MTN Nigeria warns of near-term outlook

MTN Nigeria yesterday warned that its near-term outlook was challenging due to macroeconomic disruptions.

JOHANNESBURG – MTN Nigeria yesterday warned that its near-term outlook was challenging due to macroeconomic disruptions as a result of the coronavirus pandemic and weak oil prices.

Chief executive Ferdi Moolman said that while the company had an upbeat view of the prospects for the business in 2020, on the back of the strong performance in service revenue delivered in the first quarter, it was worried about its immediate future.

Moolman said the pandemic, oil prices volatility and exchange rate fluctuations called for a more measured outlook in the near-term.

“The remainder of the year will be shaped by the impact of these developments, which remains highly uncertain at this time,” said Moolman.

Oil price collapses due to the Covid-19 pandemic have rocked the country, the continent’s biggest producer, with the Central Bank of Nigeria making a slight adjustment to the naira in March.

The adjustments have led to an increase in some MTN costs in the country.

“In addition,” Moolman said, “a series of lockdown measures began being implemented globally in response to the Covid-19 pandemic, resulting in significant operational challenges and supply chain disruptions.”

Moolman said that voice revenue had experienced an immediate impact from the current macro disruptions, based on early trends, especially in the mass market segment.

He said while the group had witnessed growth in data revenue, it did not fully offset the decline in voice revenue.

“This may persist with the extension of the lockdown, and continued macroeconomic and other challenges,” said Moolman.

The group added 4.2million new voice subscribers to take its total to 68.5million subscribers, underscoring a continued growth in market share.

Active data subscribers also attracted 1.7million new users to take the total to 26.8million.

Operating expenses increased 22.3percent, driven mainly by an increase in lease rental costs following an aggressive 4G roll site rollout.

In 2015, MTN was fined $3.9billion (R72.88bn) for failing to disconnect 5.1million subscribers.

The fine was later reduced to $1.7bn.

Mergence Investment Managers head of equities Peter Takaendesa said that the group’s new key challenge was likely to be stronger cost growth as they continued to expand their network to cater to the strong data traffic growth as well as consumer relief measures such as no fees on mobile money trans- actions.

“Most of these measures are the right things to do for long term business sustainability although they will present near term pressure to business profitability,” Takaendesa said.

“Fortunately, the business is now highly cash-generative post finishing paying the 2015 regulatory fine installments and more than 90percent of the debt is matched with revenue in the local currency.”

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Post Author: ravefmng

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