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MTN Releases Result of Financial Year Ended 31 December 2020 with N298.9 Billion PBT, Up by 2.6% 

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MTN Nigeria on Sunday released its audited results for the financial year ended 31 December 2020, with Profit before tax (PBT) growing by 2.6% to N298.9 billion, active data users increased by 7.4 million to 32.6 million and Mobile subscribers increased by 12.2 million to 76.5 million.

Ferdi Moolman, ceo, MTN Nigeria, speaking about the report, said: “2020 was a challenging year for all. The unprecedented disruption that the COVID-19 pandemic caused the businesses and people we serve, challenged us in new and demanding ways.

“The impact continues to evolve. Adoption of our data and digital services accelerated as lockdowns and gathering restrictions were imposed, and work-from-home became the norm for many.

“Our thoughts and prayers are with those who have lost loved ones due to the pandemic; the toll on lives and livelihoods globally has been profound. To date, Nigeria has recorded 155,417 confirmed COVID-19 cases and 1,905 related deaths, according to the Nigeria Centre for Disease Control (NCDC).

“MTN Nigeria has also been directly impacted by the pandemic, with 62 employees diagnosed with COVID-19 and 46 recoveries. Sadly, one of our employees succumbed to the virus.

“Our employees adapted quickly to working remotely to ensure that our customers remained connected. I am incredibly proud that we were able to meet the challenges faced in 2020, by pulling together, working closely with the government and our regulators, and understanding our customers’ evolving needs”.

The report reads in part, As we navigated the fallout of the pandemic, adapting our processes and structures to the new realities, we acted swiftly to support the national response in a holistic way. This was encapsulated in our Y’ello Hope initiatives through which we provided support to our broad base of stakeholders to the value of approximately N25 billion.

We provided free-to-access services (including SMS and data) to the most vulnerable, supported the acquisition of essential medical supplies (tests and personal protective equipment), and joined the Coalition Against COVID-19 (CACOVID) that drove multiple initiatives, including building isolation centres across the country. We also paid our taxes early in support of government’s ongoing efforts. In January 2021, MTN Group partnered with the African Union contributing US$25 million to their COVID-19 vaccination programme. MTN Nigeria is pleased to play its part in this initiative, through which Nigeria will receive 1.4 million vaccine doses for the benefit of health workers.

In addition, we committed marketing resources to our #WearItForMe campaign to help create awareness around wearing masks, and our REVV support programme for Micro, Small and Medium Enterprises (MSME) helped them navigate the new digital reality.

Our performance demonstrated the strong operational execution and resilience in our business. We connected 12.2 million new customers to our network, bringing our total subscriptions to 76.5 million. The introduction of additional customer registration requirements and suspension of the sale and activation of new SIMs towards the end of the year affected subscriber growth. We remain committed to ensuring our subscriber records are updated with the National Identity Number (NIN), and continue working closely with the government, supporting their efforts by expanding capacity to provide NIN enrolment services across our customer interaction touchpoints.

Active data users increased by 7.4 million to 32.6 million, supported by growth in gross connections and the expansion of our 4G network. Our mobile money (MoMo) business also continued to accelerate with a 269.2% increase in the number of registered agents to over 395,000 and 4.7 million active subscribers from approximately 553,000 in 2019.

Service revenue grew by 14.7%, in line with our medium-term targets, driven mainly by voice and data revenue. Voice revenue growth was 5.9%, and although this was subdued in Q2 due to COVID-19 induced restrictions, we saw a pickup in momentum into H2. Data revenue rose by 51.2%, with increased data usage and traffic. To accommodate this and enhance service quality, we focused on capacity upgrades and 4G population coverage, while expanding our investments in rural connectivity. Our 4G network now covers 60.1% of the population, up from 43.8% in 2019.

EBITDA rose by 9.7%, supported by service revenue growth. However, the EBITDA margin declined by 2.5pp to 50.9%. This was mainly due to increased operating expenses, arising from the rollout of new sites and the impact of Naira depreciation, affecting in particular the costs of our lease contracts. Despite the increase in costs, we recorded an improvement in our bottom-line earnings, with profit before tax (PBT) and profit after tax (PAT) increasing by 2.6% and 0.9% respectively.

In line with our dividend policy, the board has proposed a final dividend of N5.90 kobo per share to be paid out of distributable net income. This brings the total dividend for the year to N9.40 kobo per share, representing an increase of 18.7%.

