Five takeaways from MTN’s investor call

Nigeria’s largest telecommunications company, MTN Nigeria, during a call with investors yesterday discussed how it recorded its stellar performance in 2021 and its future plans.

The leading telecommunications company profit after tax (PAT) grew by 45.5 percent to N298.7 billion in full-year 2021 from N205 billion in the corresponding period of 2020.

The company’s share price rose 3.95 percent higher to N197.5 per share on Monday, nearing its 52-week high of N209.9.

Its earnings per share (EPS) rose by 45.5 percent to N14.67 kobo and it proposed a final dividend of N8.57 kobo per share.

Here are five takeaways from the company’s call with investors.

Aggressive Capex rollout

The company made more capital expenditures in 2021 and this helped to boost profit.

“MTN has returned to being bold and we are asserting our leadership position. We aggressively rolled out Capex wherever we saw opportunities and we were also bold with our 5G rollout. However, we were disciplined in our Capex allocation,” MTN Nigeria chief executive officer Karl Toriola said on an investor call, Monday.

Capex grew 26.7 percent to N304.4 billion in 2021 compared to N240.1 billion in the full year of 2020.

Funding strategy

According to Toriola, their Capex was financed from a pool of operational cash and external borrowing, ensuring the protection of the balance sheet against market risks and volatilities.

The company’s funding strategy was to diversify funding sources to optimize debt mix and cost.

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“We tapped the domestic debt capital market and raised N200 billion in bonds across two oversubscribed issuances. We also raised N73.5 billion in commercial papers,” Modupe Kadri, the Chief Financial Officer of MTN Nigeria said.

The issuance of the N200 billion bond was the first such issuance to be made by a telecoms company in Nigeria and is the largest corporate bond issue in the debt capital market to date.

Local currency borrowing

“We also relied mainly on local currency to reduce foreign currency exposure and the impact of exchange rate volatility,” Kadri said during the call.

He further explained that about 91.1 percent of borrowings were made in local currency while 8.9 percent was made in foreign currency.

The company also revealed that they explored repayment options for short term credit lines to mitigate foreign currency exposure and default risk.

The telco giant’s net debt plunged 5 percent to N231.8 billion in full-year 2021 compared to N246 billion in the full year of 2020.

Ambition 2025

Through Ambition 2025, MTN aims to drive efficiencies and performance while reducing network complexity in order to better manage network operations and deliver digital services to meet the evolving demands of customers.

On their ambition 2025, Toriola explained that the company is committed to building the largest and most valuable platform, driving industry-leading connectivity operations, creating shared value and accelerating portfolio transformation.

In the full year 2021 period, MTN’s service revenue grew by 23.3 percent despite the 10.6 percent decline in our subscriber base.

Data revenue rose by 55.3 percent, maintaining an accelerated growth trajectory in Q4 as MTN continues to accelerate the expansion of our 4G coverage, enhance the quality and capacity of its network to support increasing data traffic, and grow active data users.

PSB license

On the Payment Service Bank (PSB) license, the CEO said it is yet to receive final approval from the Central Bank of Nigeria.

“There are processes, clearances, submissions and structures. We are optimistic but we are putting no timelines yet,” he said.

The license was issued by the CBN in 2021 to telcos to enable them to leverage their massive infrastructure rollout and dealer network to offer some banking services, especially to the underbanked.