffs though. Perhaps the difference is that Merafe employs South Africans and is in South Africa, while the Mozal Aluminium smelter is in Mozambique?
Either way, South32 has spent around $60 million to place the asset into care and maintenance. This includes employee separation costs. Annual care and maintenance costs are around $5 million.
The alumina supplied by the Worsley Alumina refinery will now be sold to third party customers at index-linked prices.
Sun International finds growth again in land-based casinos (JSE: SUI)
As you would expect, the Sunbet business is growing rapidly
Could the bottom finally be in for the casino business? It’s possible, based on the latest results at Sun International.
We begin with the group results for the year ended December 2025. Sun International achieved group income growth of 3.2% including the Table Bay Hotel, or 7.1% excluding it. As you may recall from the recent Growthpoint (JSE: GRT) numbers, this hotel closed for a massive R1 billion overhaul.
Group continuing adjusted EBITDA (excluding the Table Bay Hotel) rose by 2.8%. This means that adjusted EBITDA margin declined from 27.9% to 26.6%.
Net debt has reduced from R5.2 billion to R5.0 billion. Net interest costs fell by a tasty 19% year-on-year, showing the dual benefit of reduced debt and a decrease in borrowing costs.
HEPS increased by 38.7%, although adjusted HEPS (up 6.4%) is the right number to look at. Interestingly, one of the items they adjust for in this regard is a R31 million non-recurring strategic review. Consultants aren’t cheap!
As further evidence that this is a mid-single digits story, the ordinary dividend for the year was up 6.5% to 424 cents per share. In a display of significantly improved sentiment, there’s also a special dividend of 100 cents per share.
As always, a closer look at the segments is valuable.
The land-based casino performance is surely the most interesting element of this story. Gross gaming revenue was down by 2.6% for the year, a much slower decline than the broader market (down 6.3%). This means they improved their market share to 46.0%.
But here’s the real nugget: Q4 saw an increase in gross gaming revenue of 4.0%. This is the first positive growth rate we’ve seen since Q2 2023. I’m still bearish on the overall market, but perhaps Sun International has finally stopped digging for the bottom.
Special mention must go to Sunbet, with a spectacular 76% increase in income. This part of the business has now overtaken Sun Slots in revenue. If it keeps up this growth rate, it will soon be bigger than Resorts and Hotels as well!
Adjusted EBITDA (before management fees) jumped from R355 million to R744 million at Sunbet. There’s nothing quite like casually doubling your profits in one year.
Unless there’s a significant change in consumer behaviour (or regulations), the growth in Sunbet looks set to continue. Growth of 40.8% in unique active players shows you how quickly this form of entertainment is growing. There are many concerns in the market around online gambling, so we will need to see how this all shakes out.
The growth at Sun Slots is far more tame, but still in the green. Income was up 2.0% year-on-year. This part of the business contributed adjusted EBITDA of R334 million, so it’s now been left in the dust by Sunbet.
The group has made a number of executive appointments, including bringing in executives from international companies. It’s probably not a bad idea to have as many different ideas around the table as possible.
In Resorts and Hotels, average room rates and revenue per available room (RevPAR) were positive contributors, especially at Sun City after its refurbishment. Excluding the Table Bay Hotel, the group achieved 6.9% growth in rooms, food and beverage revenue.
The share price closed 10.6% higher on the day. I’m not surprised by this, as the company has managed a strong set of numbers here.
Nibbles:
- Director dealings:
- An associate of a director of Lighthouse Properties (JSE: LTE) bought shares worth R2.7 million.
- The CEO of Marshall Monteagle (JSE: MMP) bought shares worth R970k.
- A non-executive director of Supermarket Income REIT (JSE: SRI) bought shares worth around R560k.
- A director of Merafe (JSE: MRF) has bought shares worth R266k.
- The non-executive chair of Primary Health Properties (JSE: PHP) bought shares worth roughly R94k under a dividend reinvestment plan.
- Hulamin (JSE: HLM) has renewed the cautionary announcement related to the potential disposal of Hulamin Extrusions. They’ve been trading under cautionary since 18 August 2025.
