MTN Nigeria Plc’s profit margin shrank from 20.6 percent in the first quarter to 17.7 percent in the second and further to 17.3 percent in the third quarter following the payment of N145.7 billion interest expenses on its N679 billion borrowings at the end of the third quarter.
The telecommunications company’s borrowings are in addition to lease liabilities of N736 billion at the end of the third quarter, adding up to interest-bearing financial liabilities in excess of N1.4 trillion.
The company’s interim financial report for the third quarter ended September 2022 shows that the rising cost of funds posed a big challenge for the company in the year. Interest expenses rose by about 35 percent in the third quarter to N55.7 billion for the quarter.
This is a sustained rise in the cost of finance from N40 billion in the first quarter to N50.6 billion in the second quarter and further to N55.7 billion in the third.
The second quarter witnessed the strongest growth in finance expenses at 52 percent quarter-on-quarter, which caused a drop in the quarterly profit figure from N97 billion in the first quarter to N84.8 billion in the second.
Net finance cost grew even much faster in the second quarter at 68.4 percent to N48 billion.
Conversely, a slowdown in finance expenses to less than 35 percent increase quarter-on-quarter in the third quarter powered a recovery in quarterly profit to N87.4 billion in the quarter. Though net finance expenses were higher in the third quarter at N53.3 billion than in the second, growth slowed down at 38.8 percent quarter-on-quarter.
The increase in the cost of finance with increases also in the cost of starter packs, handsets, and accessories limited profit growth compared to sales revenue. After-tax profit grew by 11 percent in the third quarter, which is about one-half of a 22 percent increase in turnover to N506 billion for the quarter.
Finance expenses grew by over 39 percent at the end of the third quarter while the cost of starter packs, handsets, and accessories jumped more than four times year-on-year to N15.3 billion over the same period.
Accelerating revenue, however, helped the company to absorb the cost increases. Sales revenue improved from N471 billion in the first quarter to N479 billion in the second and further to N506 billion in the third, adding up to almost N1.5 trillion for the company at the end of the third quarter operations in 2022.
In terms of growth margin, revenue improved from 18 percent in the second quarter to 22 percent in the third, after slowing down from 22 percent growth in the first quarter.
MTN’s nine-month earnings position at the end of September 2022 shows an increase of 20.7 percent in turnover from N1.21 trillion in the same period in 2021.
This indicates another strong year for the company after closing the preceding financial year with a rise of about 23 percent in turnover to N1.65 trillion. If the third quarter growth rate is maintained for the full year, the company can be expected to post a turnover in the region of N2 trillion for the 2022 operations.
Data services are the upside force for the 20.7 percent increase in revenue, growing steadily from N163 billion in the first quarter to N185 billion in the second and N201 billion in the third quarter. Up from a slight decline in the second quarter, revenue from voice services strengthened to a 7 percent growth of over N209 billion for the third quarter.
The share of data income in MTN’s total revenue has continued expanding from 34.5 percent in the first quarter to 38.7 percent in the second quarter and further to almost 40 percent in the third quarter.
Data services provided over N549 billion or 37.7 percent of the company’s revenue at the end of the nine months of operations, up from 36.6 percent at the half year. This is a marked growth of 50 percent from the data services revenue figure of N366 billion in the same period in 2021.
MTN Nigeria closed the third quarter operations with an after-tax profit of N269 billion, which is an increase of 22.3 percent over the N220.3 billion profit it posted at the end of the third quarter in 2021.
The company earned N13.80 per share at the end of the third quarter, improving from N10.82 per share in the same period in 2021. It paid an interim cash dividend of N5.60 per share at the end of half-year operations in June 2022.