I thank the Board, Management, and staff of MTN Nigeria for the support given to me and the opportunity to serve in Nigeria as I complete my tenure as CEO of MTN Nigeria and assume a new role as MTN Group Chief Risk Officer. Effective 1 March 2021, Karl Toriola will take over as the CEO. I wish Karl and his new team the very best.”

Operational review

We made considerable progress in growing the base for our business, connecting 12.2 million new subscribers to access communication services. The growth in our subscriber base provided support for voice revenue, which accounted for 67.1% of service revenue and rose by 5.9%, with an acceleration in growth to 8.9% YoY in H2. This was enabled by our expanded customer acquisition touchpoints, rural telephony initiatives and revamped acquisition offers. The suspension of new SIM registration in mid-December did not have a significant impact on voice revenue as we saw an increased level of activity from the existing base.

Data revenue maintained the positive momentum from Q2, prompted by the COVID-19 lockdowns, rising by 51.2%. The performance in data was led by a combination of increased subscribers, usage (MB per user) and ultimately traffic, supported by increased network capacity and 4G penetration. Data traffic rose by 126.5% and average usage by 64.0%. We added approximately 8.2 million new smartphones to the network, bringing smartphone penetration to 45.9% of our base, up from 41.9% in 2019.

Fintech revenue rose by 27.3%, boosted by MTN Xtratime, our airtime lending service. We expanded our MoMo agent network with the addition of over 280,000 registered agents during the year. This was achieved as we continued to convert our traditional airtime agents in line with our one distribution model. Our fintech subscribers increased by more than eight times to 4.7 million, driving higher transaction volumes of over 51.5 million during the year and core fintech revenue growth of 28.0%.

The uptake of our digital business continued to gain traction with the revamp of our products and services, improved customer journey and increase in active user base. As a result, digital revenue recorded growth of 107.2%, entrenching the pleasing structural turnaround in the business. In H1, we redefined how we account for the active user base to capture unique paid subscriptions, and we have seen this number grow by 75% to 2.8 million from 1.6 million in H1. This was driven mainly by subscriptions for ayoba, our instant messaging platform, which rose by 120.9% to 1.4 million.

Enterprise revenue increased by 1.5%, supported by growth in revenue from devices and fixed connectivity. The economic impact of the COVID-19 lockdown, particularly in Q2, led to a decline in the uptake of our products and services by the businesses we support. We are, however, encouraged by the recovery that occurred in H2 as restrictions eased and economic activity began to improve. We anticipate further uplift in enterprise revenue once the USSD pricing dispute is resolved and we recover outstanding fees from the banks. Our enterprise business includes revenue from mobile and fixed connectivity, cloud and ICT solutions, and devices. It cuts across voice, data and digital services for SMEs, the public sector and large enterprise customers.

Capital expenditure (capex) in the year was N298.6 billion, up 19.4%. Excluding right of use assets, capex was up 15.2% to N240.1 billion. We accelerated site rollout in H2 following a slowdown in H1 due to foreign exchange paucity and port congestion. As a result and in line with our guidance, we were able to increase our 4G population coverage to 60.1% with the delivery of 5,724 sites during the year, of which 74% are 4G sites.

We expanded the scope of our service agreement with IHS Holding Limited (IHS) and amended the currency conversion provision for tower services in view of the long-term benefits. This led to the movement of the reference rate for conversion to Naira, from the CBN’s official rate to the NAFEX rate. We reviewed the treatment of non-recoverable VAT on lease payments to account for it as an expense over the lease period. These, together with the effects of Naira depreciation, put upward pressure on lease rental costs in the period. In addition to these, the combined effect of the 2.5pp increase in value-added tax (VAT) and COVID-19-related costs led to a 27.2% increase in operating expenses with a knock-on effect on EBITDA margin.

EBITDA rose by 9.7% and the EBITDA margin was 50.9%. We delivered a healthy free cash flow of N387.1 billion, up 3.2%. Depreciation and amortisation rose by 11.7% because of exchange rate and VAT impacts, while net finance cost rose by 25.4% arising from higher borrowings and lower yields earned on our investments in government securities.  As a result, we recorded a PBT growth of 2.6%. In H1, we issued a N100 billion commercial paper, which was oversubscribed, at a blended rate of 5.7% per annum. This allowed us to broaden our sources of funding and lower our overall cost of funding, which reduced by 3.3pp in 2020.

