MTN Group Finally Returns $280m In 2020 Dividend From Nigeria
MTN Group finally returns $280m in 2020 dividend from Nigeria
MTN Group, based in South Africa, has repatriated approximately $280 million (R4.2 billion) in dividends from its Nigerian subsidiary from the previous year. When the company released its preliminary financial results for the six-month period ending June 30, 2021 on Monday, it announced the payout.
According to the pan-African telecoms giant, the funds from Nigeria are part of approximately $650 million (R9.3 billion) in cash that was returned to it by one of its subsidiaries.
As a result of the difficulties in obtaining foreign currency in Nigeria and some other markets where it operates, the Johannesburg-based group had been having difficulty collecting dividends from its subsidiaries.
Consequently, MTN was forced to postpone the payment of dividends for the upcoming fiscal year 2020. Other factors contributing to the suspension were cited by the company, including the timing of proceeds from an ongoing asset realisation programme (ARP) and the impact of the Covid-19 pandemic on the business.
The ARP, which was announced in March 2019, aims to simplify the group's portfolio while also reducing debt and increasing returns. Over a three-year period, it is expected that the program will generate at least R15 billion ($1 billion) in revenue for the government.
“Cash upstreaming from Nigeria has remained difficult in terms of securing foreign currency in the market,” says the author. Since the beginning of 2020, we have brought in the equivalent of approximately R286 million from Nigeria, with approximately R4.2 billion still owed to the country as of December 31, 2020, according to a statement released by the company in March.
Shareholders will be relieved that the group has now fully secured its cash dividend from Nigeria, which is one of two positive developments concerning MTN that will bring relief to them.
Respite in U.S. court case
In addition to the news from Nigeria, MTN announced that "positive developments" had occurred in a United States court case involving the company and its subsidiaries, MTN Afghanistan and MTN Dubai, according to the company.
A magistrate assessing complaints of alleged violations of U.S. anti-terrorism regulations had recommended that the case be dismissed, according to a statement from the company.
Because the company does not conduct business in the United States, the Group argued that the court lacked jurisdiction over it. According to the complaint, “no conduct by MTN defendants is alleged to have violated the Anti-Terrorism Act,” according to the company.
Following the announcement of the repatriation of funds from Nigeria and the progress made in the U.S. court case, MTN shares reportedly finished the day 6 percent higher at R111.30 (roughly $7).
The group's complete half-year results are expected to be released on August 12, and the company has warned investors to expect a profit or earnings per share drop of between 75 percent and 85 percent in the quarter (EPS). This is due to an impairment charge involving the company's Yemeni operations as well as the decoupling of its Syrian operations.
In addition to its ongoing efforts to exit markets in the Middle East over the next three to five years, the MTN Group is selling its 75 percent stake in MTN Syria as part of a plan to fully focus on core African markets over the next three to five years.
MTN expects to raise approximately R15 billion ($1 billion) from the sale of its shareholdings in markets outside of Africa, with the proceeds going toward paying down its massive debt of nearly R50 billion ($3.5 billion) for the fiscal year ending December 2020, as well as allocating additional capital investments in Africa by 2025.
Specifically in Nigeria, MTN has set aside 600 billion ($1.5 billion) over the next three years through its local unit to expand broadband access in the continent's most populous economy.
Mobile subscribers decline in Nigeria
MTN Nigeria's results for the first half of the year showed that service revenue increased by 24.1 percent year on year, despite the fact that the company's mobile subscribers decreased by 7.6 million during the period (nearly 10 percent ).
Nigerian authorities ordered telecom companies to suspend the sale of SIM cards in the country in December 2020 (until April this year). As part of efforts to verify the identities of all mobile subscribers, who were asked to link their phone numbers with national identification numbers, the directive was issued.
“In terms of operations, our mobile subscribers reached 68.9 million at the end of the first quarter, a 9.9 percent decrease from December 2020. This was due to the regulatory restrictions on new SIM sales and activations, which were lifted on April 19, 2021, according to MTN Nigeria's CEO, Karl Toriola, who spoke on an analyst conference call with analysts.
Despite a decline in user numbers, the MTN Nigeria company was able to increase service revenue to R27 billion ($1.9 billion), owing to an increase in data usage, to R790.3 billion ($1.9 billion).
Revenue from mobile money transactions increased by 280.8 percent year on year to 55.6 million, while earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 27.6 per cent to 417.2 billion ($1 billion). Its total number of MoMo active subscribers surpassed 6.1 million in March.
In order to keep up with inflation and drive 4G and rural network expansion, MTN Nigeria aims to maintain "double-digit service revenue growth ahead of inflation," according to Toriola.
