MTN half year profit surge on ballooning contribution from Nigeria

One of African’s biggest telecommunications operators, the MTN group is in a growth spurt as half year 2014 revenue surged on ballooning contributions from its Nigerian

For the first six months of the year, MTN group’s revenue rose by 10.71 percent to R72.76 billion (N1.1 trillion) from R65.71 billion (N998.79 billion) the same period of the corresponding year 2Q13.

The boost at the company’s top line level was bolstered by the impressive contribution of its Nigeria subsidiary.

MTN Nigeria recorded the highest revenue growth of 21.5 percent to R27.1 billion (N411.92 billion) in 2Q14 from R22.30 billion (N333.96 billion) in 2Q13 outperforming MTN South Africa whose operational revenue contracted by 7 percent to R19.15 billion (N298.10 billion) as weak currency and stiff competition at home slowed growth.

The group’s earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 16.45 percent to R33.76 billion (N513.15 billion) in 2Q14 from R28.9 billion(N440.64 billion) in 2Q13, while EBITDA margin increased by 3.5 points to 46.3 percent largely driven by 1.9 points increase in Nigeria EBITDA.

Total subscribers increased 3.5 percent to 215 million with 1.7 million net additions in Nigeria, its biggest market with 58.4 million customers.

The impressive or stellar performance by the Nigeria subsidiary is coming amid challenging environment such as regulatory pressures, change to the SIM platform and ban on SIM for the month of March.

MTN plans to sell 8,640 existing Nigeria towers and 543 that are still being built to an entity that will be managed by a large mobile telecommunications infrastructure provider.

The company intends to keep a non-controlling interest of 51 percent in the new entity and will enter into a lease agreement for the use of the tower infrastructure.

Operating expenses increased slightly by 4.13 percent to R39.3 billion N597.36 billion) in 2Q14 from R37.74 billion (N573.64 billion) as at 2Q13 as operating margin ratio reduced to 53.9 percent in 2Q14 compared to 57.9 percent at 2Q14.

Net margin, a measure of efficiency and profitability remained flat at 22 percent in 2Q14 as against 2Q13.

User numbers in Africa largest economy Nigeria will grow to more than 200 million by 2017 London based research company Info Telecoms and media estimates.

This means there are immense opportunities for the group company tap into and further bolster its share of the market.

Profit after tax (PAT) increased by 5.39 percent to R15.63 billion (N273.57 billion) in the period under review from R14.83 billion (N225.41 billion) as at 2Q13.

Earnings per share EPS moved by 4.40 percent to 7.31 cents (N111.21) in 2Q14 as against 7.0 cents (N106.4) cents in 2Q13.

Interim dividends declared were up 20.22 percent to 4.45 cents (N67.64) in 2Q14 from 3.70 cents (N56.24).