PAT and EPS each rose by 0.9%, reflecting an increase in taxation mainly due to lower investment allowance and exempt income.

COVID-19 and the impact on the business

The pandemic caused unprecedented disruption to businesses and impacted lives and livelihoods. Although the operating environment remains challenging, the easing of lockdown restrictions led to an improvement in economic activity and market conditions into H2. Our response to the pandemic and its impact can be categorised into four broad areas, namely social, commercial, network and supply chain as well as funding and liquidity considerations.

In terms of the social impact, we launched various initiatives to provide support for our people, customers and the various levels of government as part of our Y’ello Hope packages. We empowered our people to work remotely and implemented health measures and monitoring to ensure their safety and business continuity. We continue to provide welfare support to them through the MTN Global Staff Emergency Fund.

Our customers, particularly lower-income earners, benefitted from the free SMS initiative introduced in Q2. This provided customers with 300 free text messages for three months to ensure that they remained in touch with friends and family. Over 4.3 billion text messages were sent by more than 75% of our subscribers. We zero-rated access to a range of health and education sites, enabling our customers to access vital information at no cost to them. Fees for local money transfers via the MoMo Agent Network were waived for a month, during the lockdown, to support our customers.

We rolled out a number of interventions to support the thousands of small businesses that rely on us for connectivity. These included the relaxation of payment terms at the beginning of the crisis as well as designing and delivering the multi-faceted REVV programme. These initiatives were aimed at supporting MSMEs amid the economic disruptions resulting from the COVID-19 pandemic. Over 20,000 MSMEs registered for our masterclass sessions and we provided support for the 200 MSMEs (Y’ello 200) that emerged from the programme, helping them to adapt to a digital marketplace.

To support government’s efforts at combatting the pandemic, we donated N1 billion to CACOVID and delivered N250 million worth of personal protective equipment (PPE) to the Nigeria Centre for Disease Control (NCDC), through the MTN Nigeria Foundation. This is in addition to the logistical and communications support provided to the Nigerian Governors Forum, NCDC and State Governments. We made an early payment of our taxes ahead of established deadlines to support the Federal Inland Revenue Services’ (FIRS) revenue acceleration efforts.

From a commercial perspective, we saw encouraging trends in our traffic patterns as COVID-19 restrictions eased. Demand for voice services, which initially came under pressure in April 2020, has fully recovered and voice traffic reached new highs by Q4. Demand for data and digital services grew significantly as lockdowns were imposed and remained resilient at elevated levels due to shifts in consumer spending patterns. There was also an increased uptake of our fintech services with transaction volume in April 2020 rising by more than three times above the March 2020 level to 4.3 million, and the momentum has continued to increase.

In terms of network and supply chain, our immediate response when COVID-19 restrictions kicked in was to enhance network capacity to maintain service quality following an unprecedented surge in data traffic. We were only able to rollout a limited number of sites in Q2 due to the constraints on movement, paucity of foreign exchange and port congestion. However, we accelerated site rollouts in H2 as restrictions and logistical bottlenecks eased. As a result, we achieved a 60% 4G population coverage in 2020, which is in line with our target.

Our funding and liquidity remain well-managed, supported by strong cash flows and approved funding facilities. Our headroom to leverage is comfortably within banking covenants and is able to meet our operational, investment and financial requirements. The foreign currency exposure of our borrowings is within comfortable limits, with 94% of our debt in local currency, which positions our balance sheet well to withstand currency volatility. We plan to use the bond market to further diversify our funding sources and optimise funding costs, while mitigating exposure to market risks.

Update on new SIM registration directive

On 9 December 2020, the Nigerian Communications Commission (NCC) suspended the sale and activation of new SIMs, and on 15 December 2020 directed all operators to update SIM registration records with valid NINs with an initial deadline of 30 December 2020. While suspension of new subscriber acquisition continues, the deadline for NIN update has been extended to 6 April 2021 to accommodate logistical challenges.

We are collaborating with the NCC and National Identity Management Commission (NIMC) to ensure our subscriber records are updated, and we have made significant progress in this regard. To date, over 37.2 million subscribers have submitted their NINs, representing 48.7% of our subscriber base. We are working with NIMC to complete bulk verification of the NINs collected. This requires improved integration with the NIMC database, the development of which has reached an advanced stage.

