MTN Now Africa No1, Makes N94.6bn Profit
...N59.4bn from Nigeria
By Tayo Ajakaye
Mobile Telecommunica-tions Network (MTN) Group has taken over the leadership of the African telecommunications market, in terms of revenue and profit, from age long rival, Vodacom, as it announced a profit of R4.3 billion (about N94.6bn) for the year ending March 31, 2004. Vodacom had Monday announced a profit of R3.0 billion (about N61.5bn) for the same period.
In the results announced in South Africa yesterday, MTN Group declared a Profit After Tax (PAT) of R4.3 billion to lead the African telecom market even with a smaller subscriber base than Vodacom. The profit represents an increment of 94 percent over last year's figure.
Of this, MTN Nigeria with R2.7bn (about N59.4bn), including deferred tax assets, made the highest profit margin. (Profit from Nigeria would be much higher as MTN Nigeria is contributing only 75 per cent to the Group, as a result of the shareholding structure.) The profit from MTN Nigeria also represents 106 per cent over last year's.
MTN South Africa on the other hand made R2.2bn (about N48.4bn) or 61 per cent over last year's profit.
THISDAY had exclusively reported Tuesday that going by its half year returns in Nigeria, MTN may take over from Vodacom the telecom market leadership in Africa.
With yesterday's results MTN also has over 9.5 million subscribers, which represent an increment of 42 percent with MTN Nigeria contributing about 1.966 million subscribers.
Total revenue also increased by 23 per cent to R23.8bn (about N523.6bn) out of which R6.97bn (about N153.34bn or 29.3 per cent) came from MTN Nigeria. The revenue from Nigeria represents an increase of 30 per cent over last year's.
MTN South Africa on the other hand made a revenue of R15.9bn (about N349.8bn) representing 23 per cent over last year's.
Adjusted headline earnings per share increased by 77 percent to 253.1cents, while dividend of 41 cents were declared to shareholders.
A statement issued by the Group Executive, Corporate Affairs, Dr Yvonne Muthien, in South Africa confirmed that "MTN Nigeria continues to experience strong demand for its services, requiring a controlled sign-up of new subscribers to match the available network capacity.
"Accelerated network roll-out continues in a challenging operating environment, with the number of base stations increasing from 478 at March 31, 2003 to 839 a year later. The number of operational switches has also increased to 16 from 11. During the year under review, a limited recourse of $345 million medium-term, project-finance facility was raised by MTN Nigeria to fund its aggressive network roll-out", she added.
According to the statement, "during the period, MTN Nigeria's active subscriber base increased by 90 percent to 1,966,000. Average Revenue Per User (ARPU), decreased from $57 to $51, driven by depreciation of the Naira against the US dollar, the lowering of tariffs from December 2003 and deeper penetration into the market."
The statement also disclosed that the Group recorded a 77 percent increase in adjusted headline earnings per share to 253.1 cents while consolidated revenue increased by 23 percent to R23,871.
Earnings before interest, tax, depreciation and amortisation (EBITDA) of the Group increased by 44 percent to R8.983 million, resulting in profit after tax (PAT) of R4.312 million, 94 percent up on the previous financial year.
The overall EBITDA margin for the Group increased to 37.6 percent, from 32.0 percent last year and total capital expenditure for the Group of R5.048 million was recorded, of which MTN Nigeria accounted for 67 percent.
The Group's headline earnings per share have been adjusted to exclude the financial impact of the deferred tax asset recognized by MTN Nigeria.
MTN Group CEO, Phuthuma Nhleko, was quoted in the statement as saying, "as we mark our tenth year of operation, we are particularly pleased to report that we are nearing the 10 million subscriber mark having recorded 9,543,000 subscribers, of which almost 2 million are in Nigeria. In addition, based on our strong performance, a dividend of 41 cents has been declared to shareholders,"
It said the South African operation showed higher than anticipated growth, with revenue increasing by 22 percent to R15.184 million. Its (MTN SA) EBIDTA margin increased to 30.1 percent from 27.6 percent.
It said the South African market remains buoyant with MTN SA achieving its highest subscriber growth ever during the period under review.
Net new connections were put at 1.547 million subscribers for the year of which 193,000 were post-paid and 1,354,000 pre-paid. MTN SA's total subscribers who have made a call at least once in three months as at March 31, 204 were 6.270 million.
This is a year-on-year increase in the subscriber base of 33 percent in total, comprising 20 percent on post-paid and 36 percent on pre-paid segments since March 31, 2003.
MTN's overall South African market share remains steady at around 38 per cent, the statement said.
The MTN statement also disclosed that the Group's international operations increased revenue by 25 percent, from R6.972 to R8.687 million, despite the appreciation of the rand. Its international operations recorded a healthy EBIDTA margin of 51.4 percent and its contribution to adjusted headline earnings per share increased by a whopping 116 percent to 117.3 cents.
Buoyed by its strong Nigerian operations, the MTN Group said it has intensified its exploration for new mobile licence prospects. Towards this end, the MTN Group's Strategic Investments Division continues to explore growth opportunities in mobile business solutions, including international business development.
Also, a joint venture has been initiated with MTN Nigeria to explore electronic airtime top-up alternatives. This followed the Nigerian government's ban on the importation of recharge cards by December 31, 2004.
The Group further stated that it would "reinstate a conservative dividend policy which will allow it to pursue growth opportunities while returning dividends to shareholders, thereby optimising its capital structure. A conservative dividend cover of 6-7 times on adjusted headline earnings will be followed with a declaration of an annual dividend. Accordingly, a dividend of 41 cents per share for the year has been declared.
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