2020 Financial Year: MTN Records Highest Turnover By Any Nigerian Listed Company Ever

MTN Nigeria's full-year turnover in the 2020 financial year is the highest ever recorded by a Nigerian listed company.

The telecom giant’s revenue expanded by 15.1percent year-to-year to N1.3 trillion in the review period. The strong revenue growth was basically due to its data-led segment as sales from the segment expanded by an impressive 51.5 percent Year to Year.

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Voice sales rose relatively by 5.6 percent year to year while MTN Nigeria’s 4G network now covers 60.1 percent of the population compared to 43.8 percent in 2019.

MTN Nigeria Plc also announced a N5.90/share final dividend on impressive growth in its free Cash Flow for the financial year of 2020.

The suspension of new SIM registration enforced in mid-December did not have a material effect on the voice segment, which managed a 10.6 percent YoY revenue growth in Q4’20 (vs 7.0% YoY in Q3’20). The data revenue growth notably moderated to 37.5 percent YoY in Q4’20 compared to 55.5 percent YoY in Q3’20.

However, Cardinal Stone report showed in their research that the most valuable 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,” the report read partially.

“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 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 percent YoY on the impact of higher borrowings and lower interest on investment in government securities.

“Borrowings rose by over 26.3 percent 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 (a consequence of lower investment allowance and exempt income) to keep after-tax profit growth subdued at 0.9 percent YoY,” the report stated.

in spite of its impressive growth in revenue, the Stock was trailing by 3.28 percent trading at N174 per share.