Investors who bought the shares of MTN Nigeria Communications Plc have made more money this year than other premium companies’ stocks.......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
The NGX premium stocks tracked by BusinessDay shows that MTNN share price grew by 31.10 percent in first two months of the year, while the entire market grew by 4.76 percent in the same period.
In their March 5 report titled “MTNN turns the tide in H2’24”, Divine Olumese, research analyst at Lagos-based Vetiva said investors should buy MTNN stock saying their target price (TP) for the stock is N318.6.
While outperforming other premium stocks on the Nigerian Exchange Limited (NGX), MTNN closed February at N 264.20 per share reaching almost its 52-week high of N267.8 as against a 52-week low of N169. The stock opened for trading on Tuesday March 11 at N 255.8 percent.
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United Capital research analysts in their March 3 note asked investors to sell the shares of MTNN saying that their target price (TP) is N250.1, which represents downside of 5.3 percent against its market price of N264.2 as at February 28.
MTN Nigeria has shares outstanding of 20.995billion units. The telecoms company recently released its audited results for the year ended December 31, 2024.
Read also: MTN eyes N1.34trn from tariff hike
Earlier this year, MTN Nigeria Communications Plc notified Nigerian Exchange Limited and the investing public that the Nigerian Communications Commission (NCC) has approved the renewal of its first 800MHz Spectrum band licence (Channel 1) for an additional ten years, effective from January 1, 2025 to December 31, 2034.
The NCC also approved the extension of the second 800MHz spectrum band licence (Channel 2), which expires on December 31, 2030, for an additional four years, with a new end date of December 31, 2034. The extension harmonised the tenure of the Company’s 800MHz spectrum licences so that they jointly expire on December 31, 2034 for ease of subsequent renewals.
Also, the NCC earlier this year approved a 50 percent tariff adjustment for telecoms operations in Nigeria.
“This tariff adjustment represents an important step towards addressing the impacts of the prevailing economic challenges on our business and industry. It will enable us to maintain the critical investments required to deliver reliable, high-quality services to Nigerians. We remain committed to supporting Nigeria’s digital transformation agenda and driving inclusive growth for all stakeholder,” MTN CEO had said.
In 2024, MTNN reported EBITDA margin decrease by 9.6 percentage points (pp) to 39.1percent. Its Loss after tax (LAT) was N400.4 billion (Profit after tax of N114.5 billion in Q4 2024). Profit after tax (PAT) adjusted for the net forex loss decreased by 35.2 percent to N247.3 billion.
MTNN total subscribers increased by 1.6 percent to 80.9 million in 2024. Its active data users increased by 7 percent to 47.7 million. Service revenue increased by 35.9 percent to N3.3 trillion. Earnings before interest, tax, depreciation and amortization (EBITDA) increased by 9.2 percent to N1.3 trillion.
“MTNN had their second consecutive full year loss on the back of the macroeconomic headwinds which on the face of it is not very encouraging especially for a firm that prior to 2023 showed consistently strong profitability,” said Coronation research analysts in their March 10 results first look.
“However, in our view, with the new directive to resolve the USSD situation with the banks, the part-localisation of the lease liability, the restructuring of borrowings and most recently, the approval of the 50 percent increase in tariff, stabilising of the exchange rate,
moderating of inflation, MTNN is positioned for compelling growth/return opportunities in 2025 and we shall look at their first quarter (Q1) 2025 numbers with interest to see if we can see the green shoots of a return to profitability,” Coronation research analysts further noted.
MTNN said in their outlook that “As we continue to navigate the challenges in our operating environment, including elevated inflation and unpredictability of foreign exchange markets, we will continue our work to drive sustainable growth and operational resilience. Our primary focus is to restore a positive net asset position in the current financial year”.
In the review financial year 2024, MTNN forex losses arising from the revaluation of foreign currency-denominated obligations resulted in a loss after tax of N400.4 billion (2023: N137 billion loss), albeit with a positive result in Q4 (PAT of N114.5 billion).
Consequently, MTNN reported negative retained earnings of N607.5 billion (December 2023: negative N208 billion), which was an improvement from the June 2024 balance of N727.2 billion. Shareholders’ equity was negative N458 billion (December 2023: negative N40.8 billion), compared to negative N577.7 billion in June 2024. The company delivered a positive free cash flow of N388.2 billion, down 3.7percent.
Capital expenditure (capex), excluding leases, decreased by 1.3 percent to N443.5 billion. MTNN recorded positive free cash flow of N388.2 billion in the review financial year. In light of the negative retained earnings, the board did not recommend a dividend for FY 2024. With retained earnings in negative, management did not recommend a dividend for FY’24.
Karl Toriola, CEO, MTN Nigeria said, “We are encouraged by the resilience of our business in FY 2024, which reflects our strong commitment to driving growth and managing costs.
“Despite facing significant macroeconomic headwinds, including record-high inflation, as well as ongoing currency and energy price volatility, we remained focused on executing our strategy and creating long-term value for our stakeholders”.
“We are grateful to the authorities for the recent approval of tariff adjustments, which are essential for our industry’s sustainability and crucial for addressing our negative capital position”.
Iheanyi Nwachukwu
Iheanyi Nwachukwu, is a creative content writer with over 18 years journalism experience writing on banking, finance and capital markets. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos.
Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA).