To support the Federal Government’s effort to ensure that every Nigerian has a valid NIN, we have been granted a NIN enrolment licence and have commenced enrolment in 36 centres across the country. We are also working with NIMC and the Ministry of Communications and Digital Economy to expand our enrolment centres and provide an access point for as many Nigerian as possible. To this end, we have acquired over 15,000 enrolment devices, which are being configured for this purpose, and placed orders for additional ones.

The impact on service revenue of the new SIM activation suspension was minimal in Q4 2020, though, we anticipate that subscriber growth will be significantly impacted in Q1 2021 should it remain in place. In the near-term, we expect the service revenue impact of the suspension to be moderate as usage is primarily driven by active SIMs in our base.

Outlook

The operating environment remains challenging and uncertain due to the effects of the pandemic. We remain focused on the safety and wellbeing of our staff, customers and broader stakeholders, as well as mitigating supply chain challenges, while safeguarding our financial and liquidity position. While we continue to manage the attendant risks and support our stakeholders, however, we are also well placed to unlock the opportunities that have risen in the areas of financial inclusion along with the rising demand for connectivity and digitalisation. We continue to refine our strategy to make our operating model future-fit to adapt to a dynamic world for sustainable growth.

In view of the new directive on SIM registration, our immediate priority is to protect our base by collaborating with NIMC to drive NIN enrolment and ensure that our customers’ records are updated with NINs.

We remain focused on our MoMo business given the important role it plays in driving financial inclusion in the country. We continue to engage with the CBN regarding obtaining a Payment Service Bank (PSB) licence, which would help to accelerate this ambition of broadening financial participation and inclusion.  In the meantime, we will continue to expand the agent network through our one distribution model, broaden our service offerings and drive the overall contribution of our core fintech business to service revenue.

We will fast track 4G sites rollout to further increase population coverage, while continuing to expand rural coverage. Although the availability of foreign exchange remains a constraint, we strive to minimise its impact on the business. We will sustain our drive for cost management across the business and strengthen our operations and financial position to unlock efficiency and support margins.

 

 

 


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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University. Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

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New CAMON Device Set to Redefine Mobile Content Creation

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TECNO is gearing up to launch the next CAMON series device, which promises to be the next evolution in mobile photography.

TECNO

The CAMON lineup has always been known for its innovation in capturing and sharing cherished moments. Now, TECNO is taking it to the next level with a groundbreaking camera innovation that aims to redefine what’s possible.

For years, the CAMON series has been the driving force behind countless memorable shots, empowering users to unleash their creativity and capture the world in stunning detail. With the upcoming device, TECNO promises to exceed your expectations and deliver an unparalleled photography experience that’s second to none.

The new CAMON device will feature cutting-edge technology and unparalleled performance, setting a new standard for mobile photography and content creation. Imagine being ten steps ahead of the curve, armed with a device that empowers you to capture the perfect shot every time.

Stay updated on the latest news and announcements regarding the upcoming TECNO CAMON device by following TECNO on FacebookInstagram, and X(Twitter). Join TECNO on this exciting journey towards the future of mobile photography!


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Data Protection: NIMC’s Licensees to Face More Scrutiny

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Following the reported incident of unauthorized NIN verification by expressverify.com, investigation reveals that a third-party who, among others, was originally authorized to provide verification services to citizens and genuine businesses might have allowed expressverify.com to use its NIN verification credentials to conduct verification. The circumstances surrounding this permission is still under investigation.

 

To remedy this incident, National Identity Management Commission (NIMC), in line with established remediation protocols, barred all forms of access to its database.

Though necessary, barring all forms of access affected all genuine and crucial verification requests. After a painstaking review, limited access has been granted to few establishments that are providing pivotal public services such as education and security.

Ongoing investigation – by relevant agencies – seeks to establish the medium through which expressverify.com obtained the credentials of bona fide third parties and to determine the liability of persons involved in line with extant laws.

At the moment, data processing by licensees generally are to be scrutinized and only those that are cleared based on credible evidence of regulatory compliance will be permitted to carry out NIN verification going forward.

Furthermore, series of intensive trainings will be conducted in order to ensure that personnel and licensees are abreast of the duty of care and the standard of care mandated by the Nigeria Data Protection Act, NIMC’s Privacy Policy and other relevant regulatory protocols.

In the meantime, NDPC calls on members of the public to see NIN as an essential data for sustainable development. While existing technical and organizational measures are being strengthened to ensure the protection of this data, it is important for citizens to ensure that they are not left unidentified in various frameworks for development. It is equally important to be vigilant when sharing personal information on various online platforms.


