Despite a drop in mobile subscribers in the last quarter, MTN Nigeria Plc improved top and bottom line numbers in the first quarter to indicate that it is on a cruise to better results next quarter and beyond barring any economic headwinds.
In the last quarter ending March 1, the country’s largest network lost five million subscribers “due to the effects of customer churn and the regulatory restrictions on new SIM sales and activations” bringing the number of subscribers down to 71.5 million yet it was able to galvanise revenue by 17.1 per cent to N385.3 billion from N329.1 billion.
Although the rate of inflation has been on the rise, 18.17 per cent in March and Capital expenditure was up by 19.3per cent to N89.9 billion (up 27.8% to N31.6 billion) the telecoms company was able to ramp up its operating profit by a handsome 20.4 percent to N133 billion from N110.6 billion, growing its operating profit margin in the process. Rising operating profit is indicative of a corporation’s efficiency in managing operating costs.
Similarly, the company showed strength in managing down finance and associated cost by 40 per cent improvement in pre-tax profit, which shored to N102.98 billion from N76.9 billion, also raising pretax profit margin to 26.7 per cent from 23.4 per cent.
The ice in the cake for the telecoms company draped in yellow is the 42 per cent improvement in net profit to N73.75billion from N51.74 billion. This pushed up the company’s net profit margin to 19.1 per cent from 15.7 per cent.
The result is testimony that the company is a highly profitable one, especially from an economy just emerging from a recession. This is more so as earnings per share rose by a hefty 42.5 per cent to N3.60. This is despite the slim rise of return on equity from 29 per cent to 29.2 per cent.
The company’s growing assets level also returned 3.4 per cent in the period, which is better than the former 2.6 per cent.
But how was MTN able to wring good profit despite the seeming odds of customer churn from regulatory activity and the COVID-19 pandemic. Karl Toriola, the company CEO explained, “Impacted by the reduction in the overall subscriber base in Q1, active data subscribers declined marginally by 71,000 to 32.5 million. However, we recorded 86.7per cent increase in data traffic and a 48.5per cent increase in usage (MB per user) from the existing base. The
Improvement in data services was supported by the completion of our acquisition and activation of an additional 800MHz spectrum, enabling us to further increase traffic by 10 per cent and enhance throughput by 79 per cent.”
According to the company’s statement seen in a regulatory filing to the Nigerian Exchange (NGX), Toriola said, “Digital revenue grew by 101.0percent and fintech revenue by 28.5 per cent as customers continued to adopt more digital products and services, a trend accelerated by the pandemic. Asat the end of March 2021, we had 449,100 registered MoMo agents and 4.6 million fintech customers.
“Our ability to drive service revenue growth while managing the growth in expenses resulted in acceleration in EBITDA growth to 19.1 percent and EBITDA margin expansion of 0.9pp to 53.1percent YoY. This enabled profit before tax (PBT) and profit- after- tax (PAT) growth of 33.9 per cent and42.5per cent respectively.”
The company’s performance is also reflects on the improving general economy, it is recalled that our analysis of the company in the third quarter of 2020 when the recession was yet rife, profits were not this flattering
In that period, we had said, the company stashed a revenue haul of N975.8 billion in the third quarter from N856.55 billion made in the equivalent period last fiscal year. The rise is a 14 per cent improvement over the reference quarter.
The company equally improved operating profit in the period to N397 billion, a rise of 7.8 percent compared to N284.7 billion of the equivalent period. The rise was not enough to spruce up the company’s operational efficiency, which dropped by a few notches to 31.5 per cent from 33.2 percent.
Loosing grip of operational efficiency allowed pre tax profit to slip marginally or 0.62 per cent to N211.6 billion from N212.9 billion. The result was a drop in pretax margin to 21.7 per cent from 25 percent. The company also lost ground in terms of bottom line as net profit slipped by 3.3 per cent to ebb at N144.24 billion from N149.2 billion. Net profit margin also dropped to 14.7 per cent from 17.4 per cent.