MTNN H1 Profit Falls 14.5%, Despite Revenue Growth, Offers N3.50 Div

The board of MTN Nigeria, on Wednesday, submitted its unaudited half-year result for the period ended June 30, 2020, showing that net profit slipped by 4.7%, despite the 12.5% growth in total revenue. This was essentially driven by the 121.8% and 57.6% 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 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, making MTNN 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% growth in mobile subscriber base to 71.1m, which it said accounted for the huge voice revenue and representing 67.9% of service revenue, as the COVID-19 “lockdowns impacted traffic, particularly in April and May.”

Total revenue for the period climbed by N71.129bn from N566.946bn in the first half of 2019, to N638.075bn; with the lion’s share of N432.208bn from N420.603bn, or 2.8%; while data income stood at N154.082bn, up from N97.751bna, 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% from N264.626bn to N311.014bn; depreciation and amortization inched 8.5% from N112.968bn to N122.626bn; even as net finance costs rose 38.2% from N46.996bn to N64.966bn.

Direct network operating costs climbed from N120.12bn to N148.552bn; interconnect costs followed with N53.961bn from N52.358bn; while discounts and commission stood at N31.461bn, up from N27.449bn in the prior half-year. Other operating expenses increased to N30.839bn, up from N25.266bn; even as advertisements, sponsorship and sales promotions cost dropped to N6.754bn from N8.514bn.

Finance income dropped from N10.484bn to N7.584bn, driven by the N2.491bn interest income on bank deposits, which dropped from N3.502bn; and on amortised cost investments that dropped from N4.998bn to N2.181bn. Fnance costs soared from N57.48bn to N72.55bn, after interest expense on borrowings jumped to N30.348bn from N18.835bn; and interest on leases at N36.972bn from N31.849bn; while foreign exchange loss jumped from N540.892m to N3.963bn.

Profit before tax, therefore, fell by 2% from N142.404bn to N139.57bn, owing to what it said was the increase in finance costs arising from higher borrowing, even as the company issued a N100bn commercial paper at 5.7% rate per annum to broaden funding sources. Total borrowing for the period, the company explained, soared from N295bn in the 2019 half-year, to N524bn in the same period of this year. Tax expenses increased to N44.693bn from N42.866bn; resulting in net profit of N94.877bn, a 14.5% decline from the N99.537bn reported in the corresponding period of 2019.