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MTN attributes increased expenses in H1 2022 results to naira depreciation

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TELECOMMUNICATION giant, MTN Nigeria, has said that its operating expenses (opex) in its 2022 half year results increased by 15.1 per cent due to the effects of naira depreciation and higher dollar consumer price index (CPI) on lease rental costs.

The firm also blamed the rising energy costs in the West African nation as part of the reasons for its increased expenses in its unaudited report for the first six months of the year ended June 30, 2022, obtained from the Nigerian Exchange Group (NGX).

The six months can also be referred to as the first half of the year (H1, 2022), interchangeably.

According to the telco, it spent N277 billion in H1 2022 on operating expenses, compared to N241bn in H1 2021, representing an increase of 15.1 per cent in the period.

Similarly, its cost of sales went up by 22.9 per cent as the firm spent N162bn in the first six months of 2022, compared to N132bn spent in the corresponding period.

In the report, the company’s Chief Executive Officer, Karl Toriola, said the company saved cost via its expense efficiency programme.

Toriola said, “We continue to realize cost savings through our expense efficiency programme, and we remain disciplined with capital allocation. Cost of sales rose by 22.9 per cent off a low base in the prior year, which was depressed by the suspension of new Subscriber Identification Module (SIM) sales and activations by the regulator, lower device purchases during the period, and the impact of growing gross connections in the current year.

“Operating expenses (opex) increased by 15.1 per cent due to the effects of naira depreciation and higher dollar CPI on lease rental costs, the acceleration in our site rollout and rising energy costs. The escalation of diesel prices in Nigeria contributed to the 12.2 per cent increase in direct network operating costs with a 0.3 per cent earnings before interest, taxes, depreciation, and amortization (EBITDA) margin impact.”

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He explained that, overall, the company’s total expenses increased by 17.8 per cent, below the service revenue growth rate.

The report revealed that active data subscribers grew by 13.2 per cent to 36.8m active subscribers in the first six months of 2022, from 32.5m in the first six months of 2022.

In terms of revenue, the telco giant recorded N950.08bn for H1 2022, compared to N791.26bn obtained in the corresponding period.

The firm’s voice revenue grew by 2.9 per cent to N501.84bn in the first six months of 2022, as against N487.67bn in the first six months of 2021.

Similarly, the data revenue grew year-on-year by 51.6 per cent to N348.48bn in 2022, from N229.87bn in 2021.

Its profit after taxation jumped year-on-year by 28.06 per cent to N181.62bn in the first six months of 2022, from N141.82bn in the corresponding period.

MTN, in its outlook for the year, stressed that it has continued to witness strong headwinds such as rising general inflation, paucity of foreign exchange, supply chain disruptions, and higher diesel and petrol prices, which it said placed more financial pressure on its customers, as well as its business.

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It, however, looked forward to a surge in subscriber base in the third quarter of the year. The firm stated that the growth would be based on how well it regains subscribers lost to the National Identity Numbers (NIN) enrolment.

The telco planned to commence the rollout of 5G services in all the six geopolitical zones from the third quarter (Q3) of 2022.

Author profile

Experienced Business reporter seeking the truth and upholding justice. Covered capital markets, aviation, maritime, road and rail, as well as economy. Email tips to jolaoluwa@icirnigeria.org. Follow on Twitter @theminentmuyiwa and on Instagram @Hollumuyiwah.

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