Profitable Nigeria Inc. for those who Cracked It – MTN Nigeria

Two things:

1. Estimated profit MTN Nigeria had made

When I wrote last year that MTN Nigeria had made a profit of more than $28 billion since it started operations in Nigeria, many in the community said it was impossible.

2.  Total tax MTN Nigeria has paid

MTN has said it’s paid out over two trillion naira ($5.5 billion at today’s rates) in taxes to the federal government since it began operating in Nigeria.

Insights

My numbers might have been low. If you take at least 10% as tax (VAT, corporate tax, etc) on total revenue, it is possible to assume that the $5.5 billion tax had come from $55 billion in profit. Of course, Nigerian corporate income tax is about 30% and that means if you do direct extrapolation, MTN Nigeria might have made a profit in excess of my original $28 billion – yes, excess of at least $100 billion.

Resident companies are liable to CIT on their worldwide income while non-residents are subject to CIT on their Nigeria-source income.

The CIT rate is 30%, assessed on a preceding year basis (i.e. tax is charged on profits for the accounting year ending in the year preceding assessment).

This explains one thing – Nigeria is a very great market. But you need to crack that Nigeria Inc. Vodafone had the opportunity but passed it under the whole premise that Nigeria was a risky market. But here, MTN Nigeria has made billions of dollars in the market Vodafone passed.

Nigerian officials like to tell a story about the telecoms revolution that began in Nigeria in 2001. It involves how Vodafone, the British telecoms giant, had been offered the chance to enter Nigeria’s nascent market on the cheap. The mobile phone company considered Nigeria a risk not worth taking and passed on the opportunity. In the end, MTN, a younger, smaller rival from South Africa, and a couple of other operators took a chance on the country in an auction where they each paid $285m for a license.

Please note that this has nothing to do with the sentiment against MTN Nigeria with all the crazy fines and penalties. I have noted that Nigeria should be fair to this company. My note here is to make a case why Nigeria should be recognized as a place where foreign and local investors should explore. MTN Nigeria numbers are the best publicly available to make that case.

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