Telecommunications

MTN Introduced Mobile Phone Financing to Boost 5G Adoption

MTN partners with Intelligra to enhance 5G adoption through mobile phone financing.

Published

2 years ago

October 14, 2022

Telecommunication giant, MTN has identified the high cost of 5G mobile phones as a barrier to the adoption of the 5G network in Nigeria.

MTN Chief Marketing Officer, Adia Sowho, stated this yesterday during the unveiling of the smartphone finance initiative with Intelligra.

The initiative will allow many Nigerians to own 5G-enabled smartphones. Some of the available smartphone makers include Samsung, TECNO, Nokia, Infinix, and iTel, among others.

Speaking at the press conference, the chief marketing officer of MTN Nigeria, Adia Sowho said: “Smartphones have become the computer for many Nigerians today. Unfortunately, the high costs of these devices have made them out of reach for many. Factors such as forex fluctuation, chipset shortages, and inflation are continuously driving up the cost of phones.”

She further added that the initiative which started with Intelligra in January 2022 is now domiciled in more than 200 outlets across the country with 20,000 devices alrady financed through the initiative.

She further noted that MTN aims to achieve 1,000 units daily through the initiative as the company plans to onboard more outlets, especially in the North.

This will complement MTN 5G network which the company recently rollout in some selected cities in Nigeria.

Investors King learnt that potential beneficiaries of the initiative can walk into any of the accredited outlets and get a smartphone with zero initial capital deposit while the repayments are made through airtime.

Meanwhile, the Chief Executive Officer of Intelligra, Mr. Tayo Ogundipe, said smartphone financing is an initiative that is prevalent in many developed countries, enabling people to acquire any device of their choice and pay over time.

He also stated that while they plan to onboard more outlets are underway, some of the outlets which are already part of the deal include Slot, Credit Direct, Omali Agent Network others.

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Telecommunications

MTN Nigeria Revises IHS Lease Terms, Aims for N100 Billion Yearly Savings

Published

3 weeks ago

August 20, 2024

Samed Olukoya

MTN Nigeria, one of the country’s leading telecommunications giants, has successfully renegotiated its tower lease agreements with IHS Towers, a strategic move expected to save the company approximately N100 billion annually.

This renegotiation is a significant step in MTN Nigeria’s ongoing efforts to improve its financial performance amid Nigeria’s challenging business environment.

The revised terms of the lease agreements introduce several critical changes aimed at reducing operational costs and mitigating the impact of Nigeria’s volatile currency fluctuations.

The new agreements reduce the US dollar-indexed component of the leases, which has now been linked to a discounted U.S. consumer price index (CPI).

This change is crucial in lowering MTN Nigeria’s exposure to the fluctuating naira, providing the company with a more predictable and stable cost structure.

Also, the renegotiation removes technology-based pricing, simplifying the company’s cost framework. Payments for tower upgrades will now be based on tower space and power consumption, rather than the technology deployed on the towers.

This shift is expected to bring more clarity and control over MTN Nigeria’s infrastructure expenditure.

Another key aspect of the renegotiation is the introduction of an energy cost component indexed to the cost of diesel power.

Given Nigeria’s unreliable power supply, telecom companies like MTN Nigeria rely heavily on diesel generators to power their infrastructure.

By linking energy costs to diesel prices, MTN Nigeria can better manage these expenses, which have historically been a significant burden on its operations.

The renegotiated terms also include provisions for discounts and incentives over the life of the contracts, further enhancing the financial benefits for MTN Nigeria.

These changes are expected to boost the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, positioning it for stronger financial performance in the coming years.

MTN Nigeria’s strategic renegotiation comes at a time when the telecommunications industry is grappling with increasing operational costs and economic instability.

The savings generated from these new lease terms will not only improve the company’s bottom line but also allow it to reinvest in critical infrastructure and expand its services across the country.

As MTN Nigeria continues to navigate the complexities of the Nigerian market, the successful renegotiation of its tower lease agreements with IHS Towers underscores its commitment to maintaining financial stability and delivering value to its shareholders.

The telecom giant’s proactive approach to cost management and risk mitigation sets a positive precedent for other companies in the industry facing similar challenges.

Telecommunications

Airtel Africa Launches $50 Million Share Buy-Back Programme

Published

3 weeks ago

August 19, 2024

Samed Olukoya

Airtel Financial Results - Investors King

Airtel Africa, a major player in telecommunications and mobile money services across 14 African nations, has announced the initiation of the second tranche of its $100 million share buy-back programme.

