Noticeable increase in revenues from airtime and subscription, data, interconnect and roaming has increased the gross revenue of telecoms market leader, MTN Nigeria, to N566.95 billion at half year 2019, representing an increase of 12 percent over N505.67 billion realised same period in 2018.
MTN Nigeria as at May 2019 controlled 37.38 percent of the nation’s telecommunications market while the telecoms sub sector contributed 10.11 percent to the nation’s GDP as at the end of the first quarter of 2019.
Further analysis of the H1 2019 results showed that the company’s revenue sources are airtime and subscription, data, SMS, interconnect and roaming as well as from handsets and accessories. Other sources include digital services, value added service and other revenues.
The management of the company has proposed N2.95 interim dividend per 2 kobo ordinary share for shareholders whose names appear on the register of members as at August 8, 2019. The amount proposed per share, in view of 20.35 billion shares outstanding amounted to N60 billion and a dividend payout ratio of 61 percent. According to the release, the interim dividend, which is subject to the appropriate withholding tax, will be paid electronically on August 18, 2019. MTN Nigeria’s share price gained 1.60 percent today to close at N127 per share.
On why the results failed to lift the market, an analyst attributed this to the general state of the Nigerian economy.
“In our opinion, while MTN recorded impressive results (double digit growth in both revenue and net profit), the broader market sentiment has been largely bearish due to the uncertainties around the Nigerian economy. Most foreign and local investors prefer to invest in the safe haven of fixed income securities as uncertainties in the political space and banking sector in particular have contributed to the poor performance of the market so far. Despite the mild rally on MTN by 1.60% due to the result, it was insufficient to change the mood in the general market” said David Adu, a telecoms analyst with Meristem Securities.
In the first six months of this year, MTN Nigeria realised N359.03 billion as revenue from airtime and subscription, representing 9.73 percent increase over N327.20 billion made same period in 2018. However, revenue from airtime and subscription unit at half year 2019 amounted to 63 percent of MTN Nigeria’s overall revenue whereas in similar period in 2018, this product offering generated 65 percent of the gross earnings, indicating that competition may have reduced new opportunities yet to be explored by industry players.
On a year on year basis, that is, from June 2018 to June 2019, MTN Nigeria’s voice subscribers declined marginally by 2.5 percent from 66.49 million voice subscribers last year June to 64.81 million subscribers as at May 2019. This decline had no impact on MTN Nigeria’s revenue generation because it made more money per subscriber at half year 2019 compared with same period last year.
On the average, MTN Nigeria realised N5, 539.56 per voice subscriber in the first six months of 2019 which translated to N923.26 per voice subscriber on a monthly basis. This compares with N4, 921.19 per subscriber in the first six months of last year which amounted to N820.20 per voice subscriber on a monthly basis.
Further, data revenue spiked by 30.01 percent from N79.47 billion last year June to N103.32 billion at half year 2019. This implies that at half year 2019, data revenue contributed 18 percent to MTN Nigeria’s revenue as against 16 percent same period in 2018. While this amounted to additional N23.85 billion revenue from data subscribers, competition within the industry ensured a decline in revenue per data subscriber on a monthly basis from N340.17 in H1 2018 to N328.43 monthly per data subscriber in the first six months of 2019. This was in spite of the fact that between June 2018 and 2019, MTN Nigeria’s data subscribers rose by 34.7 percent from 38.9 million to 52.4 million.
“In the first half of 2019, we sustained a solid performance, delivering double-digit growth in service revenue, underpinned by growth in voice and data revenue. We added 3.3 million customers to our network, increasing our subscriber base to 61.5 million. Pleasing we saw data subscribers increase in the period by 2.1 million to 20.7 million. We made significant network investments to improve network quality and expand our 4G coverage.
“Our recent work to revamp our data prices and accelerate our 4G network has put us in a strong competitive position to offer more value to our customers, supporting data and voice revenue growth which will ultimately strengthen our business. We are pleased with obtaining a super-agent license from the Central Bank of Nigeria, which will enable us to build an agent network and accelerate the growth of our Fintech business”, Ferdi Moolman, MTN Nigeria CEO, said.
Growth in SMS services was marginal at 1.73 percent as revenue rose from N6.94 billion by June 2018 to N7.05 billion in June 2019. Handset and accessories generated N533.4 million at half year 2019 as against N122.5 million in corresponding period in 2018, an increase of 335.6 percent. Value added service increase by 11.43 percent from N14.75 billion last year to N16.4 billion this year’s June.
However, revenue from digital services as well as other revenues fell by 27.91 percent and 42 percent respectively. In other words, MTN Nigeria generated N16.9 billion as digital revenue during the period compared with N23.6 billion in last year’s June. Other revenues declined to N1.5 billion as at June 2019 compared with N2.6 billion in 2018.
Profit after tax (PAT) improved significantly by 34.8 percent from N73.4 billion in June 2018 to N98.9 billion by June 2019.
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