The telecommunications sector has started 2025 on Malawi Stock Exchange (MSE) on a slow note with TNM plc and Airtel plc shares dipping by 25 and 7.2 percent, respectively as analysts attribute this to lagged devaluation effects.
Figures show that although the market remained robust in January, registering 19.5 percent return by January 24, TNM and Airtel share prices dropped from K24.99 and K90 to K19.99 and K83.94 per share respectively.
Available data also indicate that the main drivers of the market remained the banking sector led by NBS Bank plc, National Bank of Malawi plc and FDH Bank plc whose share values surged by 100.5 percent, 58 percent and 34 percent in that order.
Analysts have since attributed the telecommunications players’ poor showing to lagged devaluation effects which have left the foreign exchange situation volatile to some sectors.
In an interview, Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said the decline in stock prices within the telecommunications sector appears to be largely driven by lingering market sentiment from the 2023 devaluation.
Said Makwakwa: “Investor caution, influenced by the negative impact on company valuations and earnings resulting from the devaluation, has led to an increased supply of stocks as many seek to exit their positions.
“However, despite these challenges, the 2024 trading statements demonstrate strong financial performance, indicating a positive outlook for the sector. These results suggest that there is still potential for price appreciation moving forward.”
In a separate interview, one of the MSE investors and director of Minority Shareholders Association of listed companies Brian Kampanje partly attributed the plunging telecom players shares to investors’ desire to dispose of the stocks.
He said: “The industry has over 21 billion shares making it the largest single bloc on the MSE about 40 percent in terms of the issued shares. The share turnover is high. This avoids artificial over valuation of the share price due to high demand with limited supply.
“The decrease in share price could possibly mean no more demand for telecommunication companies’ shares having reached desired portfolio levels. More investors are willing to dispose of the shares at higher prices and make profit for now,” Kampanje said.
According to Kampanje, the current share market prices reflect the best valuation of the telecommunication companies based on their performance which is linked to the foreign currency exchange rate.
The telecommunications sector has, however, published optimistic trading statements for the year ending 31 December 2024 –with TNM expecting a 290 percent profit jump to K9 billion and Airtel projecting 400 percent increase to K47 billion.
