MTN Nigeria’s financial performance in 2018 may have just strengthened the resolve of investors who had been bought on the idea of buying the telco’s shares when they are finally listed this year.
The profitable Nigerian unit of the South Africa-based telecom giant posted revenues of N1.04 trillion in 2018, the largest of any listed Nigerian company.
Its closest contender, Dangote Cement, posted revenues of N618 billion from its Nigeria operations alone in 2018, while it raked in N901 billion from its entire Africa operations.
“MTN will be priced at a premium when it is listed because of its huge revenue potential which the 2018 financial report shows is expanding at breakneck speed,” said Tajudeen Ibrahim, head of research at Lagos-based investment bank, Chapel Hill Denham.
“The company’s strong performance gives investors a taste of what is to come and many would be licking their lips as the company finalises its listing,” Ibrahim added.
MTN Nigeria expects to list its shares on the Nigerian Stock Exchange in the first half of 2019, subject to regulatory approvals. This will be achieved via a listing by introduction and will be followed by a public offer once market conditions are conducive.
Rob Shutter, MTN Group’s CEO, in an exclusive interview with BusinessDay shortly after the telco’s financial result was published Thursday, gave assurances of a listing before June 30, 2018.
“I can’t see why there will be significant delays in our planned listing,” Shutter said.
“We have complied with the regulatory requirements and the team on ground has made good progress in getting us ready for listing. The only thing is something administrative and considering how far we are into the process, I think that is unlikely. A listing in May will be a good outcome,” he said.
About the Payment Service Bank licence that MTN applied for in November 2018, Shutter said “the Central Bank of Nigeria (CBN) has been responsive and the next step is to get an approval in principle”.
“Then we can register the company and roll out operations. We hope to get through on that in the first half,” he said.
MTN Nigeria extended the strong performance evidenced at the interim period and reported full-year results that beat analysts’ expectations, with double-digit growth in voice revenue of 18.7 percent. That helped drive strong service revenue growth and the further widening of the Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) margin. EBITDA grew by 30.7 percent to 18.394 billion rand (excluding CBN payment).
EBITDA margin increased by 4.5 percentage points to 43.5 percent (excluding CBN payments which came to 194 million rand or N4.78 billion).
MTN Nigeria’s revenue, which contributed 28.2 percent to the Group’s revenue, rose 17 percent compared to last year, thanks to a 40.1 percent increase in data revenue to 5.498 billion rand. Fintech revenue grew 32.3 percent to 1.03 billion rand, second only to the South African market. That was enough to overpower a 58.3 percent slump in digital revenue to 908 million rand. Digital revenue declined because of further optimisation of value-added services (VAS), but analysts expect a return to growth in 2019.
In dollar terms, MTN Nigeria’s revenue comes to $2.9 billion, which is well below the $4.2 billion revenue in 2012.
“MTN Nigeria is clearly benefitting from deliberate investments in our network, cost optimisation initiatives and human capital,” the company said.
The company’s subscriber base rose by 11.3 percent to 58.2 million as at December 2018, from 52.28 million as at December 2017, which implies a net addition of 5.92 million to the subscriber base.
As at February 2019, the Nigerian Communications Commission (NCC) shows that MTN Nigeria’s subscriber base expanded even further and now sits at 66.7 million.
The company reported average revenue per user (ARPU) of N1,535.73 in the fourth quarter of 2018, up 3.5 percent from 2017.
Meanwhile, on December 24, 2018, MTN South Africa announced that MTN Nigeria had successfully resolved the matter with the CBN relating to the notional reversal of a 2008 private placement transaction, although the tax dispute between the Nigerian unit and the Attorney General is yet to be resolved and will come before the Nigerian courts on March 26, 2019. The audit committees of both MTN Nigeria and MTN Group have assessed the Attorney General’s claims and remain of the view that all taxes due have been paid, and as such no provision or contingent liabilities need to be raised.
“We will vigorously defend our position on this matter,” the company said.
LOLADE AKINMURELE & JUMOKE AKIYODE-LAWANSON
