MTNN Dividend Payment Jumps 40% after Earnings Beat

Following an earnings beat in the financial year 2021, MTN Nigeria Plc with Ticker: MTNN raised dividend payment to shareholders by 40%, according to the company’s financial statement.  This comprises both interim and final dividends for the year, which is strongly above the previous year payout.

The telecommunication giant disburses about 90% of the company’s total earnings to shareholders in 2021, its audited financial statement submitted as part of regulatory requirements shows.

MTN Nigeria Plc released its 2021 audited results with the fourth quarter of the financial year 2021 standalone after-tax profit (PAT) up by 28.5% year on year to N78.34 billion. Read: MTN Nigeria: Why You Should Not Miss 575mln Shares Public Offer

In the period, the telecom giant earnings per share (EPS) printed at N3.85 which is a 28.5% year on year increase, bringing the 2021 EPS to N14.67 – 45.5% above 2020 earnings.

The growth in 2021 EPS was driven mainly by the robust expansion in the top line, rising by 22.9% year on year and expansion in earnings before interest tax, depreciation and amortisation (EBITDA) margin that expanded 209 basis points to 53.0%.

MTN Nigeria proposed a final dividend of N8.57 share, bringing the 2021 total dividend to N13.12 compare with N9.40 in 2020, Cordros Capital analysts said. This implied a dividend yield of 6.9% based on the last closing price of N190.00.

After an earnings beat that saw annual revenue at N1.7 trillion, the Telco share price inched higher to N200.30 on Friday as equity investors valued MTN Nigeria at N4.077 trillion on 20.354 billion outstanding shares.

In its 2021 audited result, telecom giant service revenue grew by 20.9% year on year in Q4-2021. For full-year 2021, revenue from service inched higher by 22.9% year on year, due to the broad-based expansion.

The audited financial statement shows that MTN voice business grew by 0.9% year on year, and this income line accounted for 56.8% of revenue.  Data business witnessed a 65.2% year on year growth; accounted for 33.5% of revenue and value-added services jumped up 55.6%; translating to 4.5% of revenue.

Management revealed that the 8.4% growth in voice revenue on a full-year basis was supported by an increase in minutes of use by its active SIM base and the success of customer value management initiatives, both of which limited the impact of SIM registration and activation restrictions in H1-2021.

“For us, we think the higher minutes of use was supported by a sustained recovery in activities in the informal sector given the patronage by artisans and unskilled workers”, Cordros Capital said in an equity note.

Analysts highlighted that MTNN’s subscriber base declined on a year on year basis by 8.0 million to 68.5 million as of 2021, due to regulatory restrictions on new SIM sales and activations.

However, the management was able to reverse the trend in Q4-2120, adding approximately 1 million subscribers following the alignment of its SIM registration and activation centres with regulatory guidelines.

Cordros Capital analysts said they expect MTNN to sustain its efforts in onboarding new subscribers going forward. On data revenue which surged 55.3% to N516.24 billion in 2021, management said the growth was driven by increased data usage from its existing base, expanding 4G coverage, and improvement in network capacity to support increasing data traffic.

Interestingly, analysts spotted that the average megabyte (MB) per user rose by 62.7% year on year, enabling overall data traffic growth of 85.3% year on year in 2021. In the year, analysts said the telecom company’s smartphone penetration grew by 4.0 percentage points to 50.0%, while 4G penetration rose to 70.3% in 2021 from 60.1% in 2020.

MTNN also expanded its mobile money (MoMo) agent network with the addition of over 374,000 registered agents in 2021 bringing the total number to 770,000 agents.

Despite the higher increase in network operating costs which inched up by 25.9% compared to 22.9% growth in revenue, analysts said the sub-inflationary growth of 10.3% in operating expenses pushed earnings before interest tax, depreciation and amortisation (EBITDA) higher by 27.9% to N877.07 billion in 2021.

Similarly, its EBITDA margin expanded by 209 basis points to 53.0% in 2021, according to analysts.  Net finance cost rose by 15.8% in 2021 due to 11.4% growth in finance cost amid the decline in finance income.

In the period, the telecom company saw finance income slow down by 24.7% below the year 2020 record, which is reflective of the impact of the low yield environment amidst marginally lower cash and cash equivalents.

Overall, pre-tax profit grew 32.1% to N115.34 billion in the fourth quarter of 2021. On full-year, PBT jumped 46.1% year on year to N436.69 billion. However, analysts at Cordros Capital noted that a lower effective tax of 32.1% in Q4-2021 compared to 30.1% in Q4-2020 led to the slower growth in profit-after-tax, up 28.5% in the final quarter of 2021.

“We are impressed with the robust topline expansion delivered by MTNN despite regulatory headwinds which impacted SIM registrations”, Cordros Capital analysts said in a note.

Analysts said they also like that the company remained operationally efficient, underscored by the expansion in EBITDA Margin despite the impact of currency devaluation on BTS lease cost amid higher network maintenance cost.

“We believe data revenue will remain a key driver of earnings in 2022, even as we expect final approval from Central Bank of Nigeria regarding its PSB license to provide another springboard for earnings”, Cordros analysts stated. #MTNN Dividend Payment Jumps 40% after Earnings Beat