MTN Nigeria PAT up by 28.5% to NGN78.34 billion in Q4, 2021

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 MTN Nigeria Communications Plc (MTNN) on Friday, January 28, 2022 released another stellar performance 2021Full Year audited results at the close of business which revealed that Q4, 2021 standalone Profit After Tax (PAT) rose by 28.5% year on year to NGN78.34 billion while EPS stood at NGN3.85 representing28.5% year on year, that means the 2021Full Year EPS close on NGN14.67 up by 45.5% year on year. According to the report the growth in 2021Full Year EPS was driven mainly by the robust expansion in the top line 22.9% positive year on year and expansion in EBITDA margin 209 bps positive to 53.0%.  Therefore, the company has proposed a final dividend of N8.57/s, bringing the 2021Full Year total dividend to N13.12/s as against N9.40/s in 2020Full Year, implying a dividend yield of 6.9% based on the last closing price of N190.00/s.

Other indicators like Service revenue grew by 20.9% year on year in Q4,2021Full Year: 22.9% positive year on year, due to the broad-based expansion across voice up by 0.9% year on year; 56.8% of revenue, data up by 65.2%year on year; 33.5% of revenue, and value-added services up by 55.6% year on year; 4.5% of revenue.

 

In the report management revealed that the growth in voice revenue on a full year basis 8.4% positive year on year was supported by an increase in minutes of use by its active SIM base and the success of customer value management initiatives, both of which limited the impact of SIM registration and activation restrictions in H1-21. For us, “we think the higher minutes of use was supported by a sustained recovery in activities in the informal sector given the patronage by artisans and unskilled workers.

 

Nevertheless, the MTNN’s subscriber base declined on a year on year basis by 8.0 million to 68.5 million as of 2021Full Year, due to regulatory restrictions on new SIM sales and activations. However, the management was able to reverse the trend in Q4, 2021, adding approximately 1 million subscribers following the alignment of its SIM registration and activation centres with regulatory guidelines. We expect MTNN to sustain its efforts in onboarding new subscribers going forward.

 

On data revenue 55.3% positive year on year to NGN516.24 billion in 2021Full Year, Management noted that the growth was driven by increased data usage from its existing base, expanding 4G coverage, and improvement in network capacity to support increasing data traffic. Interestingly, the average MB per user rose by 62.7% year on year, enabling overall data traffic growth of 85.3% year on year in 2021Full Year. Smartphone penetration grew by 4.0 ppt to 50.0%, while 4G penetration rose to 70.3% in 2021Full Year from 60.1% in 2020Full Year. MTNN also expanded its mobile money (MoMo) agent network with the addition of over 374,000 registered agents in 2021Full Year bringing the total number to 770,000 agents.

The operator noted that despite the higher increase in network operating costs up by 25.9% year on year compared to revenue 22.9% positive year on year, the sub-inflationary growth in operating expenses up by10.3% year on year pushed EBITDA higher by 27.9% year on year to NGN877.07 billion in 2021Full Year. Similarly, EBITDA margin expanded by 209 bps to 53.0% in 2021Full Year Q3, 2021: 158bps positive to 52.6%.

 

“Net finance cost rose by 15.8% year on year in 2021Full Year due to the growth in finance cost  positive 11.4% year on year amid the decline in finance income 24.7% year on year decline, which is reflective of the impact of the low yield environment amidst marginally lower cash and cash equivalents 5.2% year on year declined to NGN260.89 billion.

The report further disclosed that overall, pre-tax profit grew 32.1% year on year to NGN115.34 billion in Q4,2021 Full Year: 46.1% year on year positive to NGN436.69 billion. However, a lower effective tax of 32.1% in Q4, 2021 compared to 30.1% in Q4,2020 led to the slower growth in profit-after-tax up by 28.5% year on year in Q4, 2021, it was stated.

 

In Comment, analysts at Cordros Research stated that they are impressed with the robust topline expansion delivered by MTNN despite regulatory headwinds which impacted SIM registrations. “We also like that the company remained operationally efficient, underscored by the expansion in EBITDA Margin despite the impact of currency devaluation on BTS lease cost amid higher network maintenance cost. We believe data revenue will remain a key driver of earnings in 2022, even as we expect final approval from CBN regarding its PSB license to provide another springboard for earnings.”


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