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MTN Reports N298.7 Billion Profit Despite Subscribers Declining by 8 Million to 68.5 Million in 2021

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MTN Nigeria - Investors King

MTN Nigeria Communications Plc grew profit after tax by 45.5 percent to N298.7 billion in the financial year ended December 31, 2021.

The telecom giant disclosed in its audited financial statements released on Friday.

Mobile subscribers decreased by 8 million to 68.5 million, largely due to SIM activation and sales suspension. Investors King understands that mobile subscribers rose in the final quarter of 2021.

Active data users grew to 34.3 million in the year under review, an increase of 1.7 million when compared to the same period of 2020. ACtive fintech subscribers increased by 4.8 million to 9.4 million, while service revenue increased by 23.3 percent to N1.7 trillion.

Earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 27.9 percent to N877.1 billion. Earnings per share (EPS) rose by 45.5 percent to N14.67 kobo.

MTN Nigeria proposed a final dividend of N8.57 kobo per share.

Commenting on the company’s performance, Karl Toriola, CEO, MTN Nigeria, said “2021 was a significant year for our Company. We commemorated our 20th anniversary with a celebration of our customers and all the stakeholder relationships that enabled our journey. In addition, we made good progress towards our Ambition 2025 objectives, demonstrating the strength and resilience of the business.

“This reflects the firm foundations on which our business is built, the tenacity and commitment of our people, and the support of our stakeholders. We continue to deepen our contributions to society in line with our priority to enhance shared value. During the year, our total contribution to the Government through direct and indirect taxes was N669.2 billion, up 83.4%, representing approximately 40% of our total revenue.

“We extended our interventions, in response to the challenges to our nation arising from the COVID-19 pandemic, providing a further N1.5 billion to the Coalition Against Covid-19 (CACOVID) in support of efforts aimed at curbing the spread of the virus. This is supplementary to other interventions to protect the health and well-being of our people, customers and stakeholders. We also worked hard across our business to embed new ways of working while harnessing the opportunities presented by the trends in digital adoption.

“In line with our objective to share our Company’s success with our various stakeholders, the first phase of a series of transactions to increase Nigerian ownership in MTN Nigeria was conducted during 2021 by way of bookbuild to institutional investors and fixed price offer to retail investors (the Offer). The outcome of the Offer will be announced once regulatory approvals have been obtained.”

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Telecommunications

MTN Nigeria Posts 33.6% Revenue Growth Despite Subscriber Drop in 2024

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MTN Nigeria - Investors King

MTN Nigeria Communications Plc’s total subscribers decreased by 0.9% to 77 million in the nine months ended 30 September 2024.

In the company’s unaudited financial statements, active data users increased by 5.1% to 45.3 million while mobile money wallets decreased by 21.8% to 2.8 million.

Service revenue rose by 33.6% to N2.4 trillion. See other details below.

Key Financial Highlights points:

● Total subscribers decreased by 0.9% to 77.0 million, impacted by the NIN-SIM regulations
● Active data users increased by 5.1% to 45.3 million
● Active mobile money (MoMo PSB) wallets decreased by 21.8% to 2.8 million
● Service revenue increased by 33.6% to N2.4 trillion
● Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 5.3% to N860.2 billion
● EBITDA margin decreased by 14.9 percentage points (pp) to 36.3%
● Loss after tax was N514.9 billion (Q3 2024 profit after tax of N4.1 billion)
● Profit after tax (PAT) adjusted for the net forex loss was N118.5 billion, down 59.2%
● Earnings per share (EPS) was negative N24.51 kobo (positive N5.65 kobo adjusted for the forex loss, down 59.2%)
● Closing retained earnings and shareholders’ funds of negative N723.0 billion and N573.6 billion, respectively
● Capital expenditure (capex) excluding leases was down 27.8% to N217.6 billion
● Positive free cash flow of N536.8 billion, an increase of 21.9%

Commenting on the company’s performance, MTN Nigeria CEO Karl Toriola “In the first nine months of 2024, we sustained the growth in our underlying operating performance – underpinned by our resilient business model and operational agility –despite challenging conditions.

The inflation rate remained elevated amidst rising energy prices and naira depreciation. Inflation averaged 32.8% in the nine months (Q3 2024: 32.8%) compared to an average of 24.5% in 2023 (Q3 2023: 25.5%). To curb inflation, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 8.5pp to 27.25% during the period, resulting in higher funding costs, although this helped reduce volatility and improve liquidity in the forex market.

The higher inflation and interest rates weighed on consumers’ spending power and impacted business activity. However, we remain focused on enhancing operational efficiency and driving the growth of our commercial operations.

Additionally, the naira closed at the Nigerian Autonomous Foreign Exchange Market (NAFEM) in September 2024 at N1,542/US$ (December 2023: N907/US$), exerting pressure on business activity. The improvement in liquidity in the foreign exchange (forex) market has helped us reduce our exposure to foreign currency-denominated
obligations.

