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Why MTN can’t repatriate over N106bn profit from Nigeria

MTN group says it is yet to repatriate R4.2bn (over N106bn) profits made from Nigeria back to South Africa due to the challenge of accessing foreign currency.

The MTN Group President and Chief Executive Officer, Ralph Mupita, disclosed this while announcing strong results across its twenty-one African markets.

According to Mupita, as at 31 December 2020 only R286 million (about 707.1million) out of the profits made from Nigeria has been successfully sent back to South Africa.

MTN group posted an impressive double-digit growth in earnings in 2020, doing especially well on its medium-term targets.

The group financial statements shows about 29 million new subscribers were added during the year under review, bringing MTN’s group subscriber base to 280 million in Africa.

In 2020, MTN also revealed new 19 million data users were added and nearly 12 million Mobile Money users, to reach totals of over 114 million and 46 million respectively.

The company said these numbers helped grow its service revenue by 11.9 percent to R170-billion and earnings before interest, taxes, depreciation and amortisation (Ebitda) increasing by 13.4 percent.

MTN also reported a 52 percent increase in adjusted headline earnings a share, a four-percentage point increase in return on equity to 17 percent and a more than doubling in operating cashflow to R28.3 billion.

Basic earnings a share increased by 87 percent, good operational performance and an improved contribution of the share of profits from associates and joint ventures.

MTN Group’s capital expenditure was R28.6bn and its net debt was reduced by R12bn to R43bn.

However, MTN announced suspension on its full year dividend for 2020.

The board said it would communicate a revised medium-term dividend policy after the announcement of its 2021 financial year results in March 2022.

On assessment of the progress of cash upstreaming from Nigeria, ARP delivery and COVID-19 impacts, the board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of FY2021 result,” the statement noted.

The last six months of 2020 was a bad period for MTN Nigeria, as the company’s telephone subscribers dumped its Y’ellow network within three months.

Ripples Nigeria gathered that MTN was the highest loser in the telecoms subscriber base market in the last half year of 2020 compared to Airtel Nigeria, Globacom and 9mobile.

Data from the Nigeria Communications Commission (NCC) showed that Airtel Nigeria, Globacom and 9mobile were on a gaining streak of six months before they hit a roadblock in December. During the six months period, MTN lost about three million subscribers, more than the 2.03 million Airtel, Globacom and 9mobile lost in total.

It was discovered that, while Airtel, Globacom and 9mobile grew their subscriber base without a loss in third quarter (July-September) last year, 448,831 subscribers dumped MTN in September to end Q3 with 82.63 million.

During the same period, Airtel had gained (483,851) more subscribers than MTN lost, to rise to 54.25 million, while Globacom added 1.32 million subscribers to its base to improve its total number ro 54.25 million, and 9mobile gained 351,610 subscribers to increase its base to 12.72 million in Q3 last year.

Meanwhile, in fourth quarter 2020, MTN recorded loses in November and December. MTN’s subscriber base depleted at a high rate from 83.33 million subscribers in October to 82.02 million in November.

In December, MTN’s subscriber base further declined to 80.76 million. This put MTN’s subscriber loss at over 2.56 million between October to December.

During the same period, MTN’s rivals, Airtel, Globacom and 9mobile suffered loss once – in December. While the Y’ellow network’s subscriber base dropped between October and November, Airtel grew its base by 1.01 million subscribers to hit 57.23 million total subscriber base.

However, the number dwindled by 1.58 million in December, putting Airtel’s total subscriber base at 55.64 million. Following a gain of 10,024 subscribers in November, Globacom also suffered the same fate like other telcos, as it lost 249,194 subscribers in December, to close the year with 54.84 million subscriber base behind Airtel.

The constant decline in MTN subscriber base shows that the telco giant is losing its grip in the telecoms market, and informing its rivals that subscribers confidence in the MTN service is depreciating.

Exodus exit from MTN affected the firm’s gap above its market rivals, shrinking its market share to 39.55% in December, from 40.30% in September 2020. In August last year, MTN held a 40.90% market share.

Airtel currently accounts for 27.25% of the subscriber base market share, while Globacom holds 26.85% share and 9mobile takes up the 6.36% share of the market.

The reason for the exodus in MTN could be linked to the company’s high rate of data depletion and call rate. MTN charges a flate rate of 11.26kobo per second for calls, Airtel, Globacom and 9mobile charge 11kobo per second.