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MTNN Still Maintaining the Largest Share – Coronation Merchant Bank

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MTN Nigeria - Investors King

The latest data released by the Nigerian Communications Commission (NCC), the industry regulator, show that internet subscriptions stood at 140 million in October. This represents a y/y decline of -8.2%. However, we noticed a m/m increase of c.61,000 in subscriptions. The y/y decline can be partly attributed to the FGN’s subscriber identification Module (SIM) card regulation, which requires each SIM card to be linked to a National Identification Number (NIN). Based on our channel checks, the stress associated with the NIN-SIM linkage has resulted in customers abandoning SIMs of devices that are not their primary source for communication or internet connectivity.

Furthermore, over the past year, there has been a visible shift to fibre broadband internet subscription plans which do not require SIM cards to function. Residential estates are increasingly tilting towards this option given the heavy reliance on internet services at home due to the ongoing work-from-home approach.

Among the mobile network operators, MTN Nigeria (MTNN) accounted for the largest share (38%) of total subscriptions. We noticed from the commission’s data that in October MTNN recorded a 0.1% m/m increase in internet subscriptions. Airtel and Glo recorded m/m increases of 1.6% and 0.7% respectively. Meanwhile, 9mobile recorded a m/m decline of -1.3%.

Furthermore, the commission’s data show that outgoing porting activities was highest for 9mobile while Airtel was the chief recipient of incoming porting activities.

The latest earnings release by MTNN show that revenue grew by 22.9% y/y in Q3, compared to the 31.4% y/y growth it delivered in Q2. The solid sales growth was largely driven by a 57.3% y/y growth in data revenue, on the back of sustained data demand supported by fintech, digital services and partly by base effect.

Broadband penetration currently stands at 39.8%. Based on the national broadband plan 2020-2025, the FGN projects a broadband penetration target of 70% by 2025. In March, Anambra state waived right-of-way (RoW) fees for telecom operators as part of the state’s efforts to drive broadband expansion. The harmonisation of right-of-way (RoW) charges across states and local government areas would assist with boosting broadband penetration. The FGN proposed a RoW fee of N145 per linear meter of fibre.

We understand that the NCC plans to auction two slots of 3.5GHz spectrum license this month. The sale of these slots of 3.5GHz spectrum is expected to facilitate 5G rollout across the country. The commission disclosed that the remaining three slots will be auctioned over the next two years. The NCC has pegged the reserve price for the 3.5GHz spectrum at USD197.4m. Industry sources suggest that the successful 5G rollout will result in a boost to internet data speed at ultra-low latency as well as more reliable and increased network capability.

Turning to data from the National Bureau of Statistics (NBS) capital importation into the telecommunications sector declined by -99.7% y/y to c.USD342,000 in Q2 ’21. This significant decline in investments into the sector can be linked to general investor apathy given the hazy macroeconomic environment triggered by the pandemic as well as infrastructure deficit in the telecommunications sector, high cost of services, low digital literacy, among others.

For Nigeria to become an active member of the current digital transformation within the global village, huge investments in telecommunications infrastructure are required. A deepened broadband penetration feeds directly into better internet access and the ripple effect of the latter on the economy attracts immeasurable benefits.

According to the latest national accounts, telecommunications posted double digit growth of 10.9% y/y in Q3 2021. Furthermore, the latest inflation report shows that communications prices rose by 10.6% y/y in October compared with 10.7% y/y recorded in the previous month. The telecommunications segment was already expanding rapidly and has been further boosted by the prevalence of working from home due to the COVID-19 pandemic.

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Cement Manufacturers on NGX Pays N115.782 Billion Income Tax in H1 2022

Cement manufacturing companies paid N115.782 billion in income tax in the first half (H1) of 2022

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Lafarge, Bua Cement and Dangote Cement

Cement manufacturing companies listed on the Nigerian Exchange Limited (NGX) paid N115.782 billion in income tax in the first half (H1) of 2022.

Their unaudited financial statements obtained by Investors King revealed.

Dangote Cement Plc, Nigeria’s most capitalised company and the largest cement manufacturing company in sub-Saharan Africa, paid N92.786 billion in income tax in H1 2022, up from N89.624 billion paid in the same period of 2021.

The company reported a 10.2% decline in profit after tax to N172.104 billion, down from N185.692 billion reported in the corresponding period of 2021. Dangote Cement realised N808.037 billion in revenue during the period.

BUA Cement Plc, Nigeria’s second-largest cement manufacturer, remitted N13.527 billion in income and deferred taxes to the Federal Inland Revenue Service in the first 6 months of the year.

The cement manufacturing company generated N188.562 billion in revenue and reported a 41.40% increase in profit after tax to N61.364 billion.

Lafarge Africa, another key player in the cement industry, reported revenue of N186.587 billion in the first half of the year. The company then paid N9.468 billion in income tax before declaring a profit after tax of N37.410 billion for the period under review.

