Data services have been the cash cow for MTN Nigeria Plc for the second year to 2021 and the position is expected to be maintained, even extended in 2022.
Expert projections indicate that top growth margins of over 50 per cent of the company achieved in data revenue over the past two years are sustainable in the current financial year.
The telecommunications company had generated over N516 billion in data earnings in 2021, which is an increase of 55 per cent in the year. This is an accelerated growth from about 51 per cent in the preceding financial year.
If a 50 per cent increase in data revenue is realised this year, the company may close the year with revenue from the income line peaking in the region of N775 billion. That could raise the proportion of the company’s revenue generated from data services to about 40 per cent.
The contribution of data revenue to MTN’s total revenue has expanded rapidly from less than 19 per cent at the end of 2019 to 24.7 per cent in 2020 and further to 31 per cent at the end of 2021. It provided the spur for a 23 per cent growth in turnover to N1.65 trillion in 2021 – the fastest revenue growth for the company in five years.
The rapid growth in data revenue is an offshoot of the coronavirus-induced changes in the communication pattern of people and businesses. The economy has experienced a major shift to virtual activities in the aftermath of the coronavirus pandemic.
Telecommunications companies that provide the platform for increased virtual activities are the major beneficiaries. Earnings from airtime/subscription have slowed down and its dominance in revenue has continued to thin down.
For MTN Nigeria, airtime/subscription raked in almost N820 billion revenue in 2021, representing less than 50 per cent of total revenue at the end of the year. This is a sustaining drop from 62 per cent in 2019 and 57 per cent in 2020.
Earnings from airtime services improved by 7 per cent in the year compared to the 55 per cent growth in data services revenue. Income from interconnect and roaming grew by 26.7 per cent to nearly N168 billion.
Another top speed growth was recorded from income from SMS, which surged up by 276 per cent to over N46 billion during the year. Also, value-added services advanced by 52 per cent to about N71 billion at the end of the year.
There were some revenue drops in the year in non-critical service areas and therefore their impacts were insignificant relative to volume. These include earnings from digital services, which went down by 51 per cent to less than N18 billion and handset and accessories, which recorded a drop of 60 per cent to less than N3 billion.
With the strong growth in data revenue expected to be maintained in 2022, MTN’s group profit is projected to cross the N400-billion mark in the year. The company lifted after-tax profit by 45.5per cent in 2021 to almost N299 billion.
It was an accelerated growth from a slight improvement after-taxa profit to N205 billion at the end of 2020. The company grew profit close to twice as fast as turnover, which indicates a major gain in profit margin in the year.
Net profit margin increased from 15. per cent at the end of the 2020 operations to 1per cent at the end of 2021. The improvement reflects a combination of cost savings and strong revenue growth.
The cost savings were realised from some of the company’s expense lines that slowed down relative to revenue. These include interconnecting costs, which grew by 13. per cent to less than N128 billion.
Discounts and commissions also claimed a reduced share of revenue at an increase of 1per cent to N78 billion while depreciation of property and equipment equally slowed down at an increase of per cent to N162.5 billion.
Finance expenses also slowed down at an increase of 1per cent to N160 billion at the end of the year. This is against an increase of 18 per cent to N144 billion in 2020.
However, the company’s biggest expenditure line – direct network operating cost, failed to follow the path of moderation. It grew by 2per cent to over N390 billion, ahead of the 2per cent growth in turnover.
MTN Nigeria still achieved a generally moderated cost in 2021, which enabled it to achieve a strong growth of 3per cent in operating profit to N584.7 billion in the year.
The company raised earnings per share from N10.08 in 2020 to N14.67 in 2021. It has announced a final cash dividend of N8.57 per share, topping up its interim cash dividend of N4.55 per share dividend qualification date is 6th April while e payment is scheduled for 28th April 2022.
