Business Hilights
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MTN’s return to profitability strong boost for early listing in Nigeria—BHIU

A new report released by the Business Hilights Intelligence Unit (BHIU), the research arm of Business Hilights publications has noted that “The recent announcement of return to profitability by the MTN Group in earnings for the year ended 31 December 2017 remains a strong encouragement to go ahead and list on the Nigerian Stock Exchange (NSE), currently adjudged as one of the best in the world”.

The BHIU report further stressed that “MTN’s coming to the Nigerian market will grow the industry in Nigeria and further give millions of its subscribers and followers the chance to be part owners of the leading telecoms giant in Nigeria”.

Late last week, the African leaders in telecoms, MTN Group, posted an impressive results showing that its earnings bounced to profit for the year ended 31 December 2017, although the strong Rand dented revenue growth as new subscriber definitions saw active customer numbers tumble.

The result indicated that MTN Group returned to annual profit in 2017 in the absence of one-off charges related to a $1.1 billion fine imposed on it the Nigerian Communications Commission (NCC) over failure to meet the deadline to deactivate some unregistered lines on its network.

The group also plans to spend a total of R27.7 billion, about $580m, in 2018, with the guidance of South Africa at R9.6 billion and for Nigeria at R6.9 billion.

Besides, network operator, at the weekend, reported positive headline earnings per share (HEPS) of 182 cents compared to a full-year headline loss per share of 77 cents at the end of 2016.

MTN Group chief executive officer, Mr. Rob Shuter averred in an interview that “We are back in the black, with an attributable profit for the full year of R4.4 billion, as you know we had a loss of R2.6 billion in 2016,” even as the group’s revenue for the 12 months increased by 6.8% on a constant currency basis, but was actually down by 10.2%, at R132.8 billion, when currency changes were included.

Besides, the group’s service revenue was also hit by the strong rand during the period, decreasing by 10.8% to R124.4 billion, but would have been up 7.2% had the currency remained constant.

Continuing, Shuter added that “The stronger rand and the significant year-on-year (YOY) depreciation of the naira against the US dollar had a negative translation impact on rand-reported results for the period”.

A further review of the result disclosed that the average Naira depreciated by 25.8% against the US dollar in the year, and the closing rate was down 13.1% YOY. The average Rand strengthened by 9.6% against the US dollar YOY, and the rand closed 10.7% stronger. In light of recent developments in SA, we expect the rand to remain robust throughout 2018,” the group said.

However, just as reported data revenue increased by 19.4% to R28.2 billion, digital revenue decreased by 6.9%, to R13 billion, but would have been up by 14% on a constant currency basis.

Shuter stressed that “The digital revenue is slightly disappointing, and there are two things going on in there: a very strong performance by Mobile Money and by our new rich media services, but a lot of pressure in the old value-added services subscription business, where we have been doing a big optimisation of that business largely in Nigeria”.

Other figures within the period under review showed active MTN Mobile Money customers increased from 16.1million to 21.8 million across the group an increase of 5.7 million.

Group voice revenue was largely flat as Shuter argued that “Ideally, long-term flat voice revenue is a pretty good achievement,” although Nigeria actually saw outgoing voice revenue increase by 7.5% for the year”.

Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 15.2% for the year, to R46 billion, while the EBITDA margin decreased by 1.4 percentage points to 34%.

Capital expenditure (capex) for the year was close to R31.5 billion, slightly higher than the previous guidance of R30 billion.

Since two years ago, MTN Nigeria had been angling to hit the Nigerian stock market for listing.

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