This latest phase is a significant step following the completion of the programme’s first tranche earlier this year.

The buy-back programme, which commenced today, aims to enhance shareholder value by reducing the company’s capital through the repurchase and cancellation of its own shares.

The second tranche is expected to conclude by December 19, 2024. Airtel Africa has engaged Citigroup Global Markets Limited (Citi) to facilitate this phase of the buy-back.

Under this agreement, Citi will conduct on-market purchases of Airtel Africa’s ordinary shares, with the company subsequently acquiring these shares from Citi.

Citi will operate as a riskless principal and will make purchase decisions independently of Airtel Africa.

“The purpose of this buy-back programme is to reduce the capital base of the Company, thereby benefiting our shareholders through increased value per share,” stated a spokesperson from Airtel Africa. “All shares repurchased under this programme will be cancelled.”

The share buy-back transactions will be conducted within the framework of pre-set parameters outlined in the agreement between Airtel Africa and Citi.

These transactions will adhere to the guidelines established by the Company’s general authority to repurchase shares, as granted by its shareholders during the annual general meeting held on July 3, 2024.

At that meeting, shareholders approved the purchase of up to 374,141,187 ordinary shares.

In compliance with regulatory standards, the buy-back will be conducted according to Chapter 9.6 of the Financial Conduct Authority’s UK Listing Rules and the Market Abuse Regulation (EU) No 596/2014, as incorporated into UK domestic law.

Market Impact and Outlook

This strategic move comes as Airtel Africa seeks to optimize its capital structure and deliver value to its investors.

The share buy-back programme is anticipated to reduce the number of outstanding shares, potentially increasing the value of each remaining share and reflecting positively on the company’s stock performance.

The commencement of the second tranche follows the successful execution of the first tranche, demonstrating Airtel Africa’s commitment to shareholder returns and capital management.

The company’s decision to continue with the buy-back programme highlights its confidence in the long-term growth prospects and stability of its operations across the African continent.

Telecommunications

MTN Records First Loss in Seven Years Due to Naira Devaluation

Published

3 weeks ago

August 19, 2024

Samed Olukoya

MTN Group Ltd., Africa’s largest wireless carrier by revenue, has reported its first loss in seven years due to the steep devaluation of the Nigerian naira.

The company announced a loss of 7.39 billion rand ($414.7 million) for the first half of 2024, a stark contrast to the 4.14 billion rand profit it recorded during the same period last year.

The loss marks MTN’s first since 2016, when the company was hit with a massive fine exceeding $1 billion by the Nigerian government.

This time, however, the company’s financial setback is largely attributed to the economic challenges in Nigeria, one of its most critical markets.

Since President Bola Tinubu took office in May 2023, the naira has depreciated by more than 70% against the U.S. dollar, severely impacting MTN’s revenue in the region.

Nigeria, Africa’s most populous nation, contributes nearly a third of MTN’s total earnings, making the devaluation a significant blow to the company’s overall financial health.

Currency devaluations in other African markets, such as South Sudan, have also compounded MTN’s financial difficulties.

Despite these challenges, the group managed to increase its total customer base by 0.8%, bringing its total number of subscribers to 288 million.

However, the ongoing conflict in Sudan and MTN’s recent exit from Afghanistan have led to a decline in users in those regions.

MTN’s Chief Executive Officer, Ralph Mupita, revealed that the company is considering further exits from specific markets as part of its strategy to stabilize operations.

The company is currently in discussions to divest from its Guinea Conakry unit and plans to reduce its stake in the Nigerian business to as low as 65% by selling shares to local investors. MTN currently holds a 73% stake in its Nigerian operations, according to data compiled by Bloomberg.

Despite the financial challenges, MTN remains committed to its long-term growth strategy in Africa. The group continues to focus on expanding its digital and fintech services, which are seen as key drivers of future revenue.

However, the current economic conditions in some of its major markets, particularly Nigeria, underscore the volatility and risks that come with operating in the region.

As MTN navigates these turbulent waters, the company’s ability to adapt to the rapidly changing economic landscape in Africa will be critical to its future success.

Investors and stakeholders alike will be closely watching how MTN manages its operations in Nigeria and other key markets in the coming months.