Covid-19 broke industrial sectors, but some sectors, despite the paralysis, captured huge financial values. With people constrained in their homes, talking and using the web became the few options to keep the hours going: “Adoption of our data and digital services accelerated as lockdowns and gathering restrictions were imposed, and work-from-home became the norm for many”, noted MTN.
Yes, the telecommunication sector, across the world, saw growth, accelerated by Covid-influenced intervention programs. So, it is not surprising that MTN Nigeria is reporting a record number – a turnover of N1.346 trillion for the financial year 2020! In other words, MTN Nigeria is the largest publicly traded company by revenue in Nigeria. If you have not run the math, that is about 10% of Nigeria’s national budget as turnover!
But earnings were restrained by a rise in direct network operating costs by more than a quarter from N246.604 billion to N310.248 billion, and in discounts and commissions by over one fifth from N56.586 billion to N68.528 billion.
An 18 per cent rise in MTNN finance costs, which represents the cash it spends on interest on short-term loans, from N122.080 billion to N143.687 billion also capped earnings.
Pre-tax profit came to N298.874 billion, up from the N291.277 billion reported for the corresponding period of 2019, according to the telco’s financial statement published by the Nigerian Stock Exchange.
Profit for the year inched up 1 per cent from N203.283 billion to N205.214 billion.
Shareholders fund upped from N145.857 billion to N178.386 billion at the rate of 22 per cent. MTNN shares closed trade on the floor of the NSE on Monday at N174 per unit, posting no movement.
Yes, a South Africa’s DNA’d company is helping us to understand that wealth abounds in Nigeria. Congrats to the home of Y’ello.
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If we can still remember, when MTN Nigeria released earnings earlier last year, I said it here that I found it embarrassing that a company that seem to be the largest company here by revenue couldn’t average a billion dollars quarterly. But it has improved a bit on that count, though I was disappointed yesterday, this time in its profits report. Zenith Bank still beat it with a margin of N3 billion!
Why is it instructive to point that out? Because it doesn’t bode well for an economy when a bank becomes the most profitable entity. I am not suggesting that Zenith Bank’s profits should reduce, but I want that of telecom or any other sector to be higher, it’s one key way of encouraging entrepreneurs to venture into productive sectors of the economy, financial services is not one of them.
There’s wealth here, though our productivity output is still very low, but by taking more people out of poverty bracket and expanding the middle-class, our flagship companies will report better numbers, with the SMEs which serve as feeders to them booming too.
South African owned businesses always set the pace here, which I think is also a good thing, meaning that foreign entities that are serious can thrive here. I expect better numbers next year.