Therefore, the firms paid (Dangote Cement – N92.786 billion; BUA Cement – N13.527 billion and Lafarge Africa remitted N9.468 billion) a combined N115.782 billion in income tax to the federal government in H1 2022.

Together, the three cement manufacturing companies realised N1.183 trillion in combined revenue and reported a total profit after tax of N172.202 billion.

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Dangote Cement Sales Drop, Profit After Tax Dips 10% in H1 2022

Dangote Cement Plc reported a 7% drop in sales volume in the first half (H1) of 2022 to 14.2 million tonnes.

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Dangote Cement - Investors King

Nigeria’s leading cement manufacturing company, Dangote Cement Plc reported a 7% drop in sales volume in the first half (H1) of 2022 to 14.2 million tonnes.

Sales volume from Nigeria declined by 5.3% to 9.3 million tonnes. This the company attributed to global supply chain disruption that impacted operations where imports are required during the period.

The company’s revenue grew by 17% to N808 billion while the group earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 6.3% to N373.2 billion. Nigeria’s EBITDA expanded by 12.3% to N349.4 billion.

Profit after tax dipped to N172.1 billion, representing a decline of 10.2%, largely due to unrealised foreign exchange losses.

Net debt stood at N423 billion in the period under review.

Speaking on the company’s performance Michel Puchercos, Chief Executive Officer, said: “Despite the elevated inflation due to a very volatile global environment, the first half of 2022 has been positive.

“We recorded increases in revenue and EBITDA that drove strong cash generation across the Group. We recorded revenue of ₦808.0B, up 17.0% compared to last year and Group EBITDA of ₦373.2B, up 6.3% with an EBITDA margin of 46.2%.

“Although significant increase in energy and AGO costs are impacting production, we are strengthening our efforts to ramp up the usage of alternative fuels. Our Alternative Fuel Project aims to leverage waste management solutions, reduce CO2 emissions, and source material locally. So far this year, we co-processed 67,230 tonnes of waste representing a 25% increase over H1 2021.

“To drive consumer engagement and support demand ahead of the rainy season; we have commenced the 3rd season of our National Consumer Promotion – “Bag of Goodies 3”. On the operational side, we are ramping up production at our Okpella plant and are progressing well to deploy grinding plants in Ghana and Cote d’Ivoire.

“Our business model remains robust, thanks to the prudent and flexible approach we have taken across our operations. Our continuous focus on efficiency, meeting market demand and maintaining our costs leadership drives our ability to consistently deliver superior profitability and value to all shareholders.”

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Nigerian Breweries Announces 142.8% Jump in Profit in H1 2022

Nigerian Breweries Plc on Friday reported a whopping 142.8% jump in profit after tax realised in the first half (H1) of 2022.

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Nigerian Breweries - Investors King

Nigerian Breweries Plc on Friday reported a whopping 142.8% jump in profit after tax realised in the first half (H1) of 2022.

In the company’s unaudited financial statement obtained by Investors King, revenue grew by 31% from N209.031 billion recorded in the first half of 2021 to N274.085 billion in the period under review.

Cost of sales stood at N155.349 billion, an increase of 18.3% from N131.340 billion filed in the corresponding period of 2021.

Gross profit rose by 52.4% from N77.917 billion in H1 2021 to N118.736 billion in H1 2022 while marketing, distribution and administration expenses surged by 44.8 percent to N84.896 billion from N58.628 billion.

Results from operating activities expanded by 79.9% to N35.840 billion, up from N19.917 billion achieved in H1 2021.

Nigerian Breweries grew profit before tax to N25.697 billion in the period under review from N11.940 billion filed in H1 2021.

The company paid N6.954 billion in income tax to post N18.743 billion profit after tax. This represents an increase of N142.8% growth from N7.858 billion recorded in H1 2021.

In a press release signed by Uaboi G. Agbebaku, Esq., Company Secretary, Nigerian Breweries said profitability was driven by the company’s pricing strategy and better mix.

However, the increase in the cost of sales was attributed to the recent surge in commodity prices due to internal and external factors.

“The increase in operating profit and profit after tax was driven mainly by top line growth resulting from our pricing strategy and better mix. Increase in cost of sales was due to rise in commodity prices. Marketing, distribution and administration expenses were driven by the increase in commercial activities, rising diesel prices and higher wages arising from collective labour agreements,” the company stated.

“Although interest expenses were lower, the net finance cost was higher due to foreign exchange losses arising from a higher cost of meeting foreign obligations to overseas partners.

“Our business continues to build momentum and deliver consistent profitable growth even in the context of a very challenging operating environment. Our best-in-class portfolio of brands provides a unique platform that positions us well to lead and grow the beer and malt category and drive superior long-term value creation.”

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