Analysts have predicted a boost in revenue of major telecommunication companies in the country as businesses and companies shift to work from- home activity in a bid to curtail the spread of the coronavirus pandemic.
Gbolahan Ologunro, equity analysts at CSL Stockbrokers in a report said the outbreak of COVID-19 which has disrupted activities, leading to the shutdown of offices, factories, schools and social gatherings will result in increased data and voice consumption in the short term as people increasingly communicate remotely and seek entertainment during the lockdown.
“Thus,we expect MTN’S earnings to receive a significant boost. Post COVID- 19, we think favorable demographics, rising smartphone penetration along with increasing internet penetration ( 38.47percent as at Jan- 2020 compared with 32.34percent in Jan 2019), and continued investment by the company in deepening 4G coverage are positive catalyst for earnings growth,” he said.
In its full-year 2019 result, MTNN printed a double-digit growth in revenue up 13percent year-on-year to N1.2trillionn in FY 2019, on the back of growth in voice up 8percent year-on-year and data revenue surged 42percent yearon-year.
Management attributed the growth in voice revenue to 10.5pecent year-on-year increase in subscriber base to 64.3 million in FY 2019) and 7.6percent increase in voice traffic. On the other hand, the growth in Data Revenue was buoyed by 34.9percent year- on- year growth in data subscribers to 25.2 million in FY 2019, greater data traffic ( up 85.8% y/y) and improved 4G coverage following the activation of 800MHZ spectrum in Q2 2019.
Fintech Revenue grew 23.3percent year-on-year, supported by the increased adoption of the company’s flagship airtime lending service ( MTN Xtratime). Notably, the company launched a super- agent service in August 2019 which is largely concentrated on airtime and data sales using agents (known as MOMO agents).
With a network of 108,000 agents nationwide serving about one million customers in just four months of operation, we expect continued growth in Fintech Revenue, driven by continued uptake of the service. Additionally, we think the expansion of service offerings (based on management’s guidance) in this segment to include cash deposit and withdrawal services and facilitating e-commerce bodes well for future growth.
“Against this backdrop, we estimate data revenue will grow 50percent year on-year (higher than 42percent in 2019) to N329.1bn in 2020e while the contribution of data Revenue to overall Revenue will improve to 25percent from 19percent in 2019. All in, we project FY 2020 Revenue of N1.32trn, implying a growth of 13percent when compared with FY 2019,” he said.
