A content analysis of financial statements to determine the primary purpose of JSE listed companies in the mobile telecommunications sector.

Abstract

This study analyses the listed companies in the mobile telecommunications sector of the JSE, with the intention of determining their primary purpose. The study explores the literature of the three economic models, namely the neoclassical theory, Conscious Capitalism and the entity maximisation and sustainability models. This is vital as the major identifiers and themes of each model need to be compared and contrasted with each other in order to determine the differences between the models. The next stage is to match the economic models with the companies in the study using a content analysis of each company’s annual integrated reports. The annual integrated reports, the annual financial statements and the sustainability reports (where separately disclosed) were analysed over a five-year period from 2013 to 2017. The companies in the study are Blue Label Telecoms, The Huge Group, MTN and Vodacom. The selected companies are listed on the JSE in the mobile telecommunications sector and have to adhere to the strict reporting requirements of the JSE. The study then uses financial ratio analysis to determine the profitability of each company in the review. The study then concludes which company, using the economic model, performed the best over the five-year period. The content analysis determines the dominant model in the mobile telecommunications sector which happens to be the entity maximisation and sustainability model. Each company, though, has a different focus from the other. Blue focuses on shareholders and customers, the Huge Group on shareholders, MTN on its employees and Vodacom focused on its customers. The ratio analysis reveals that Vodacom had performed the best followed by MTN while Blue and Huge were tied for third place. Therefore, it can be concluded that the Vodacom entity maximisation and sustainability model with a focus on customers that Vodacom follows performs the best over the 2013 to 2017 period.