The MTN Group on Tuesday released full year results for its financial year ended December 2010, showing that its Nigerian operations remain the most profitable of its global operations.
The MTN Group’s financial results show that the Group’s total revenues globally for 2010 stood at N2.57 trillion (115 billion rand) while earnings before interest, taxes, depreciation and amortization (EBIDTA) stood at N1.07 trillion (48 billion rand).
A break-down of the Group’s results however shows that MTN Nigeria, which remains its biggest operations, also contributed the most to the Group’s revenues and profits in 2010.
MTN Nigeria made total revenues of N749 billion in 2010, 29% of the Group’s total revenues in 2010, while EBITDA for MTN Nigeria was N473 billion, 41% of the Group’s total EBITDA..
Analysis of MTN Group’s profit after tax for 2010 however shows its West and Central Africa operations - made up mainly of MTN Nigeria and MTN Ghana - contributed N269 billion (12 billion rand) or 71% of the Group’s profit after tax of N377 billion (16.83 billion rand).
BusinessDay could not access specific profit after tax figure for MTN Nigeria operations, but analysis of the MTN Group’s West and Central Africa revenue figures shows that MTN Nigeria alone contributed 66% of the region’s revenues and 77% of its EBITDA.
Analysts say this is likely to translate into MTN Nigeria contributing nothing less than 70% of MTN Group’s West and Central Africa profit after tax, which means that profit after tax for MTN Nigeria could be as high as N188 billion, making it the most profitable company in Nigeria.
BusinessDay analysis of MTN’s full year results confirms that MTN Nigeria is the Group’s most profitable operations, as the EBITDA margin in its Nigerian operations is the highest for all its operations globally.
“MTN Nigeria’s EBITDA margin increased by 3.7 percentage points to 62.9% as of December 31, 2010. This was mainly due to the operation achieving better economies of scale and various ongoing cost control initiatives,” according to a statement obtained on MTN Nigeria’s 2010 full year results from the Group’s website.
The MTN Group earned the next highest EBITDA margin of 44.3% in its Ghana operations while EBITDA margin in MTN Iran stood at 41.1%. EBITDA margin in MTN South Africa stood at 34%, while MTN Syria offered the lowest EBITDA margin of 23.1% in the MTN Group.
MTN Nigeria also had the highest subscriber base of 38.7 million, about 27% of the MTN Group’s global subscriber base of 141.9 million at the end of 2010.
Reviewing the operations of MTN Nigeria, the MTN Group stated that its Nigerian operations “performed well for the period under review despite increased competition in the fourth quarter; increasing its market share to 52% through the capture of more than 60% of the subscribers added by the market in 2010.
This was as a result of attractive segmented promotions to customers and effective churn management. Improved customer service and product accessibility through enhanced distribution channels and customer call centres also contributed to the subscriber base increasing by 25% over the year to 38.7 million.”
The MTN Group declared a final cash dividend of N78.41 kobo per share (R3.49). It had paid an initial interim dividend of about N36 per share (R1.51) bringing total dividend for its 2010 financial year to about N114 (R5.00) per share.
“This dividend payout was very positive, but not spectacular,” Ziyad Joosub, an analyst at JP Morgan, told Reuters.
We believe this is only the first step towards a more generous cash return policy in future years, which could include extraordinary dividend distributions and share buybacks, because the company is cash flush.”
Shares of MTN, the largest company with a primary listing in Johannesburg, surged 3.5 percent to N2, 918.84 per share (130.15 rand) after the announcement of the results.
However, the outgoing CEO of the MTN Group, Phuthuma Nhleko, dashed speculation the company could eventually spin off its international operations which includes Nigeria.
“Under no circumstances will we entertain an arrangement whereby MTN International is either separated from, or not controlled by, the MTN Group,” he said. “That, for us, is just not negotiable.”
Nigerian analysts have called on MTN to list its Nigerian operations on the Nigerian Stock Exchange (NSE).
In 2008, MTN Nigeria did a private placement in which it sold 5.96% of its stakes for $594.50 million in a private placement exercise which the MTN Group says gave Nigerian individuals and institutions a 9.45% stakes in MTN Nigeria and reduced the Group’s stake to 76.08%.
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