Staff Reporter
MOBILE Telecommunications Limited (MTC) delivered higher revenue and maintained strong cash generation during the first half of its 2026 financial year, but rising operating costs limited profit growth, prompting analysts at Simonis Storm Securities to lower their earnings forecasts and downgrade the stock from a “buy” to a “hold”.
In its latest research note, Simonis Storm said MTC’s revenue increased by 7.1% to N$1.95 billion during the six months under review, driven by strong growth in prepaid services, roaming and enterprise connectivity. However, the company’s EBITDA margin declined from 49.4% to 47.4% as costs increased at a faster pace than revenue, while earnings rose by only 1.6%.
The research firm described the results as resilient but noted that revenue growth did not translate into stronger profitability.
According to Simonis Storm, MTC’s performance remains broadly in line with expectations on the revenue side, but profitability has fallen below projections. The firm estimates that the first-half results represent approximately 48% of its full-year revenue forecast, but only around 47% of expected EBITDA and earnings.
As a result, Simonis Storm reduced its full-year earnings forecast and lowered its target share price from 1,073 cents to 1,035 cents per share.
Revenue growth was supported by a 9.1% increase in prepaid income, driven by customer growth, increased uptake of Aweh bundles and higher data consumption. Roaming revenue surged by 45.2%, largely due to inbound Internet of Things (IoT) connectivity, while enterprise revenue increased by 32.3% following strong customer growth and rising demand for integrated connectivity solutions.
MTC’s total subscriber base increased to 2.37 million customers, with prepaid subscribers rising from 2.08 million to 2.16 million and enterprise customers increasing from 16,017 to 22,075.
Despite the strong revenue performance, the company faced growing expenditure across several areas. Personnel costs increased by 18.6% due to staff growth, salary adjustments and job regrading, while direct costs rose by 7.7% as a result of transmission lease expenses and new spectrum licence fees. General and administrative costs also climbed by 12.9%, driven by spending on security, software and facilities.
Simonis Storm noted that MTC’s contract revenue declined by 7.2% following a deliberate affordability strategy that included additional free data and revised bundle offerings aimed at improving customer retention.
The research firm said the success of this strategy will depend on whether it leads to increased usage and stronger long-term customer value.
MTC continued to generate strong cash flows during the period, reporting operating cash flow of N$675.1 million, slightly higher than the N$670.8 million recorded in the corresponding period last year. The company invested N$197.9 million in property, plant and equipment and a further N$99.6 million in intangible assets.
The board declared an interim dividend of 47.78 cents per share, amounting to N$358.4 million, compared to 47.03 cents per share in the previous period.
Simonis Storm said MTC remains an attractive income-generating stock due to its dominant market position, strong balance sheet and continued exposure to growth in data and enterprise services.
However, the analysts cautioned that cost management will be critical in the second half of the financial year.
“The top line is expanding in the right segments, but operating leverage has stalled and earnings growth remains well below revenue growth,” the report stated.
The firm added that evidence of stabilising margins and slower cost growth could support a more positive outlook in future.
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