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Market Digest Nigeria

Finance

MTN Nigeria posts strong first-half growth, despite decline in earnings

MTN

Telecommunications group MTN Nigeria has reported strong growth in its key revenue lines for the six months ended June 30.

MTN

Service revenue increased by 12.6% to N637-billion, while earnings before interest, taxes, depreciation and amortisation (Ebitda) grew by 8.2% to N327.1-billion during the first six months of 2020.

“Following a strong first quarter, we experienced a challenging operating environment in the second quarter characterised by Covid-19 induced lockdowns and the broader macroeconomic impact it has had,” said MTN Nigeria CEO Ferdi Moolman.

“Despite this, we have maintained double-digit service revenue growth of 12.6% for the first half of the year under review, driven by strong growth in our key revenue lines.”

MTN Nigeria’s data revenue increased 57.6% during the period, supported by an increase in data users and traffic, while revenue from digital and fintech services increased 121.8% and 29.6% respectively.

Voice revenue growth was 2.8% amid a change in traffic pattern following the lockdowns.

However, costs also increased leading to an overall decline in profit before tax and earnings per share (EPS).

EPS contracted 4.7% to N4.66 kobo and profit before tax declined 2% to N139.6-billion during the six months to June.

The earnings were also impacted by a change in the accounting treatment of the value-added tax (VAT) component of lease payments, the combined effect of the foreign exchange rate adjustments, the 2.5% increase in VAT and the associated costs of Covid-19 initiatives.

As a result, growth in Ebitda was 8.2%, while the Ebitda margin declined by two percentage points to 51.3% during the first half of the year.

Meanwhile, MTN Nigeria achieved 6.8-million in net additions, connecting over 71.1-million customers to its network.

“We also connected 3.8-million new users to the Internet, bringing our active data subscribers to 29-million. Our Mobile Money subscribers increased by 1.6-million to 2.2-million, the majority of which were in the second quarter,” Moolman commented.

MTN Nigeria further upgraded its network capacity to accommodate the growth in traffic, while continuing to expand its fourth-generation network coverage, albeit at a slower pace given the constraints presented by Covid-19.

“Our funding and liquidity remain well-managed, supported by strong cash flows and approved headroom facilities,” he assured.

“Our headroom to leverage is comfortably within banking covenants and we are able to meet our operational, investment and financial requirements and obligations. Our foreign currency exposure is within manageable limits, with 95% of our debt in local currency, so that our balance sheet can withstand currency volatility.”

Moolman warned, however, that the further impacts of Covid-19 are uncertain and will depend on the evolution of the virus throughout the remainder of the year, any reinstatement or intensification of lockdowns and any other economic impacts caused by the global situation.

“However, we remain confident in the resilience of the business and the ability of our employees to adapt as the situation develops.”

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