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5 Common Backup Mistakes and How to Avoid Them

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Are you confident that your valuable data is protected from unexpected disasters or cyber threats? Consider this: 1 in 10 computers fall victim to viruses, and a staggering 113 phones are stolen every minute every day[1].

With data loss being a sudden and potentially irretrievable nightmare, ensuring reliable backups is non-negotiable. March 31st, celebrated as World Backup Day, is a poignant reminder of this essential task. Let’s delve into the common backup mistakes people make and how to steer clear of those.

1. Skipping regular backups:

The most common mistake is forgetting to back up data regularly. Whether personal files or crucial business documents, not establishing a consistent backup routine leaves you vulnerable to data loss.

Unexpected system crashes or malware attacks can happen anytime, making your precious data inaccessible or permanently lost. But you can help avoid such a situation by setting up automatic backups.

SSD Backup Mistakes to avoid
2. Putting all faith in a single backup device:

A device can get damaged or stolen, putting your backups at risk, so depending entirely on one storage medium is playing a dangerous game with your data’s safety.

 Instead, diversify your backup storage solutions with a combination of external HDDs, NAS, and cloud storage.

Portable HDDs like those from WD like Western Digital’s My Passport offer up to 5TB for simple, cost-effective backups. For smartphones, 2-in-1 flash drives such as SanDisk Ultra Dual Drive Go USB Type-C and SanDisk iXpand Flash Drive Luxe are convenient options.

These drives, compatible with USB Type-C devices, automatically back up photos, videos, and more. Just plug and play for seamless data transfer across devices.

If you need a device to store huge amounts of data, then the desktop drive called My Book  from WD is just the product for you, with up to 22TB of storage capacity.

SSD Backup Mistakes to avoid
storage device

3. Forgetting version control:

Overlooking version control during backups is another blunder. Not keeping multiple versions of files increases the chance of saving corrupted or wrong data over previous versions.

Without a proper versioning system, fixing mistakes or retrieving older versions can become a challenge. To prevent forgetting version control, establish a system that tracks changes to your files over time.

This ensures that you can always revert to earlier versions if needed, helping protect against accidental data loss or corruption.

Regularly maintaining this system will help you stay organized and prepared for any unforeseen issues.

Additionally, it’s crucial to verify the version you’re backing up to ensure it’s the correct one.

This simple step can help prevent accidental overwriting of important data with potentially corrupted or incorrect versions.

Double-checking ensures that you’re safeguarding the most up-to-date and accurate information, minimizing the risk of errors during backups.

SSD Backup Mistakes to avoid
4. Ignoring off-site backup solutions:

Many people overlook off-site backup solutions, assuming local backups are foolproof. However, relying solely on local backups makes you vulnerable to site-specific disasters like fires or theft.

Using off-site backups means keeping copies of your data in different places so that if something bad happens in one area, your data stays safe.

As an alternative, you could use cloud storage. Cloud backup devices are popular for remote data storage accessible via the internet. Various online cloud services offer features like file synchronization, sharing, and encryption for secure data storage.

5. Underestimating encryption:

Not prioritizing encryption in backups can be a costly mistake. Storing unencrypted backups makes your sensitive data vulnerable to unauthorized access or breaches.

Implementing strong encryption ensures even if your backups fall into the wrong hands, the data remains protected.

However, it is equally important to remember not to opt for out-of-the-box encryption solutions, as they might make it difficult for you to retrieve the backed-up information later.

My Passport HDD and My Book from WD come equipped with built-in 256-bit AES hardware encryption with password protection that helps keep content secure.

Additionally, maintaining proper key management practices is essential to ensure smooth decryption and access to your data when needed.

SSD Backup Mistakes to avoid
Monitor and storage device

This World Backup Day, Western Digital urges you to back up your data safely, and at the same time, prepare for the unexpected by having a contingency plan in place for device mishaps like crashes, theft, or damage.

Worrying about losing data isn’t something you have to lose sleep over if you have an active data backup strategy.

A common rule of thumb for keeping important data from disappearing forever is the 3-2-1 Rule. It dictates that you should:

3. Have THREE copies of your data. One is a primary backup and two are copies.

   2. Save copies of your backups on TWO different types of media or devices.

   1. ONE backup copy should be kept offsite in case of disaster.

Determine where and how you’ll store backup files and identify support contacts for swift assistance.

These proactive measures ensure quick data recovery and safeguard your cherished memories for the long haul.


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