MTN Nigeria Increases Dividend as EPS Spikes 21.3%

MTN Nigeria Increases Dividend as EPS Spikes 21.3%

In 2022, MTN Nigeria Plc.’s increased dividend payment to shareholders as earnings per share (EPS) jumped 21.3% to N17.79, according to the telecom company’s audited financial statement. In its earnings release, Karl Toriola, its Chief Executive told the Nigerian Exchange the board’s plan to pay N10 dividend, pushing total dividend payment for the year to N15.60.

This represents an increase of 18.9% year on year as the telecom giant reaffirms the board of directors’ plan to deliver economic value to its shareholders. “In addition, we are exploring a scrip dividend option as an alternative form of shareholder return to a cash dividend, subject to regulatory and shareholder approvals.

“We anticipate that once regulatory approvals have been received, there will be further shareholder communication ahead of the Annual General Meeting (AGM) planned for 18 April 2023”, MTN Nigeria Chief executive said in a statement.

MarketForces Africa reported that the company revealed plan to allot incentive shares to investors who purchase its Initial Public Offering (IPO) completed in January 2022 and met the conditions entitling them to additional shares.

The offer was the first phase of a series of transactions to increase Nigerian ownership in MTN Nigeria. As part of this, MTN Group offered an incentive of 1 bonus ordinary share for every 20 ordinary shares allotted, up to a maximum of 250 bonus ordinary shares per investor.

The qualified investors who hold some or all the shares allotted to them for 12 months until 31 January 2023 are eligible to receive the incentive shares in their Central Securities Clearing System (CSCS) account after the requisite regulatory approvals are obtained.

Projecting into 2023, MTN Nigeria reveals a plan to achieve 83% 4G population coverage while continuing to roll out additional 5G sites and bring the 5G network experience to more smartphone users.

At the core of its operation is a decision to accelerate MoMo PSB growth, which it considers as a key focus in its fintech strategy.

“Our immediate priority is to reopen the NIBSS interface for outbound transfers and scale commercial activities focused on growing active wallets while continuing to enhance our governance framework and control environment”, the telecom giants stated in a release.

In its result, MTN Nigerian grew service revenue by 21.5% to N2.0 trillion while its earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 22.0% to N1.1 trillion.

In its regulatory filing, the telecom giants hint that revenue was supported by strong growth in data, fintech and digital services.  This was further supported by the recovery in the voice business segment as MTN Nigeria continued to manage the impact of the Nigerian Communications Commission’s (NCC) directive on NIN-SIM registration while actively growing the subscriber base, it added.

The result indicated that voice revenue maintained a steady recovery as more customers were reactivated and gross connections ramped up, saying the surge was backed by customer value management (CVM) initiatives.

As a result, voice revenue rose by 6.8%, bucking the slower growth trend of general voice traffic as data traffic continues to increase, MTN Nigeria told Nigerian Exchange. 

Supporting the top line, the company’s data revenue rose by 46.9% on the sustained growth of active data users and increased data usage.  It noted that increased revenue from data was supported by expansion of its 4G network and enhanced quality and capacity of the network to support the rising data traffic.

“Our 4G network now covers 79.1% of the population, up from 70.3% in December 2021. Data traffic rose by 66.6%, of which 79.5% was carried on the 4G network2, MTN Nigeria stated, noting that usage (MB per user) grew by 47.4%.

“We added over 5.5 million new smartphones to our network in 2022, bringing smartphone penetration to 52.4%. We added over 500k fixed broadband users, which brought our user base to 1.2 million”.

Likewise, Fintech revenue increased by 19.6%, with solid growth in Xtratime and core fintech services (wallet and super-agent business, up 218.1%).

MTN Nigeria hints that active fintech users rose by 57.5% to 14.9 million, of which approximately 2 million represent active MoMo wallets which jumped up by 11.1% in the fourth quarter of 2022. It said the number of registered MoMo wallets since the launch in May 2022 was 13.2 million, indicating the underlying momentum in the ecosystem.

“We expanded our MoMo agent network by adding over 88k active agents, bringing the total number to approximately 224k. Our agent network continued to play a pivotal role in our MoMo ecosystem, bringing the service closer to our customers”, the telecom giant explained.

In the period, digital revenue increased by 64.1% as the adoption of digital products continues to grow with user journey optimisation and the growth of the active base, up 37.5% to 10.3 million.

In the financial scorecard, it said rich media services, mobile advertising and content VAS, continue to drive revenue growth, adding that its instant messaging platform, ayoba, accounted for half of the active users.

Also, service revenue from enterprise business rose by 51.2%, led by the mobile and fixed connectivity services and underpinned by onboarding new customers across segments.