We continued to manage the effects of the Nigerian Communications Commission’s (NCC) industry-wide NIN-SIM directive, which has impacted the evolution of our customer base. Having implemented the directive with all our subscribers fully compliant, we continue our drive towards reconnecting those affected to reduce churn
while extracting increased value from the market.

Sustained commercial momentum notwithstanding the macro headwinds

Our commercial momentum drove broad-based growth across all revenue segments, demonstrating the underlying strength and resilience of the business. We recorded an increase in service revenue of 33.6%, which was ahead of the average inflation rate in the period. This growth was led by data and supported by voice, fintech and digital
services.

We recorded a 9.8% increase in voice traffic and a 42.1% increase in data traffic. In addition, data usage per user grew by 31.2% to 11.3GB, supported by the rising demand for data and digital services, which has contributed to revenue growth.

In the fintech business, we focused on executing our growth strategy, prioritising increasing wallet quality, focusing on advanced services and the MoMo PSB app to enhance the user experience and engagement. We have introduced cross-border remittances with thirteen fellow African countries to boost adoption and monetisation.

Taking advantage of their interoperability, we are now leveraging the existing network of agent and merchant ecosystem in the industry to bring our services closer to our customers.

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Telecommunications

Elon Musk’s Starlink Suspends Internet Subscription Price Hike for Nigerian Users 

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Starlink, the satellite internet service owned by Elon Musk’s SpaceX, has suspended its earlier announced price increase for Nigerian users.

A message from the Starlink Team on Thursday noted that the suspension of the price hike is temporary, adding that the latest decision is to navigate regulatory challenges.

Investors King had on October 2 reported that the internet service inflated its prices owing to rising inflation in Nigeria.

The monthly subscription fee had risen by 97 percent, from N38,000 to N75,000, as customers expressed displeasure over the significant increment.

Starlink had also said that new users would also face a higher cost for the Starlink kit (hardware for installation), which was to be priced at N590,000, a 34 percent increase from the previous price of N440,000.

Meanwhile, about 22 days after, the internet company rescinded its decision to increase the price, citing some regulatory challenges.

Even though the company stated that the increment would have enabled it to deliver reliable service for its users, it pointed out that it could no longer proceed with it in the meantime.

According to the company, it needed regulatory support to make the improvements necessary for a better customer experience.

While assuring customers who had already subscribed to packages carrying the hiked prices that their account would be credited, the company declared that users could still cancel their services.

The message by Starlink to its customers read, “Last month, we increased the monthly service price for Starlink in Nigeria to account for inflation, helping us maintain operations and continue delivering reliable service.

“Today, we are temporarily suspending this price increase as we navigate regulatory challenges.

“If you’ve already been charged at the higher rate, a one-time credit will be applied to your account to cover the difference. You also have the flexibility to cancel your service at any time.

“We remain committed to providing high-speed Internet in Nigeria, but we need regulatory support to make the improvements necessary for a better customer experience. Without these approvals, our ability to continue delivering service is at risk.

“Thank you for choosing Starlink and supporting our mission to bring affordable, high-speed internet to more people as many people around the world as possible.”

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Telecommunications

Telecom Tariffs Set to Rise as FG Proposes 12.5% Tax Hike

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Telecommunications - Investors King

Telecommunication service providers in Nigeria have announced an impending increase in customer tariffs for calls and data.

The anticipated rise is attributed to the Federal Government’s proposed 12.5% value-added tax on telecommunications, which would represent a 66.67% increase from the current 7.5%.

According to telecom operators, the increase in tax would force them to also increase the tariff charged for consumers’ calls and data.

The Global System for Mobile Communications (GSMA), a non-profit organisation representing the interests of mobile network operators worldwide stated that Nigeria’s telecom industry is already overtaxed. Therefore, any increase in the tax rate would impact customer tariffs.

GSMA declared that the telecommunication industry pays over 50 different taxes to various government arms.

This tax increase is in line with the new Bill reform, which imposes excise duties on technology and consumer services industries, including telecommunications, gaming, gambling, lotteries, and betting services.

As part of a broader tax reform initiative, the proposed Bill aims to unify the fiscal legislation governing taxation in the country.

“A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks relating to Taxation and Enact the Nigeria Tax Act to Provide for Taxation of Income, Transactions, and Instruments, and Related Matters,” the Bill read.

“Services, including telecommunications, gaming, gambling, betting, and lotteries however described, provided in Nigeria shall be charged with duties of excise at the rates specified under the Tenth Schedule to this Act in a manner as may be prescribed by the Service,” the Bill outlined.

“Amount of an excisable transaction is the amount chargeable for the service by the service provider, both in money or money’s worth,” the Bill indicated

In response to the proposed tax reform, the President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, expressed concern that the government’s proposal could cripple the telecommunications industry.

“They are essentially trying to kill the industry by imposing more burdens on it,” he stated

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