Staff Writer
Mobile Telecommunications Limited (MTC) remains a strong income-generating stock with a dominant position in the Namibian telecommunications market, but rising costs are beginning to weigh on profitability, according to stockbroking firm Simonis Storm Securities.
In its latest assessment of MTC, Simonis Storm downgraded the stock from “Buy” to “Hold” and lowered its target price to 1,035 cents, down from 1,073 cents.
The firm said MTC’s interim results for the six months ended March 2026 showed that while revenue growth remains healthy, the company is struggling to convert that growth into stronger earnings.
“MTC remains a quality income stock with a dominant, defensive market position, strong cash generation, and credible exposure to data and enterprise growth,” Simonis Storm said. “The first half of 2026, however, makes one point clear: cost control now matters as much as revenue growth.”
MTC reported a 7.1% increase in revenue to N$1.95 billion during the period, driven by growth in prepaid services, roaming, and enterprise solutions. However, earnings increased by only 1.6%, reflecting pressure from a rising cost base.
According to the analysis, prepaid revenue grew by 9.1% due to customer growth, increased adoption of Aweh bundles, and higher data consumption.
Roaming revenue surged 45.2%, supported by inbound Internet of Things (IoT) connectivity, while enterprise revenue rose 32.3% as customer numbers expanded by 37.8% and demand for integrated connectivity solutions increased.
MTC’s total subscriber base reached 2.37 million, with prepaid subscribers growing from 2.08 million to 2.16 million, and enterprise customers increasing from 16,017 to 22,075.
The report noted that contract revenue declined by 7.2% as a result of a deliberate affordability strategy that included offering additional free data and optimised bundles.
Simonis Storm said the move was aimed at improving customer retention over the long term, despite creating short-term revenue pressure.
The brokerage highlighted profitability as the key area of concern. MTC’s EBITDA margin declined to 47.4% from 49.4% a year earlier, as operating costs increased faster than revenue.
Personnel expenses rose 18.6%, driven by higher headcount, employee regrading, and salary increases.
Direct costs increased by 7.7% due to transmission lease expenses and new spectrum licence fees, while general and administrative costs climbed 12.9% because of higher spending on security, software, and facilities.
“The result is best read as profitability protected despite a heavier cost base, not margin expansion,” Simonis Storm said.
Despite the margin pressure, the brokerage said MTC’s strong cash generation and dividend payments continue to underpin the investment case.
Operating cash flow improved slightly to N$670.8 million, while the company continued investing in network infrastructure and technology, spending N$99.6 million on intangible assets.
The board declared an interim dividend of 47.78 cents per share, up from 47.03 cents in the previous period, representing a payout of N$358 million.
