Abstract
This study employed panel regression analysis to investigate financial performance determinants of MTN and Vodacom’s rest of Africa businesses. The study investigated seven MTN and Vodacom operations for the period 2012 to 2020. It used net profit margin (NPM), return on assets (ROA) and return on equity (ROE) as financial performance proxies. Financial performance determinants investigated include both internal and external factors. These are asset size, total debt to total assets ratio (debt ratio), liquidity, number of subscribers and exchange rate. Data relating to exchange rates was obtained from the World Bank website while financial data and subscriber information was obtained from the audited financial statements. Data obtained was also analysed using descriptive statistics and trend analysis. The study findings indicate that asset size has a significant and positive relationship with ROE and no significant impact on both ROA and NPM. This suggests that the telecommunications industry should consider infrastructure sharing to reduce infrastructure costs and improve internet penetration in Africa. The debt ratio exhibited a negative relationship with both ROA and NPM. No significant relationship was found between debt and ROE. The telecommunications industry should, therefore, minimise debt levels and foreign denominated debt. Liquidity exerted an insignificant impact on financial performance. Subscribers were found to have a mixed impact on financial performance. An insignificant relationship was found between subscribers and both ROA and NPM, while ROE was negatively impacted by an increase in number of subscribers. The tracking of number of subscribers by the telecommunications companies is, therefore, not sufficient, suggesting that the quality of each subscriber should be evaluated instead. Lastly, the study concludes that the exchange rate has both a negative and positive impact on financial performance, depending on the financial performance proxy used. The industry should, therefore, minimise the level of foreign denominated debt that culminates in higher interest payments and weakens the balance sheet...