MTN Nigeria is one of the most profitable companies quoted on the Nigerian Stock Exchange (NSE), hitting revenues two times more than the highest-grossing bank in Nigeria. The high revenue figure translates to better margins and on the efficiency of the telco with the most subscribers.
The telco improved revenue by 12.6 percent to N1.17 trillion in the last financial year ending 31, December 2019from N1.03 trillion. This is nearly two times the N66.3 billion made by Zenith Bank in the same period. Zenith Bank is Nigeria’s most profitable bank.
The secret to the revenue spike say the company’s CEO, Ferdi Moolman, is focusing “on building our subscriber base, resulting in a growth of 10.5 percent in net additions to a total of 64.3 million subscribers.”
The company saw a rise in voice and data services .“Our active data subscribers rose by 34.9: percent to 25.2 million. As a result, the ratio of active data users to total mobile subscribers increased by 7.1 percent to 39.2 percent in 2019, “ Moolman said.
In the year under review, pretax profits were up by 31 percent to N290.1 billion from N221.34 billion, signaling that the company was better able to manage operations in the period relative to the 2018 financial year. This is seen in the leap in operating profit to N395.3 billion from N266.13 billion, a48.5 percent rise. Also seen helping the rise of operating profit is the improvement in operating cost, which the telco was able to beat down by 20.8 percent to N242 billion from N305.5 billion and this is despite the high cost of doing business seen in the cost of power.
The company’s bottom line responded to the efficiency in cost control with a 39 percent improvement to N202.1 billion from N145.66 billion. The rise in after-tax profit gave a boost to net profit margin as it jumped to 17.3 percent from 14 percent, indicating the company’s ability to wring more naira from revenues than previously.
The telco’s financial structure looks healthy as the company is working down its liabilities while improving assets. Although inventories are down to suggest a more brisk sales scenario than the previous year, receivables have ballooned which is the result of better sales. Inventories are down 41 percent to N909.57 thousand from N1.54 million while receivables are up 36 percent to N52.4 million from N38.62 million, quite an insignificant number as the company’s sales is mostly on cash and carry basis. The relatively low figures have a buoying effect on its ability to meet short term obligations, which improved to 3:1 from 0.33:1 by the current ratiometric.
Given the company’s good run, one would expect its share prices to be on the ascendancy, not so as it has been traveling northwards even finding a place among the top worst performers last Friday, 27 February as it dropped to N110 from N112.1, a change of N2.1. Friday’s fall when put in context, is ostensibly because of news of the coronavirus outbreak that sent the market skidding, careering to a N308 billion loss. The stock has seen a steady decline since February 25 after a horizontal projection weeks earlier.
While MTN may not have control of the market and incidentals like the Coronavirus, it seems to be on top of its game on how to rake in revenue. According to an accompanying statement on its 2019 financial statement presented to the NSE:
We are optimistic about the prospect for our business in 2020 and pleased with the continued momentum from H2 in 2019, and particularly Q4. Expanding 4G network coverage to deliver high-speed internet to more people nationwide and data revenue growth remains in focus. We expect growth in voice revenue to remain healthy. We continue to make good progress in our with the expansion of our super-agent network and are confident that the expanded service offerings will position us effectively drive broader financial inclusion as well as rollout the payment service bank seamlessly, once we receive a license.
Whether the company is able to get results from this strategy can only be seen with time. Although the burgeoning telecom market teaming with a youth population in love with data seems to point in that direction, indications will emerge from its performance in the first quarter. Let’s wait and see.
