MTN Nigeria’s profit margin, measured using earnings before interest, tax, depreciation and amortisation (Ebitda), fell by two percentage points to 51.3% in the six months to June 2020, partly due to accounting changes and Covid-19.
Nigeria is MTN Group’s biggest and most profitable market. The Nigerian Stock Exchange-listed subsidiary delivered strong growth in subscriber numbers, up 6.8 million to 71.1 million from December 2019, while active data users rose by 3.8 million to 29 million. Year-on-year service revenue jumped 12.6% to ₦637-billion.
Ebitda grew by 8.2% to ₦327.1-billion, while profit before tax declined by 2% to ₦139.6-billion and earnings per share fell by 4.7% to ₦4.66 kobo. MTN Nigeria declared an interim dividend of ₦3.50 kobo.We have maintained double-digit service revenue growth of 12.6% for the first half, driven by strong growth in our key revenue lines
Explaining the growth in Ebitda but the decline in the Ebitda margin, MTN said that during the reporting period it changed the accounting treatment of the VAT component of its lease payments. In addition, the combined effect of foreign-exchange rate adjustments, a 2.5% increase in VAT and the associated costs of Covid-19 initiatives impacted margins.
“Following a strong first quarter, we experienced a challenging operating environment in the second quarter characterised by Covid-19-induced lockdowns and the broader macroeconomic impact that has had,” said MTN Nigeria CEO Ferdi Moolman.
“Despite this, we have maintained double-digit service revenue growth of 12.6% for the first half, driven by strong growth in our key revenue lines.”
Data revenue rose by 57.6%, supported by an increase in data users and traffic. Revenue from digital and fintech services rose by 121.8% and 29.6% respectively, while voice revenue growth was 2.8% amid a change in traffic patterns following Nigeria’s lockdowns. However, costs also increased leading to an overall decline in profit before tax and earnings per share.