A market-leading, cash-generative telco with a dominant fintech rail in M-Pesa — trading at ~3.2× forward EV/EBITDA, a 30–45% discount to peers — because a temporary depreciation programme is masking earnings power that already exists.
The analysis — four observations
- Earnings trough the market may see through. A two-year, US$100m modernisation front-loads depreciation; cash is untouched. FY26 reported EPS ~48 vs underlying ~92–100.
- M-Pesa as a fintech rail. TZS 590bn revenue (+29.3%), 38.9% of service revenue; lending, savings & merchant services up ~50% — higher return, lower capital.
- Under-penetrated, fast-formalising market. National mobile-payment value +28.3% to TZS 255tn; smartphone penetration only ~42%.
- Quality at a frontier discount. 0.9× net debt/EBITDA, Vodafone parentage, 50%-of-profit dividend — discounted for thin DSE liquidity, not fundamentals.
The core distortion — HY2026
41.7Reported NPAT · TZS bn
→
99.6Underlying NPAT · TZS bn
The gap is accounting, not economics — TZS 60.6bn of accelerated depreciation in the half. The reported optics and the underlying earnings tell two different stories.
FY2025 performance
+20.5%
Service revenue → 1,516bn
+69.4%
Profit after tax → 90.5bn
+25.2%
EBITDA → 493.6bn
32.1% margin
0.9×
Net debt / EBITDA
robust
~3.2×
Mkt EV / FY26E EBITDA
vs 4.5–6.0× peers
Valuation context — TZS/share (illustrative, educational)
| Method | Indicative range |
|---|
| Market price | ~780 |
| P/E comparables | 828–1,023 |
| Discounted cash flow | 949–1,375 |
Illustrative valuation exercise for education only — not a price target or recommendation. DCF assumes 22% WACC, 6% terminal growth. Control precedents (5.5–6.5× EV/EBITDA) imply ~1,455–1,690 and are shown only to frame the range.