MTN confirms plans to sell 14% of its Nigerian business despite making N790bn in H1
MTN Nigeria’s shareholders have approved an equity shelf programme to sell up to 14% of MTN Group investment in Nigeria. However, the sale will be subject to market conditions over the medium term.
The telecom giant had earlier revealed its intentions to sell down its shares in its Nigerian business as a means to diversify shareholders and increase ownership of the company by more Nigerian retail and institutional investors.
However, details on how this sale will be eventually executed will be dependent on shareholders agreeing to the terms.
This new development comes at a time when MTN Nigeria’s business is seeing double-digit growth. According to the unaudited results for the half-year ended June, the telcos service revenue rose 24.1% to N790.3 billion.
A breakdown shows that voice revenue grew by 13.1% to N413.5 billion and data revenue continued the positive momentum from the second half of 2020, rising by 48.3% to N228.5bn as data traffic rose by 83.0% YoY.
Over 7 million subscribers lost
Despite the rise in revenue, the number of subscribers dipped significantly. In the first half of the year, MTN’s mobile subscribers had declined by 7.6 million to 68.9 million, impacted by the regulatory restrictions on new SIM sales and activation.
However, the impact of the drop on revenue was partly offset by higher usage in its active SIM base as well as migration to a higher quality of experience.
The company revealed that voice revenue benefited from an 11.8% increase in traffic and its customer value management (CVM) initiatives.
For Data, revenue was driven by increased usage from the existing base and supported by the acceleration in 4G rollout and enhanced network capacity following the acquisition and activation of an additional 800MHz spectrum in Q1.
MTN’s 4G network now covers 65.1% of the population, up from 60.1% in December 2020
MTN Nigeria chief executive, Karl Toriola added that the progress made during the period was achieved by managing the impact of the pandemic.
“In the first half of 2021, we made good progress strengthening the resilience of the business, managing the impact of the Covid-19 pandemic and enhancing support to our people, customers and other stakeholders,” he said.
24% increase in costs
Even as revenue grew, the telco also saw double-digit growth in expense. During the first half of the year, operating expenses increased by 24.6% to N374 billion.
According to the company, the increase in expense was due to an accelerated site rollout, the effects of Naira depreciation on lease rental costs and Covid-19 related expenditure.
Depreciation and amortisation rose by 17.1% and net finance cost was down by 9.8%, resulting from a lower average cost of borrowings.
Similarly, Capital expenditure in the period was 39.1% higher to N186.4 billion, as MTN increased investment in its network to maintain service quality and aggressively expand its 4G footprint and rural coverage.
The digital business continues to grow
Like other segments, MTN’s digital businesses continue to grow on the back of a strong partner ecosystem and the uptake of its products and services.
Its digital revenue rose by 61.8% driven by its rich media and value-added services. Ayoba, MTN’s instant messaging platform, now has more than 2.3 million active users bringing the total number of digital users to over 3.9 million, up 38% YoY.
MTN’s Fintech arm led by MoMo saw a revenue increase of 48.2%, driven by increased adoption of Xtratime and other core fintech services.
Xtratime is a service that allows you to borrow airtime on credit when you run out of airtime and payback on your next recharge
A breakdown shows that its MoMo agent network has increased by over 120,000 to more than 515,000 in H1.
Similarly, its use has increased significantly with transaction volume seeing an outstanding 280.8% YoY increase to 55.6 million during the first half of the year.
This growth stemmed from the increase in the active subscriber base. MoMo now has more than 6 million users, more than double the number of users it had last year.
Other aspects like enterprise business also witnessed increases during the period. Enterprise revenue increased by 6.0%, demonstrating the continued recovery from the impact of the COVID-19 lockdown.
Alongside diversifying its shares, MTN plans to further localise its Nigerian management team with the appointment of Nigerians to two key senior positions – chief marketing officer and chief information officer previously held by expatriates.
The latest appointment of Thrive Agric’s interim Chief Executive Officer, Adia Sowho as its first female Chief Marketing Officer (CMO) is among the new changes.
The company has also revealed plans to spend more infrastructure by connecting 1,000 rural communities to its network this year and an additional 2,000 communities in 2022.
In the next three years, MTN says it will invest more than N600 billion to expand broadband access across the country in support of the government’s broadband plan.
Even as its business grows, the company says it strives to realise efficiency through cost discipline and enhanced digitisation. It added that it is introducing a strategy called Ambition 2025 for the next five years.
“We have a clear focus on sustaining double-digit service revenue growth ahead of inflation, driving 4G and rural network expansion, as well as positioning our fintech and digital businesses for accelerated growth in order to unlock their full value”MTN
For the period under review, an interim dividend of N4.55 kobo per share has been approved to be paid out of distributable net income to shareholders. This represents a growth of 30% over N3.50 kobo per share paid in H1 2020.
With the SIM ban already lifted, MTN anticipates subscriber growth to normalise in the short term as more of its acquisition centres are certified for SIM registration.
However, given the ongoing uncertainties presented by the new wave of the COVID-19 outbreak and the NIN registration exercise, MTN remains mindful of possible changes for the rest of the year.
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