Customers register their MTN mobile phone sim cards at a roadside kiosk in Lagos, Nigeria. (Photo: George Osodi / Bloomberg via Getty Images) Four years ago, Nigeria’s telecommunications market was like an albatross around MTN’s neck as the company had several costly run-ins with the country’s regulators.
MTN was slapped with an initial fine of $5.2-billion (later reduced to $1.6-billion) in 2016 for failing to disconnect about 5.1 million mobile subscribers as Nigerian authorities were cracking down on unregistered SIM cards in the country that could be used for nefarious purposes such as terrorist activity.
In 2020, MTN settled a long-standing tax dispute with Nigerian authorities relating to dividend repatriation in breach of foreign exchange rules, agreeing to pay a $53-million fine. Nigerian authorities were accused of unfairly shaking down foreign companies and seeking to extract cash from them because the country’s oil-reliant economy was in the doldrums due to falling oil prices.
These fines are enough to scare any investor and push them to disinvest from any country. But MTN remained committed to Nigeria and even recently doubled down on its investments in the country’s nascent financial technology (fintech) industry, especially the arena of mobile money.
This has paid off, judging from the performance of MTN’s Nigeria operations — with every metric of profitability and financial health heading in the right direction.
MTN Nigeria’s service revenue for the year to 31 December 2021 grew by 22.9% to ₦1.6-trillion (R60-billion), while profit after tax over the same period grew by 46% to ₦298.7-billion (R11.2-billion). Even shareholders were rewarded with a handsome dividend as MTN increased their payouts by nearly 40% to ₦8.57 per share.
Nigeria is an important market for MTN as it accounts for about a third of the telecommunications group’s annual core profit.
MTN’s share price on the JSE rose by as much as 10% on Monday after it informed investors about the performance of its Nigerian operations. Its share price closed at a near seven-year high of R192.12, adding R28-billion to its market value of R357.4-billion.
MTN’s fintech investment
MTN Nigeria’s service revenue (revenue generated from offering customers services) is still being driven by voice and data services. But the most intriguing part of MTN Nigeria’s results is that its new mobile money business is becoming a serious component of revenue generation.
In August 2019, MTN launched a mobile money transfer service called MoMo (an acronym for mobile money) in Nigeria, Uganda and Ghana, […]