On expenses, the cost of sales rose by 25.6% due to accelerated gross connections and low base effect in the prior year, which was depressed by the suspension of new SIM sales and activations by the regulator and low device purchases.

The continued impact of Naira depreciation and higher dollar consumer price index (CPI) on lease rental costs, the acceleration in site rollout, and rising energy costs were cushioned by the disciplined execution of expense efficiency programme.

As a result, operating expenses increased by 18.8%. In addition, the energy costs impact is mitigated in tower contracts resulting in lower negative earnings before interest tax depreciation and amortisation (EBITDA) margin impact of about 0.3 percentage points.

Despite this, EBITDA increased by 22.0% while the EBITDA margin expanded marginally by 0.2pp to 53.2%, reflecting our ability to drive operating leverage and efficiency.

Depreciation and amortisation rose by 15.3% due to increased site rollout. Net finance costs increased by 34.6% on higher borrowings, rising interest rates, and foreign exchange loss due to the Naira depreciation.

As a result, MTN Nigeria records 22.3% profit before tax (PBT) growth. Meanwhile, its tax liabilities increased by 26.9% due to the PBT growth, the increase in the education tax rate to 2.5% and the tax paid on investments in government securities following the expiration of the 10-year tax exemption period.

In the period, capital expenditure (Capex) was N504.3 billion, up 23.5%, due to an acceleration in coverage expansion focusing on the 4G and 5G networks and rural telephony programme.

Core Capex, excluding the right-of-use assets, increased by 18.6% to N361.0 billion, slightly above plan to enable us to capture growth opportunities.

MTN Nigeria stated that its accelerated Capex investments allowed the company to capture growth opportunities in the data space while mitigating foreign exchange and supply chain disruption risks and the impact of rising inflation.

In the report, the management gives assurance that MTN Nigeria’s funding and liquidity remain well-managed. Looking into 2023, MTN Nigeria said, “Our operating environment continues to experience headwinds from the ongoing global macroeconomic and geopolitical volatility, putting increased financial pressure on our customers and business.

“Despite the challenges, we will continue to invest in the resilience of our business, taking advantage of opportunities embedded within our connectivity and platform businesses. We will continue to ramp up gross connections and implement our NIN recovery initiatives to grow the subscriber base”.

“This will be supported by an aggressive pursuit of our rural telephony programme to expand broadband access and drive further digital inclusion. In addition, we will continue accelerating 4G and 5G coverage to accommodate the demand for data while pursuing our home broadband strategy to capture a significant share of market growth”, it explained.

Speaking about the result, MTN Nigeria CEO, Karl Toriola said, “Navigating a challenging operating environment “2022 was challenging due to global macroeconomic and geopolitical volatility, resulting in higher inflation, supply chain uncertainties, foreign exchange volatility and availability”.

In Nigeria, Inflation reached a 17-year high of 21.5% in November before moderating slightly to 21.3% in December, bringing the average for the year to 18.8% and putting pressure on consumer spending.

To curb rising inflation, the Central Bank of Nigeria increased interest rates four times in 2022, bringing the Monetary Policy Rate to 16.5% – up by five pp during the year. This was further raised by 1pp in January 2023 to 17.5%.

MTN Nigeria Chief said the telecom company has continued to manage and invest in the resilience of our business and networks, expanding coverage and capacity with a focus on expense efficiencies and disciplined capital allocation.

“We became the first mobile network operator to launch a 5G network in Nigeria, providing coverage in key cities in the six geopolitical regions.

“Since its commercial launch in September 2022, we have rolled out 588 sites and brought the 5G network to 5G-enabled smartphones, starting with iPhone users”.

It said broadband coverage at the end of 2022 was 87.9%, up by 3.4 %.

“Our mobile subscriber net addition was 7.2 million for the year, representing a good recovery from the impact of an increase in churn in Q3 2022 and demonstrating the effectiveness of our churn management initiatives and interventions to ramp up gross connections.

“Active data subscribers grew by 5.2 million and benefitted from our efforts to drive data conversion in new and existing subscribers. We accelerated the coverage and capacity of our 4G network in response to the rising data traffic, bringing 4G population coverage to 79.1% (up by 8.7pp).

“4G traffic now constitutes 79.5% (up by 9.7pp) of the total traffic on our network. We continued to progress in building our fintech ecosystem and executing its growth strategy with the commercial launch of our MoMo PSB in May 2022. Our active fintech users rose by 5.5 million to 14.9 million, of which approximately 2 million are active MoMo wallets”, CEO said. #MTN Nigeria Increases Dividend as EPS Spikes 21.3%

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