Investors looking for stocks to buy amid the coronavirus outbreak ravaging economies across the globe are advised to invest in MTN Nigeria.
The largest telecommunication company in Africa’s largest economy has been adding impetus to shareholders value since it listed on the Nigerian Stock Exchange last year to become the second largest company by market value.
While other big companies are capitulating to the vagaries of macroeconomic environment as they are finding it difficult to magnify earnings, MTN Nigeria has been recording double digit growth in service, voice, and data revenue.
The telecommunications giant is taking advantage of the country’s growing young population that crave for data plan as it continues to add millions of subscribers to its network.
MTN Nigeria has an excellent cost control mechanism as operating expenses growth are below the current rate, which also helped spur profit margins.
Double digit growth in revenue validates investment in 4G
For the year ended December 2019 MTN Nigeria’s revenue increased by 12.62 percent to N1.16 trillion from N1.04 trillion the previous year.
A breakdown of the sales shows active data was up 6.5 million or 34.75 percent to 25.20 million as against 18.40 million the previous year while data revenue was up 42.40 percent in the period under review; data contributed 18.80 percent to service revenue,
Total operating expenses increased by 4.41 percent to N408.50 billion as at December 2019, which is lower than the January inflation rate of 12.13 percent.
The reduction in expenses means the company is making progress in its cost progress initiatives and reduction in non-recurring.
A breakdown of cost structure shows direct network operating cost fell by 20.78 percent to N242.01 billion in December 2019 from N305.52 billion the previous year.
MTN Nigeria controls its costs efficiently and run its operations effectively as operating profit spiked by 48.54 percent to N290.29 billion in the period under review from N266.11 billion the previous year.
Profit before tax increased by 31.06 percent to N202.11 billion in December 2019 from N145.68 billion the previous year while net income was up 38.73 percrnt to N201.11 billion as against N145.68 billion the previous year.
Cost curtailment buoy profit margins
The company has generated more operating cash from Naira of revenue earned as earnings before interest, taxation, depreciation and deprecition (EBITDA) margin increased to 44.80 percent in the period under review from 41.80 percent the previous year.
EBIT margins otherwise known as operating profit margin moved to 33.80 percent in the period under review as against 25.61 percent as at December 2018.
MTN Nigeria has turned Naira invested in sales into higher profit as net margins increased to 17.27 percent in the period under review from 14.02 percent the previous year.
Pretax profit margin followed the same growth trajectory as it moved to 24.80 percent in the period under review from 21.30 percent the previous year.
The telecoms giant has effectively converted sales into cash as operating cash flow increased to 51.67 percent in the period under review from 5642.10 percent the previous year.
Maintains position as the largest Mobile Network Operators
With an N316.16 billion free cash-flow, the company has the financial strength to embark on future expansion plans, pay dividend to shareholders and settle its obligations.
It has a capital expenditure spending of N208.30 billion as at December 2019, as it continues to invest in projects across the country.
For a period spanning 19 years since the first commercial rollout of its telecoms services in Nigeria in 2001, MTN Nigeria has invested as much as N4.55 trillion ($14.67 billion) in fixed assets and facilities across Nigeria till date.
Over the next three years, the telecoms giant plans to invest N600 billion on its network. MTN Nigeria said the investment will enable it to accelerate it 4g network, deepen population coverage and support Federal Government broadband initiatives.
MTN Nigeria’s mobile subscribers moved by 6.10 million to 64.30 million, a figure that is 32.15 percent of the country’s population of 200 million.
According to statistics released recently by telecoms industry regulator, the Nigerian Communication Commission (NCC), MTN maintained the position of the largest Mobile Network Operator (MNO) with a subscriber number of 70.7 million, followed by Globacom with a subscriber number of 51.8 million, while Airtel maintained its position as the third largest MNOs in the country, with a subscriber number of 49.9 million, followed by 9mobile, which is place the fourth largest MNOs in the country with a subscriber number of 13.2 million. Smile Communications was ranked the fifth largest telecoms operator, with a subscriber number of 170,726, followed by 21 Century Technologies as the sixth largest telecoms operator with a subscriber number of 96,234, while ntel comes next to 21st Century as seventh largest telecoms operator with a subscriber number of 3,595.
According to the latest data from the commission, mobile voice subscription across networks moved up slightly from 184.7 million in December 2019, to 185.74 million in January 2020.
