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MTN Nigeria Witnesses 4.7% Decline In Profit Post Tax In H1 2020

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MTN Nigeria Plc has disclosed that it experienced a marginal decline in its H1’2020 Pre and Post-Tax income despite growing Revenue relative to the corresponding period of 2019.

Brandnewsday gathers that MTN made this known, as a leading telecommunication’s company in Africa’s biggest economy and the biggest telecoms company on the Nigerian Exchange with a market capitalization of ₦2.3 trillion, 4th August 2020.

MTN Nigeria Drivers of the Revenue Performance

The telecoms giant grew its Revenue in H1’2020 by 12.5% to ₦638.07 billion compared to ₦566.99 billion in H1’2019. This was jointly driven by a 2.7% increase in Voice Revenue to ₦368.64 billion, 4% increase in Interconnect & Roaming Revenue to ₦64.56 billion, 49% jump in Data Revenue to ₦153.98 billion, 103.2% increase in Handset and Accessories Revenue to ₦1.08 billion, and a 261.4% surge in Other Revenues (from Cloud and Infrastructure Services, Information and Communication Technology) to ₦5.65 billion amongst others.

However, Revenue from SMS services declined by 38.4% (relative to H1’2019) to print at ₦4.34 billion, as the preference for cheap and data-powered messaging applications continues to grow.

Regulatory adjustment and business-expansion-drive escalate costs

Nevertheless, the company’s major cost items saw a significant leap in H1’2020 which eventually pressured its bottom-line.

Specifically, its Direct Network Operating Cost (DNOC) rose by 23.7% compared to ₦120.12 billion in H1’2019 to settle at ₦148.55 billion.

READ: MTN Nigeria Completes Its N100bn Commercial Paper

On the other hand, the company’s Finance Cost rose sharply by 26.2% to ₦72.55 billion compared to H1’19, owing to a 26.9% jump in Total Borrowings to ₦523.72 billion (mostly short term) as the company obtained more local and foreign loan facilities to drive its capacity expansion agenda and to maintain its leadership position in the Nigerian market.

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Weak Profit line impacted basic EPS

As a result of the costs increases, Pre-Tax Income and Net-Income of the company weakened by 1.99% and 4.68% to print at ₦139.56 billion and ₦94.87 billion respectively compared to ₦142.40 billion and ₦99.53 billion in H1’2019.

Expectedly, the measure of per unit potential returns to equity investors, the Earnings Per Share (EPS), of the company in H1’2020 fell mildly by 4.7% to settle at ₦4.66k compared to ₦4.89k in H1’2019.

Yet, the company has proposed to reward its shareholders with an Interim Dividend of ₦3.50, which translates to a Dividend Payout Ratio of 75%.

Going forward, we maintain a 12-months target price of ₦135 for MTN, which represent an upside potential of 14.50% over the closing price of ₦117 as of Monday 4th August 2020.

MTN Nigeria MTN Nigeria Witnesses 4.7% Decline In Profit Post Tax In H1 2020

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