The wholesale business unit (WBU) of MTN Nigeria has emerged as the best performing units among its three business units at the end of the third quarter ended September 30, 2019. WBU recorded 98 percent gross margin, indicating that MTN Nigeria retained virtually every revenue it earned from this segment of its business. The other business units are Consumer Business Unit (CBU) and Enterprise Business Unit (EBU).
Appraising its unaudited third quarter financial statements for the period ended September 30, 2019, MTN Nigeria generated N29.9 billion revenue from the WBU, and less of direct costs of N747.5 million, the unit ended the period with a gross profit of N29.15 billion. This amounted to 98 percent gross margin.
The WBU revenue grew by 35 percent when compared with N22.20 billion realised in the third quarter of 2018. In addition, both the direct costs and gross profit of this line of business grew by 35 percent when compared with direct costs and gross profit made in corresponding in 2018. In both the third quarters of 2018 and 2019, the gross margin for the WBU remained at 98 percent.
The consumer business unit (CBU) accounted for the bulk of the revenue as at the end of the third quarter as MTN Nigeria earned N723.7 billion revenue from the CBU, but with N150.9 billion as direct costs, the CBU made N572.8 billion as gross profit at the end of the third quarter 2019. Compared with 2018, the CBU generated N662.3 billion as revenue; N125.6 billion as direct costs while the gross profit stood at N536.6 billion. This implies a gross margin of 81 percent.
The implication is that CBU witnessed the least growth in revenue and gross profit among the three business segments. Apart from that, its gross margin declined from 81 percent last year September to 79 percent in September 2019. Similarly, the share of CBU’s revenue fell to 84 percent this year from 87 percent in September 2018.
The Enterprise Business Unit (EBU) posted the second best performance after WBU. At the end of the third quarter of 2019, EBU recorded a 29 percent growth in revenue which moved from N79.99 billion last year September to N102.85 billion as at September 2019. Direct costs fell sharply by 57 percent from N21.6 billion last year to N9.3 billion as at the end of September 2019. Consequently, gross profit grew by 60 percent from N58.35 billion in September 2018 to N93.58 billion in September 2019.
The above performance of EBU has two implications for MTN Nigeria. First, gross profit margin rose from 73 percent last year September to 91 percent as at the end of September 2019. Second, the share of EBU’s revenue from the total revenue increased from 10 percent last year September to 12 percent by September 2019.
When MTN Nigeria’s third quarter performance is viewed from the point of its services, handset and accessories posted the highest growth in revenue at the end of the period. In the nine months ended September 2019, revenue from handset and accessories grew by 379 percent from N177.3 million last year September to N848.8 million same period this year. Revenue from data services generated N162.3 billion by September 2019 as against N122.2 billion in September 2018, representing an increase of 33 percent. Revenue from interconnect and roaming rose by 22 percent; value added services (VAS) increased by 12 percent, while airtime and subscription rose by 8 percent.
On the flip side, revenue from “other services” nosedived by 38 percent; digital revenue fell by 21 percent, while the revenue from SMS revenue marginally fell by 2 percent.
TELIAT SULE
