Dylan Bradfield, portfolio manager at Sharenet
Buy: MTN
MTN plans to cut R4bn-R6bn in costs by 2029 through AI- and tech-driven structural efficiencies to lift earnings amid weak economic growth. MTN South Africa CEO Ferdi Moolman stressed the local business’s role as a “cash upstreaming engine” and dividend anchor for the group, shifting from basic cost programmes to deep backend optimisation.
The operator is simplifying its prepaid portfolio by slashing bundles to drive quality growth rather than volume, while targeting a 30% share of the fixed home connectivity market (30-million homes) by 2030 and using targeted mobile virtual network operators to boost data value share by three to four percentage points.
Separately, MTN Group aims to unlock R30bn in value from AI (including a potential partnership with Microsoft) over the next three to five years via operational expenditure optimisation, hyper-personalised consumer bundles and compliance agents, plus enterprise compute and infrastructure repurposing for AI workloads.
MTN recently confirmed guidance as it looks to double data revenue with a focus on supporting margin expansion above 44%. MoMo is going from strength to strength as new regulations look set to allow broader payments settlements. Last week MTN announced a strategic technology partnership with Ant International (via Alipay’s ecosystem) to drive new revenue streams.
Sell: Prosus
Prosus faces three near-term headwinds: AI capex at Tencent, competition for iFood and the slow turnaround at Just Eat. Tencent’s AI capex continues to weigh on reported profit growth (first quarter 2026 revenue was in line but below consensus), yet core resilience mitigates this operating margin, which held at 38.5%, while ex-AI margins improved to 43%. The business appears capable of self-funding AI without major damage to profitability.
iFood faces clearer near-term pressure. Intensifying Brazilian competition prompted stepped-up reinvestment. Recent guidance shows this will cut financial 2027 adjusted ebitda to between $100m and $150m, directly pressuring margins and risking misses despite strong expected order/gross merchandise value growth and ancillary revenue support.
European food delivery (mainly Just Eat) adds integration and regulatory risks. Since the 2025 acquisition, Just Eat has been in turnaround mode after years of decline (2026 orders are down 7%). Financial 2027 targets a modest increase of $100m in adjusted ebitda. The EU-mandated Delivery Hero stake sales to Uber have created an overhang and uncertainty over synergies. Analyst valuations for both iFood and Just Eat have been lowered conservatively.
While Tencent’s AI capex might be overplayed, clear risks in food businesses seem front of mind. Finally, keep an eye on social media bans for teens, which will likely impact time on platforms and gaming.
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