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As the days of its potential listing draws closer, investors are already getting a taste of what to come as MTN Nigeria, forecasts strong financial performance in the coming five years, according to a May Pre-IPO presentation by the firm seen by BusinessDay.
The largest subsidiary of MTN Group is forecasting upside to revenues from subscriber growth (due to population and mobile penetration increases), as well as Average Revenue per User (ARPU) upside from increase in data usage and economic expansion in Nigeria.
Having recorded highest ARPU of $4.24 in the industry, MTN Nigeria had a strong net income of N32 billion in first quarter 2018 alone, compared to N81 billion recorded for the full year 2017 showing the company is in pole position for a positive year in 2018.
In first quarter 2018, the presentation showed that MTN Nigeria showed stronger financial performance as revenues rose faster than costs.
Despite recording a cost increase of 8 percent year on year to N145 billion in first quarter of 2018 compared to N134 billion in first quarter in 2017; the company recorded strong revenue growth of 15 percent to N249 billion in first quarter 2018 compared to N218 billion in Q1 2017.
MTN Nigeria, who controls 57 percent of market share in the country also had an improved earnings before interest taxes, depreciation and amortisation (EBITDA) of N104 billion in Q1 2018 compared to N95 billion in Q4 2017, implying that MTN Nigeria had a stronger operating performance.
EBITDA essentially is a way of evaluating a company’s performance without having to factor in financing decisions, accounting decisions or tax environments.
Also, MTN Nigeria’s EBITDA margin which provides investors with a clear view of a company’s operating profitability and cash flow increased to 41.8 percent in first quarter 2018 compared to 40.3 percent in last quarter of 2017.
In the first quarter of 2018, MTN Nigeria recorded Adjusted Cashflow Margin of 19 percent compared to full year 2017 of 16 percent showing how efficiently the company can convert sales to cash.
Capital investment expenditure stood at N57 billion in Q1 2018 compared to N203 billion for full year 2017 showing the company’s strong commitment towards growth and expansion in the remaining months of 2018.
Compared with its other competitors in the telecom sector, MTN Nigeria boasts of over 54.5 million subscribers as at first quarter 2018 and 14.1 million active data users.
MTN Group has continued to make good progress with the preparations for the IPO and has been engaging with capital market regulators –the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), sources tell BusinessDay.
According to a valuation carried out by BusinessDay Research & Intelligence Unit (BRIU), which is the first major pre-IPO valuation attempted by a research firm using publicly available data, MTN Nigeria is forecasted to have values ranging from $8.56 billion to $10.88 billion. BRIU used various valuation methodologies including the discounted cash flow valuation (DCF) and relative valuation to estimate the Value of MTN Nigeria.
BusinessDay research predicts that MTN intends to achieve a “retail friendly” offer price for the IPO, of around N80 per share, the average price for shares listed on Nigeria’s bourse which would split its nominal value to 2 kobo from N1.
Analyst have said the share sale will go a long way in deepening the Nigerian financial market especially since the market has not recorded any initial public offers for two years since the January 2015 listing that saw the birth of Transcorp.
DIPO OLADEHINDE
