MTN to List On the NSE Before End of H1, 2019

Wednesday, March 14, 2019    7:30PM / By Glory Okutue/Proshare research

 

MTN Nigeria is likely to list on the Nigerian
Stock Exchange (NSE) before the end of H1 2019. Speaking to journalists at an
interactive session in Lagos yesterday, the telco’s managing director, Ferdy
Moolman, noted that the company would be coming to the floor of the Exchange in
a two-pronged strategy. According to Moolman, “we will list by way of introduction
in the first phase of our listing programme, and this will happen before the
end of the first half of the year, but we will pursue full listing in due
course as part of our second phase”.

Moolman noted that, “ we are very keen on listing
on the local Exchange, and unknown to many, we already have twenty percent
(20%) of the shares of the company in the hands of Nigerians which trade freely
in an over the counter (OTC)  private
arrangement”. 

MTN Nigeria’s results for 2018 were impressive.

Highlights:

  • Service revenue grew by 17.2%
  • Voice revenue grew by 18.7%
  • Data revenue increased by 39.3%
  • Fintech revenue increased by 32.7%
  • Digital revenue contracted by 58.1%
  • Expenses increased by 12.3%
  • Data traffic increased by 56.3%
  • EBITDA grew by 30.8% to 453.1 billion (excluding the payment
    to CBN)
  • EBITDA margin grew by 4.6p.p to 43.6% (excluding the payment
    to CBN)
  • CAPEX intensity decreased by 7.4p.p to 17.4%
  • Total subscribers increased by 5.9 million to 58.2 million
  • Active data users increased by 4.5million to 18.7 million

Business Drivers

MTN
Nigeria recorded significant improvements in its financial performance which
can be traced to the growth in the company’s voice and data revenue.

Voice
revenue increased by 18.7% to N783.1 billion and made a significant
contribution of 76% to the total revenue. Voice subscribers base increased by
5.9 million to stand at 58.2 million total subscribers.

Data
revenue came in second with a 15% contribution to the total service revenue.
The active data users in 2018 grew by 4.5 million to 18.7million users thereby
boosting data revenue growth to N150.7 billion which is about 39% increase from
last year value.

Digital
revenue contracted by 58.1% to N26.6 billion and this can be attributed to the
company’s further optimization of its VAS business. Fintech revenue; xtratime
and MOMO inclusive increased by 32.7% to N28.6 billion.

Digital
and Fintech revenue each contributed 3% to the company’s total service revenue
while other sources contributed 3%.

 

Financial Performance

 

Other revenue sources recorded the highest revenue growth of
about 51.9% from N31, 607 million naira in 2017 to N48,004 million naira to
2018. Data revenue had a revenue growth of about 39.3% to N150,658 million
naira as against N108,132 million recorded in 2017. Fintech revenue came in
third place with a revenue growth of 32.7% from N21,540 million toN28,588
million while voice revenue grew by 18.7% from N659,760 million to N783,059
million. Digital revenue however performed poorly with a revenue contraction of
58.1% diving to N26,608 million in 2018 from N 63,451 million in 2017.

 

Nevertheless, voice revenue made the highest contribution of
about 76% to the total revenue compared to data revenue contribution of 15%
which contradicts the trend recorded in other country. This is likely due to
the higher number of voice subscriber base (58.2 million) when compared to the
active data users (18.7 million users) and the low data tariff in Nigeria.

 

The service revenue however recorded 17.2% growth from N884,
490 million in 2017 to N1, 036,917 million in 2018

 

Table 1 MTN Nigeria Revenue 2017-2018









Revenue

2017 (N’mn)

2018 (N’mn)

% change

Other Revenue

31,607

48,004

51.9%

Data Revenue

108,132

150,658

39.3%

Fintech Revenue

21,540

28,588

32.7%

Voice Revenue

659,760

783,059

18.7%

Digital Revenue

63,451

26,608

-58.1%

Total Service Revenue

884,490

1,036,917

17.2%

 

 

Chart 1 MTN Nigeria Revenues over Business Segments

Proshare Nigeria Pvt. Ltd.

Source:
MTN Nigeria Annual Accounts 2018

 

Operating Expenses increased by 14.7% from N356,063 million
in 2017 to N408,507 million in 2018 while cost of sales grew by 7.6% to 198,935
million compared to its preceding year value of N184,860 million. The total
expenses for the year stood at N607,442 million which indicates a 12.3% growth
in total expenses.

 

Table 2 MTN Nigeria Expenses 2017-2018






Expenses

2017
(N’mn)

2018
(N’mn)

%
change

OPEX

356,063

408,507

14.7%

Cost of
Sales

184,860

198,935

7.6%

Total

540,923

607,442

12.3%

Source:
MTN Nigeria Annual Accounts 2018

 

 

Chart 2 MTN Nigeria Expenses 2017-2018

Proshare Nigeria Pvt. Ltd.

Source: MTN Nigeria Annual
Accounts 2018
 

 

The company recorded a massive improvement of 121.6% in its
AFCF from N 121,376 million in 2017 to N268,913 million in 2018 figure
(excluding the payment made to CBN). Capex recorded 18.2% slump from N225,019
million in 2017 to N184,173 million in 2018. The company’s EBITDA aided by AFCF
growth increased by 30.8% from N346,395 million recorded in 2017 to N453,086 in
2018 (excluding CBN payment).

 

Table 3 MTN Free Cash Flow and CAPEX 2017-2018






 

2017
(N’mn)

2018
(N’mn)

2018*
(N’mn)

%change

AFCF

121,376

249,721

268,913

121.6%

Capex

225,019

184,173

184,173

-18.2%

EBITDA

346,395

433,894

453,086

30.8%

*EBITDA
excludes the impact of CBN resolution (19.2bn)

Source: MTN Nigeria Annual
Accounts 2018
 

 

Chart 3 MTN Nigeria Free Cash Flow 2017-2018

 

Proshare Nigeria Pvt. Ltd.

Source:
MTN Nigeria Annual Accounts 2018
 

 

Capex to
total revenue ratio (Capex intensity) dived to 17.4% from 24.8% recorded in
2017 while EBITDA margin (excluding CBN payment) gained 4.6pp to stand at 43.6%
in 2018 as again 39.0% recorded in 2017.

Table 4 MTN Nigeria’s CAPEX Intensity
2017-2018





 

2017
(%)

2018
(%)

2018*
(%)

Capex
Intensity

24.8

17.4

17.4

EBITDA
margin

39.0

41.8

43.6

Capex intensity = Capex/Total revenue

Source:
MTN Nigeria Annual Accounts 2018

 

 

Chart 3 MTN Nigeria CAPEX Intensity 2017-2018

Proshare Nigeria Pvt. Ltd.

Source:
MTN Nigeria Annual Accounts 2018

 

Proshare Nigeria Pvt. Ltd.

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