MTN confirms plans to sell 14% of its Nigerian business despite double-digit growth in the first half of the year
MTN confirms plans to sell 14% of its Nigerian business despite double-digit growth in the first half of the year
MTN Nigeria's shareholders have approved an equity shelf program for the sale of up to 14% of MTN Group's stake in the country. The sale, however, will be conditional on market conditions in the medium term.
The telecom giant previously announced its intention to sell down its stake in its Nigerian operations in order to diversify its shareholder base and increase the company's ownership by Nigerian retail and institutional investors.
However, details on how it intends to proceed have only recently been confirmed following shareholder approval of the terms.
This new development comes as MTN Nigeria's business continues to grow at a double-digit rate. The telcos' service revenue increased 24.1 percent to N790.3 billion in the half-year ended June, according to unaudited results.
The breakdown shows that voice revenue increased by 13.1 percent to N413.5 billion, while data revenue increased by 48.3 percent to N228.5 billion, as data traffic increased by 83.0 percent year on year.
Despite the increase in revenue, the subscriber base shrank significantly. MTN's mobile subscriber base decreased by 7.6 million to 68.9 million in the first half of the year, impacted by regulatory restrictions on new SIM sales and activation.
However, the revenue decline was partially offset by increased usage in its active SIM base and migration to a higher-quality experience.
Voice revenue increased 11.8 percent as a result of increased traffic and the company's customer value management (CVM) initiatives.
For Data, revenue growth was fueled by increased usage from existing customers and aided by the acceleration of 4G rollout and increased network capacity following the acquisition and activation of additional 800MHz spectrum in Q1.
MTN Nigeria's chief executive officer, Karl Toriola, added that the company made progress during the period by mitigating the pandemic's impact.
“Throughout the first half of 2021, we made significant progress in strengthening the business's resilience, managing the impact of the Covid-19 pandemic, and enhancing support to our employees, customers, and other stakeholders,” he said.
24% increase in costs
While revenue increased, the telco's expenses increased by double digits. Operating expenses increased by 24.6 percent to N374 billion in the first half of the year.
The company attributed the increase in expense to an expedited site rollout, the effects of Naira depreciation on lease rental costs, and Covid-19-related expenses.
Similarly, capital expenditure increased 39.1 percent to N186.4 billion during the period, as MTN increased network investment to maintain service quality and aggressively expand its 4G footprint and rural coverage.
Digital business continues to grow
As with the rest of the business, MTN's digital businesses continue to expand as a result of a strong partner ecosystem and increased adoption of its products and services.
Its digital revenue increased by 61.8 percent, owing to the company's investments in rich media and value-added services. MTN's instant messaging platform Ayoba now has over 2.3 million active users, bringing the total number of digital users to over 3.9 million, a 38 percent increase year on year.
MTN's Fintech division, led by MoMo, saw a 48.2 percent revenue increase, owing to increased adoption of Xtratime and other core fintech services.
According to a breakdown, its MoMo agent network increased by over 120,000 to over 515,000 in H1.
Similarly, its usage has grown significantly, with transaction volume increasing by an astounding 280.8 percent year over year to 55.6 million in the first half of the year.
This growth was fueled by an increase in the number of active subscribers. MoMo has surpassed 6 million users, more than doubling its user base from last year.
Other sectors, such as enterprise business, saw increases during the period. Enterprise revenue increased by 6.0 percent, indicating that the impact of the COVID-19 lockdown is still being felt.
Along with diversifying its shareholder base, MTN intends to further localize its management team in Nigeria by appointing Nigerians to two key senior positions previously held by expatriates – chief marketing officer and chief information officer.
Among the new changes is the recent appointment of Adia Sowho as Thrive Agric's first female Chief Marketing Officer (CMO).
Additionally, the company announced plans to invest in infrastructure by connecting 1,000 rural communities to its network this year and another 2,000 by 2022.
MTN says it will invest more than N600 billion over the next three years to expand broadband access across the country in support of the government's broadband plan.
Even as its business expands, the company maintains a focus on efficiency through cost discipline and increased digitisation, according to the company. It added that it is launching a five-year strategy called Ambition 2025.
In conclusion
An interim dividend of N4.55 kobo per share has been approved to be paid to shareholders from distributable net income for the period under review. This is a 30% increase over the N3.50 kobo per share paid in H1 2020.
MTN anticipates that subscriber growth will stabilize in the short term as more of its acquisition centers become certified for SIM registration.
However, in light of the ongoing uncertainty created by the new wave of the COVID-19 outbreak and the NIN registration exercise, MTN is keeping an eye out for possible changes throughout the remainder of the year.
