MTN Nigeria has declared a ground-breaking full-year revenue in the financial year of 2020, the highest ever recorded by a Nigerian listed entity. The telecom revenue expanded by 15.1% year on year to N1.3 trillion in 2020 despite the pandemic. The strong revenue growth was led by its data segment as sales from the segment expanded by an impressive 51.5% Year onYear.
According to the result Voice sales rose relatively by 5.6% year to year as the global switch to data-enabled communication subsisted. MTN Nigeria Plc has declared a final dividend of N5.90 per share share. The result showed that MTNN’s 4G network now covers 60.1 per cent of the population compared to 43.8 per cent in 2019. According to MTN Nigeria, the suspension of new SIM registration enforced in mid-December did not have any material effect on the voice segment, which managed a 10.6% year on year revenue growth in Q4’20 (vs 7.0% YoY in Q3’20). In contrast, data revenue growth notably moderated to 37.5% YoY in Q4’20 compared to 55.5% YoY in Q3’20.
In a research note CardinalStone said the telecom company’s margin was adversely affected by currency devaluation; “Margins were adversely affected by the effect of Naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20. On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” the report stated.
The company’s margin was also negatively affected by the higher cost of borrowing and the ultra-low rates prevailing at Nigeria’s debt market; “Net finance cost increased by 25.4% YoY on the impact of higher borrowings and lower interest on investment in government securities. Borrowings rose by over 26.3% to N521.2 billion in FY’20, after the company notably issued its N100 billion Commercial paper in June 2020. The effect of higher borrowings combined with a tax increase to keep after-tax profit growth subdued at 0.9% Year on Year.”