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Thursday, May 09, 2019 / 09:58AM / Stanbic IBTC
Stockbrokers
MTN Nigeria reported a solid quarter with service revenue increasing by 13,4% YoY, in line with our medium-term guidance of double-digit growth. This was led by a 32,4% increase in data revenue and a 12,7% increase in voice revenue. A general slowdown in economic activities during the election period impacted voice revenue growth. Growth in data revenue was supported by an increase in smartphone penetration, improved network quality and a 9,1% increase QoQ in active data subscribers to 20,4 million. Total subscribers increased by 3,6% QoQ to 60,3 million. MTN Nigeria reported an EBITDA margin of 53,3%. On an IAS 17 basis the margin increased to 44,2%, up 2,4 percentage points YoY, driven by the growth in revenue and effective cost management.
The successful listing of our e-commerce joint venture, Jumia, provides a market value for our 18,9% investment and we completed the conversion of MTN Nigeria to a public company ahead of the listing by introduction on the Nigerian Stock Exchange anticipated for May 2019.
Early in the second quarter, our e-commerce joint venture, Jumia Technologies AG, successfully raised fresh capital and listed on the New York Stock Exchange, resulting in a dilution of our shareholding from 29,7% to 18,9%. This investment is now valued at approximately US$560 million as at 6 May 2019. As of 12 April 2019, we will no longer equity account for the Jumia investment.
In line with
simplifying the capital structure of the business ahead of listing, MTN Nigeria
is progressing with the redemption of the preference shares, of which MTN
Group’s share is approximately US$315 million.
Update on the Attorney General of the
Federal Republic of Nigeria matter
MTN took legal action
after receiving a demand notice from the Attorney General of the Federal
Republic of Nigeria (AGF) alleging unpaid duties and taxes between 2007 and
2017. The lawsuit challenges the authority of the AGF to deal with issues
around tax and custom duties. According to the law, oversight for this is the
responsibility of the Federal Inland Revenue Service (FIRS) and Nigerian
Customs Service (NCS).
The court heard
arguments on the AGF’s preliminary objection on 26 March 2019. At the time, the
AGF requested that MTN’s lawsuit be dismissed because it was not filed within
the appropriate timeframe, which the AGF asserted was within three months of
receipt of the initial request for a self-assessment. Having considered the
matter, the judge determined that MTN’s lawsuit was not statute-barred, as the
company was only required to file its case within three months of receipt of
the actual demand notice in August, which it did. The Federal High Court
delivered its ruling on 7 May 2019, rejecting the notice of preliminary
objection filed by the AGF in response to MTN’s lawsuit to have the AGF’s
demand for circa US$2 billion dismissed. We remain resolute that MTN Nigeria
has not committed any offence and will continue to defend this position. Court
was adjourned to 26 June 2019 for the trial of the substantive case.
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