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MTN Nigeria Reports Flat 2020 Full-Year Profit, As Revenue Hits N1.346tr

It was, after all, another good year for telecommunications giant- MTN Nigeria Communications Plc, going by the audited numbers for the Full-Year published Sunday by its board, showing among others that although revenue climbed 15.1% up, profit after tax for the period remained flat at N205.214bn, just 0.9% marginal rise over the N203.283bn reported in the preceding year. This translated to Earnings Per Share of N10.08, as against the N9.99 of the preceding year, of which the board has recommended a dividend of N5.90 per two kobo ordinary share, bringing total payout for the financial year under review to 9.40, payable to shareholders who names appear on the register of members as of close of business on May 4, 2021. Electronic payment of the final dividend is slated for May 26, a after shareholders have approved the payment proposed at an annual general meeting.

This was despite a statement by Ferdi Moolman, its chief executive, describing 2020 as “a challenging year for all,” perhaps because the employees adapted quickly to working remotely to ensure that customers remained connected, while

The profit line was negatively impacted by a combination of direct network operating costs, interconnect costs, employee costs, depreciation of right of use assets, other operating expenses, and finance costs.

According to the result, revenue for the period stood at N1.346tr, from N1.169tr; a breakdown of which showed that the customer business unit remained its golden goose, accounting for N1.169tr or 86.87% of total revenue; from the previous N991.058bn or 84.71%;  ahead of the N134.814bn contributed by the enterprise business unit, slightly better than the previous year’s N132.761bn.

A further analysis shows that voice garnered the lion’s share of the revenue, accounting for N766.389bn, as against the preceding year’s N725.449bn; followed by data with N332.371bn, jumping by 51.49% from N219.398bn; possibly due to the attractiveness of the WhatsApp, revenue from short messages dropped to N12.33bn from N13.505bn. Growth in Interconnect and roaming income was flat at N133.078bn from N125.042bn; same as handset and accessories at N7.358bn, down from N2.208bn; digital income stood at N37.038bn from N35.939bn; value added services fetched N46.444bn up from N37.167bn; just while other revenues came to N11.287bn from N11.026bn.

Direct network operating costs swallowing N310.248bn of the total revenue, compared to the previous N246.604bn. Interconnect costs followed with N112.470bn, a slight increase over the previous N105.25bn; even as roaming costs slipped to N2.956bn, down from N4.038bn, owing to the significant decline in international travel in the aftermath of the Coronavirus pandemic.

Discounts and commissions increased to N68.528bn from N56.586bn; there was a cut back in spending on advertisements, sponsorships and sales promotions from N19.848bn in the prior year to N15.144bn; while employee costs jumped 50% up to N45.325bn from N30.707bn. Depreciation of property and equipment increased slightly to N150.203bn from N147.807bn; just as amortisation of intangible assets at N36.699bn, rose from N29.997bn. Depreciation of right of use assets soared from N54bn to N72.125bn; other operating expenses inched to N66.591bn  from N50.989bn, leaving operating profit at N426.713bn as against the N393.225bn of prior year.

Finance income for the period fell to N15.848bn from N20.132bn, driven principally by interest income on bank deposits of N7.860bn from N7.95bn; and interest income on amortised cost worth N4.644bn, which fell from N10.212bn; just as net foreign exchange gain – realised stood at N1.275bn, double previous year’s N690m.

Finance costs leaped to N143.687bn from N122.080bn; bloated by interest expense on borrowings at N53.205bn, up from the restated N46.967bn for the prior year; while interest expense on leases jumped to N78.544bn from N64.902bn; followed by Net foreign exchange loss (unrealized) stood at N10.051bn, compared to N2.907bn in the preceding year. Profit before taxation, therefore, rose marginally to N298.874bn; as tax expenses stood at N93.66bn from N87.994bn. Profit for the year amounted to N205.214bn from N 203.283bn.

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