Home Business MTNN spends N30.5bn on diesel annually

MTNN spends N30.5bn on diesel annually

by Business News Report

MTN Nigeria  said the lack of regular public power supply is taking a toll on businesses in Nigeria saying that it spends N30.5 billion on diesel annually. Giving facts behind its annual result accounts yesterday, Mr. Olusegun Akinfenwa, General Manager Financial Planning Division MTN Nigeria said “Diesel costs remain the biggest singular expense in MTNN’s cost profile with a spend of N30.5bn in the year.

Meanwhile MTN Group warned its shareholders yesterday of possible decline in its revenue as weaker oil prices bring economic doubts to its biggest market in Nigeria.
Nigeria contributed nearly 37 per cent of MTN’s total revenue, while its South African home market made up about 27 percent.

“In Nigeria some level of uncertainty remains with regards to the implications of the oil price and currency fluctuations, which may lead to slower economic growth,” MTN said in a statement.

Authorities in Nigeria have devalued the naira currency and raided foreign exchange reserves to feed demand following the slump in crude prices. A tough regulatory environment has also meant MTN has been forced to offer similar tariffs to its own subscribers and those of its smaller rivals. It has also been hit with bans against selling SIM cards and promotional pricing.

“It would appear that the regulatory pressure may ease, but the unknown at this stage is the economic impact of the falling oil price,” said Reuben Beelders, portfolio manager at Gryphon Asset Management.
Nigeria’s capital spend will increase by 5 percent although it is expected to contribute more than a quarter of the 17.5 million new subscribers MTN hopes to sign on this year.

MTN surprised investors by declaring a 1,245 cents per share total dividend, up from 1,035 cents last year. It said it planned increases of between 5-15 percent a year, which sent the shares up as much as 2.8 percent.

Mr. Akinfenwa said that there was rise in interconnect debts to the network of about N13.6billion for MTN alone which he said was a dangerous symptom that distress is not too far from the industry if appropriate measures are not put in place to rescue the situation by the regulatory authority. He said that Industry sustainability is at risk from dire equation of higher capital and operating expenditure against lower revenues.

He said that year on year there was over 50 per cent decline in industry subscriber additions in 2014 with 7.3million as against the 15.1million the previous year.

MTNN he said connected 42 per cent of the 7.3million new subscribers amounting to 3.1 million about 6 per cent increase in subscriber number. He disclosed that MTN’s performance might have impacted on the total market growth in terms of subs & revenue in 2014.

He said that MTNN implemented three major business model changes in 2014 amounting to significant cost savings and network optimisation. These include; TP model restructuring – win-win model adopted Managed Services (MS) for better network efficiency and Tower assets transfer for network assets optimization.

Mr. Akinfenwa said that the company’s Revenue growth of 4 per cent (5% in 2013), lower than the inflation and GDP growth of 8 per cent and 6 per cent respectively. According to him “Voice remains the lion share of revenue, though with minimal growth. Data & digital revenues continue to experience a healthy growth. MTNN he continued remains focused on growing its data & digital revenue
Some of the data & digital products launched have continued to aid expand penetration in some other industries, e.g. music, insurance, health, etc.

The increasing adoption of the unregulated OTT operators & services remains a threat in the data & digital space. Data revenue he said went up by over 25 per cent and data volume increased by 50 per cent. Data revenue contributed 18 per cent (15% in 2013) to total revenue.

He disclosed that there are 9.3million 3G devices devices in use on MTN network inclusive of 247,483 dongles.

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