MTN Nigeria’s profit falls to N94.88bn amidst 12.5% rise in revenue

By Omobayo Azeez

Despite a double digit increase in its revenue in the H1’2020, MTN Nigeria had its net profit slipped by 4.7 per cent to N94.877 billion from N99.537 billion recorded in the same period last year.

According to the financial report the company filed at the Nigerian Stock Exchange (NSE) on Wednesday and signed by Ferdi Moolman, its country chief executive manager, the company recorded 12.5 per cent growth in total revenue which hit N638.075 billion higher than N566.946 billion the preceding year.

This was essentially driven by the 121.8 per cent and 57.6 per cent increase in digital and data income at a time more companies and individuals worked and held meetings virtually in the aftermath of the coronavirus pandemic in the period under review.

Another highlight of the financials analysed by business a.m was the offer of N3.50 interim dividend per share proposed by the directors, from its earnings per share of N4.66, down from N4.89 in 2019.

This positions the telecoms giant as the first company to offer such as investors await announcements from the other regular interim dividend paying stocks.

The dividend is however payable to shareholders as of August 14, while the register of members will be closed on August 17; while payment will be made electronically on August 24, 2020.

In the period also, the company reported a 15.6 per cent growth in mobile subscriber base to 71.1 million, which it said accounted for the huge voice revenue and representing 67.9 per cent of service revenue, as the COVID-19 “lockdowns impacted traffic, particularly in April and May.”

Total revenue for the period climbed by N71.129 billion from N566.946 billion in the first half of 2019, to N638.075 billion; with the lion’s share of N432.208 billion from N420.603bn, or 2.8%; while data income stood at N154.082 billion, up from N97.751 billion, helped by growth in “data subscribers, improved 4G penetration and enhance network capacity to support traffic growth .”

Digital revenue soared from N1.92bn to N4.258bn; Fintech income improved by 29.6% to N21.346bn from N16.464bn; with other service revenue dropped by 13.8% from N29.126bn to N25.097bn.

Expenses increased by 17.5 per cent from N264.626 billion to N311.014 billion; depreciation and amortization inched 8.5 per cent from N112.968 billion to N122.626 billion; even as net finance costs rose 38.2 per cent from N46.996 billion to N64.966 billion.

Direct network operating costs climbed from N120.12 billion to N148.552 billion; interconnect costs followed with N53.961 billion from N52.358 billion; while discounts and commission stood at N31.461 billion, up from N27.449 billion in the prior half-year.

Other operating expenses increased to N30.839 billion, up from N25.266 billion; even as advertisements, sponsorship and sales promotions cost dropped to N6.754 billion from N8.514 billion.

Finance income dropped from N10.484 billion to N7.584 billion, driven by the N2.491 billion interest income on bank deposits, which dropped from N3.502 billion; and on amortised cost investments that dropped from N4.998 billion to N2.181 billion.

Finance costs soared from N57.48 billion to N72.55 billion, after interest expense on borrowings jumped to N30.348 billion from N18.835 billion; and interest on leases at N36.972 billion from N31.849 billion; while foreign exchange loss jumped from N540.892 billion to N3.963 billion.

Profit before tax, therefore, fell by 2 per cent from N142.404 billion to N139.57 billion, owing to what it said was the increase in finance costs arising from higher borrowing, even as the company issued a N100 billion commercial paper at 5.7 per cent rate per annum to broaden funding sources.

Total borrowing for the period, the company explained, soared from N295 billion in the 2019 half-year, to N524 billion in the same period of this year.

Tax expenses increased to N44.693 billion from N42.866 billion; resulting in net profit of N94.877 billion, a 14.5 per cent decline from the N99.537 billion reported in the corresponding period of 2019.